Do I need a trust?

I am asked this question by almost every single client I see. Ninety-five percent of Americans, can get through life without a trust. This means they can pass assets to their loved ones, outside of probate, incurring no estate taxes, without needing a trust. Read that again. Trusts in Ohio are commonly referred to as Living Trusts, Revocable Trusts, Grantor Trusts, and Family Trusts.

Why are trusts so popular?

It gives people something to talk about. Financial planners and attorneys have made fortunes selling trusts to clients. In fact, it got so out of control that the Ohio Supreme Court started sanctioning attorneys for preparing trusts where it isn’t needed. People fear death and taxes. And sometimes, they are willing to overpay for legal services they don’t need to satiate their fears.

The plain reality is that over 99% of Americans do not meet the threshold to require advanced tax planning. In 2022, the Federal Estate Tax (See IRS) exemption is over $12M dollars per person. And, in the State of Ohio, there is no Ohio Estate Tax.

A simple last will and testament is not rocket science. It is a form document that can be tailored to meet a client’s specific needs. By sitting down and teaching the client probate and giving the client the knowledge, the client can make informed decisions of how to structure assets on their own to avoid probate administration.

What we see

More often than not, a client reaching out for assistance with trust administration is either in over his/her head, is in a fight with other beneficiaries, the attorney who drafted the trust didn’t know what he or she was doing, or there was never any follow-up by the Grantor to actually fund the trust. We see some, but not a lot of trustee misconduct. That doesn’t mean it doesn’t happen.

My goal as a practitioner is to lift the curtain and show my clients that probate is not hard to avoid.

What factors should I consider for a trust?

  • Tax Planning
  • Cost of Care
  • Mental Capacity
  • Special Needs
  • Division of Assets After Death
  • Multiple Marriages
  • Number of Beneficiaries
  • Employment Status
  • Value of Life Insurance Policies
  • Client’s Age
  • Location of Real Estate
  • Owning Real Estate in Multiple States
  • Age of Beneficiaries
  • Nature of Personal Property Owned by Client
  • Fee Budget
  • Quality of Future Trustees

Are there benefits to a trust?

Yes. Absolutely. A properly drafted and properly administered trust can save in legal fees in the long run. Trusts can also expedite the administration of assets upon death of the Grantor. But for the vast majority of individuals, the extra step of creating a trust is not necessary.

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