Not everyone with a trust fund has the last name of Clinton, Gates or Trump. Creating a living trust fund for your children is a wise investment and a practical financial tool that is not only for the offspring of the rich and famous.
In its simplest definition, a Revocable Living Trust or Family Trust, is a legal document that holds title and ownership of assets and property on behalf of its beneficiaries. You appoint someone to oversee the management of your estate after your death. Virtually anything can be placed in a trust: stocks, bonds, insurance, real estate, savings accounts, personal property and cash. You can alter or amend a revocable living trust; an irrevocable trust can not be touched. One of the biggest benefits of trust is that it avoids the hassle of legal matters related to inheritance issues and prevents the court from, ultimately, controlling and managing your assets.
A trust also allows children and grandchildren to manage your assets if you become incapacitated. Another big difference between a will and a trust is that a trust is not filed with the court and does not become a matter of public record once you die. It is kept private. Additionally, a will is simply an expression of your wishes and does not avoid a lengthy court and inheritance process. For example, for your property to go to your children or grandchildren, a probate court must evaluate and settle your debts and determine the value of your property and what and how much can be distributed. A trust essentially avoids this process.
“I frequently advise clients that have a home, property or other major assets and minor children to take advantage of the many benefits of a trust fund,” says attorney Aquanetta Betts, owner and managing partner of the Law Offices of Aquanetta Betts in Owings Mills, MD. “Establishing a trust enables you to identify your assets and where it all goes after you pass,” she says. Betts says she has seen many families destroyed and estates mired in the court system for years due to poor estate planning. “Sound financial planning and accurately determining the value of your property and assets by establishing a trust fund will protect your heirs and give you peace of mind,” she says.
Most attorneys will charge about $1,000 to draw up a trust; however, the cost depends on the amount of assets and property involved. Betts says clients should provide a complete inventory of all their assets, liabilities and clear designation of how and to whom their property will be distributed once they die.