David Witter is the founder and CEO of Financial Harvest Wealth Advisors in Winter Park, Florida.
Do I Need A Trust?
A question we sometimes get is, “David, I’ve got the four basic estate planning documents in place, the will, living will, health care surrogate, and power of attorney. But do I need a trust?”
Estate Planning Basics:
- Living Will
- Health Care Surrogate
- Power of Attorney
Property in Another State?
I think the way to think about that is to kind of go through a checklist. The first one would be, do you have property in another state?
Probate: Florida & N.C.
Let’s say that you have a house up in the mountains in North Carolina, as an example. And a home in Florida. If you pass, there would be probate proceedings in both Florida and in North Carolina, and that would be more costly.
A Trust Could Own N.C. House
But a trust could actually own your house up in North Carolina, and then that would avoid probate.
That flows into the second one, which is as your estate gets larger and more complex, usually, a trust really helps with the administration of that to bring organization to it in reducing probate cost.
A Trust Helps:
- Reduce Probate Costs
Do You Need Financial Control?
A third area to think about is the loved ones that you’re leaving the money to. Do you need to have some control or have some say in how that money goes to them?
- Special Needs/Special Trust
- Financial Maturity
- Discretion of Trustee
One example might be a special needs child. You need to have a special trust in place just for that so that it doesn’t disqualify them from getting maybe some state aid.
Or, maybe you’re concerned about the financial maturity of the loved one that you’re leaving the money to. Do you want to control the trust by a certain age?
Do you want the trust to be incentive-based where they have a certain income that they’ve earned? Or do you want to leave it to the discretion of the trustee at that point in time, so it gives more control?
Protect Family Assets from Loss
The last thing I would say that you should consider is how worried are you about protecting the assets that you’ll leave to loved ones from maybe divorce?
If you have a son or daughter and you’re worried that if they go through a divorce, you want to make sure that the assets stay in your family. Or, if your son or daughter may one day have litigation against them. That’s another way that a trust can be really useful for is asset protection.
David Witter is the founder and CEO of Financial Harvest Wealth Advisors located in Winter Park, Florida.