Everyone needs a will, of course, but one other thing you might consider before it's too late is a trust. For years, I thought living wills, trust funds and the like were devices lawyers invented to separate me from my money but my attitude is slowly changing.
Trust funds are good because they simplify things. You set up a trust, you name your beneficiaries and, upon your demise, whatever you put in the trust goes to the beneficiaries. It's very neat and clean. If you only have a will, the will has to go through probate, which can take time and be a hassle for survivors. And in Buffalo, where a lot of people own a home for the summer and a condo down south for the winter, trusts make even more sense because if you die with just a will, your survivors very likely will have to go through probate in two courts.
Either way, setting up a trust fund or writing a will, costs money. The only major financial difference is that a trust may be a little more complicated and you pay the cost now, and with a will, the probate costs usually come out of your estate. You can pay now, or you can pay later, but either way, you will pay. And with a trust, you can make things a lot simpler for your survivors. That's a significant advantage.
The trouble with writing a column about trusts is that no two trusts are alike. Each one is tailor-made to fit the situation, the assets available, the complexities of the estate and even the personalities of the people involved. So whatever is said here has to be taken with the understanding that everyone's situation is different and alternatives mentioned here may not apply.
Robert G. Sillars is a Clarence attorney who has been planning estates, writing wills and establishing trusts for more than 30 years. "Most young couples come in to establish trusts to protect their children," he said, "to provide for their care and schooling, their college education, should anything happen to the parents.
"Fortunately, those trusts almost never come into being because the parents outlive the need for that kind of trust." The children grow to adulthood, rendering the trust irrelevant.
A trust can be tailor-made to fit not only the estate, but also the beneficiaries. "We used to see assets held until a beneficiary hit age 21 or 22," Sillars said, "but more recently we've seen distributions withheld until age 25 or older.
"I've seen many trusts where the beneficiary got part of the distribution at age 25, and the rest at age 30. The theory being, I guess, that if he blew it at 25, he'd get another shot to do it right at age 30."
One prime consideration when setting up a trust is your choice of trustee. It should, of course, be someone you trust, because the possibility of shenanigans always exists, but it should also be someone willing and able to take on the responsibility. For instance, Uncle Bob might be wonderful with your kids, but not so good with finances. Aunt Suzie might be a financial whiz, but have the personality of a prune. Bob would make a fine guardian; let Suzie handle the books.
One other aspect to consider is change. Everything changes over time. When my father died, we discovered a will he had drafted nearly 30 years before, and had never updated. My brother, sister and I had to jump through several large hoops in order to get my mother easy access to what was a fairly mundane estate. Once you write a will, plan an estate or set up a trust, put aside an hour or so every January to review and update it.
Anything can be put into a trust, including the family home (while Mom and Dad can retain lifetime use). But it takes some planning and discussion and clear-headed decision-making. Revocable trusts can be changed, but are subject to the five-year Medicaid "look-back" period. Irrevocable trusts have some advantages, but cannot be changed. Every choice you make can have tax consequences. Not everyone is up to the task. Some simply prefer to avoid making decisions. But those who are willing can do themselves and their loved ones a big favor by talking to an attorney or estate planner, getting their finances in order, and easing the path, for themselves and their loved ones, toward the inevitable.