Nicole: Who needs a trust? Contrary to popular belief, you do not need to be a millionaire to need a trust. There are lots of benefits that come with having a trust, and there are about four main reasons why we recommend a trust. One of them is if you have minor beneficiaries. The reason for this is because minors, if you put them as beneficiaries on your accounts, and then you pass, that money gets held in trust at court, and then your kids don’t receive that money until they’re 18, sometimes not till they’re 21 years old. Now, the problem with that is that sometimes people don’t want their 18-year-old to be receiving a large amount of money all at once, because we all know the decisions we were making financially when we were 18 years old.
Another reason that we recommend trust is if you own multiple properties, especially multiple properties in different states. Real property typically gets pulled into probate, so, if you have a property in Colorado, and you have a property in Nevada, and then you pass, your Colorado property gets pulled into Colorado probate and your Nevada property gets pulled into Nevada probate. If your trust owns both properties, you’re now avoiding probate in multiple states.
Another reason that we recommend trust is if you’re a business owner. You cannot put beneficiaries on a business account, and so, what controls the business assets is your business documents saying your operating agreement, for example, and your operating agreement should be saying that all of your assets transferred to your trust to then go to your beneficiaries after the fact.
One of the other reasons that we really recommend trusts are because you can put in rules or restrictions in place for your trust. A common example is distributing assets one-third at 25, one-third at 30, one-third at 35. Another reason is sometimes we have 40-year-olds who aren’t really savvy with money, so, we want to spread out their distribution patterns even longer. Sometimes we have people who have drug addictions, or we have people who have gambling problems, so we want to monitor when they’re getting their assets and what they need to meet in order to receive that distribution.
Trusts are extremely beneficial because we’re avoiding court costs and attorney fees in that long probate process, and most importantly, your wishes are being carried out very easily, when you have a trust.