Do You Have Misconceptions About Trusts?

Do You Have Misconceptions About Trusts?

Planning for the passing of a loved one is a major step in life, and our staff at Gilbert Memorial Park take that very seriously. We sometimes find that our clients have planned the funeral services but didn’t have an estate plan to handle the financial burden of loss.

This month, we’ve partnered with Phelps LaClair, a local estate planning law firm, to help raise awareness of how funeral plans are just one piece of the puzzle. Phelps LaClair is hosting a webinar this month—you can sign up to attend here if you’d like to know more. You can also take a quick online quiz to find out how protected your estate is.

Today we’ll be dispelling some common misconceptions about trusts. 

1. Trusts are only for the wealthy.

Even if you have a modest estate, a revocable living trust will be beneficial to your loved ones. The costs for probate can swallow a higher percentage of a small estate, so it is a wise decision to avoid probate entirely. Even with a small estate, everyone who owns assets (such as a house and vehicles), can protect them with a revocable living trust.

2. You no longer control your assets.

Actually, the opposite is true. Since you are the trustor, the trustee, and the beneficiary of the trust, you control all the assets of the trust during your lifetime. You are still in control even after your death because the assets of the trust will be distributed according to your wishes, not according to the arbitrary whims of probate court. A lesser known type of trust called an IRA Inheritance Trust can protect your retirement accounts from automatic taxation, thereby preserving the value of the estate. When you have minor children, naming the trust as the beneficiary of your retirement account and your life insurance also allows your children to avoid a court-appointed guardianship.

3. If you have a will, you don’t need a trust.

A will is subject to Arizona’s probate court system. This often involves expensive court costs, mandatory waiting periods, public notices to creditors and frivolous contests from disgruntled heirs. On the other hand, a trust allows your loved ones to administer your estate privately instead of in a courtroom. And a well-designed trust can protect your loved ones’ inheritances from unexpected crises in their lives, such as divorces, lawsuits and creditors.

4. The best trustee is a family member.

This is not always true. When a family member is the successor trustee, there is the possibility of divisive arguments within the family. The ongoing court case around the settlement of Tom Petty’s enormous estate bears witness to that. The best trustee is a person who can impartially carry out the instructions of the trust.

Having professional guidance to assist with the administration of the trust can go a long way toward avoiding personal liability and seeing that all goes smoothly according to the desires of the trust-maker.

For a Solid Estate Plan, Contact our Friends at Phelps LaClair

As a second generation estate planning firm, Phelps LaClair has helped thousands of Arizona families plan their estates and implement those plans after the death of loved ones. Phelps LaClair offers a free consultation to help you with your estate plan. Give them a call to see how they can help you today!

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