Do You Trust a Trust as Your Estate Plan?

Lately, there has been a lot of discussion about Trusts and the role they play in estate planning. In fact, some people have come to believe that simply creating a Trust means they have completed their estate plan.

That can be a serious mistake.

A Trust can certainly be an important and valuable part of a properly prepared estate plan. Depending on your circumstances, a Trust may help manage and distribute assets, provide instructions for how property should be handled after your death, and potentially help certain assets avoid probate.

But a Trust is not necessarily a complete estate plan by itself.

A comprehensive estate plan should look beyond the question of, “Who receives my property when I die?” It should also address what happens if you are alive but unable to make important medical, personal, financial, or business decisions.

A Trust Has an Important Job—But It Cannot Do Everything

One of the primary purposes of a Trust is to provide instructions for assets properly transferred into the Trust.

That last part is important.

Creating a Trust document is only one step. Assets that are intended to be controlled by the Trust generally must be properly titled or transferred so that they become part of the Trust. This process is often called funding the Trust.

What happens if you establish a Trust but later acquire property and never transfer it into the Trust?

Depending on how you own that property and whether it has another method of transferring at death, such as a beneficiary designation or joint ownership, probate may still be necessary.

This is one reason estate planning should not be viewed as simply signing one document and putting it away in a drawer. Review your estate plan periodically, especially when major changes occur in your life, family, finances, or property ownership.

Fund the Trust

What Else Should Be Part of Your Estate Plan?

While everyone's circumstances are different, a properly prepared estate plan may include several documents in addition to a Trust.

Medical Power of Attorney

Who would make your health care decisions if an accident, illness, or other medical situation left you unable to communicate your wishes?

A Medical or Health Care Power of Attorney allows you to designate someone you trust to make health care decisions on your behalf when appropriate.

Without planning, your family may face difficult decisions without clear instructions about who you wanted to speak for you.

Power of Attorney for Property

Estate planning is not only about what happens after death.

What happens to your financial affairs if you become incapacitated?

Who can handle your bills? Who can deal with financial institutions? Who can manage property or business matters when you can't do it yourself?

A Power of Attorney for Property lets you choose an agent to handle financial and property matters based on the authority you grant in the document.

For business owners, these questions may matter even more. An unexpected illness or incapacity can affect not only your household but also employees, business partners, customers, and ongoing financial obligations.

Living Will

A Living Will addresses another important part of planning: your wishes regarding certain end-of-life medical treatment.

In Illinois, a Living Will can provide direction concerning death-delaying procedures when an individual has a terminal condition and is unable to express his or her wishes.

These are deeply personal decisions. Making your wishes known in advance can help guide your loved ones when they may already be dealing with an extremely difficult situation.

Estate Planning Is About More Than Your Assets

Trusts have received plenty of attention in recent years, and for some individuals and families, a Trust can be an excellent estate planning tool.

But don't assume a Trust automatically solves every estate planning problem.

A good estate plan should consider the bigger picture.

It should address not only what happens to your property after your death, but also questions such as:

• Who will make medical decisions for you if you cannot?

• Who will manage your financial affairs if you become incapacitated?

• What are your wishes concerning medical treatment?

• Are the assets you intended to place in your Trust actually in the Trust?

• Have your family, financial situation, or wishes changed since we prepared your documents?

A Trust does not automatically solve every estate planning problem.

Estate planning is not a one-size-fits-all process. Your plan should reflect your property, family, concerns, and goals.

The Trust may be an important part of the plan—but the Trust should not necessarily be the entire plan.

If you have questions about Trusts, Powers of Attorney, Living Wills, probate, or whether your current estate plan adequately addresses your needs, it may be time to have your documents reviewed.

For a no-charge consultation, contact Attorney Burton A. Brown at (630) 381-8017.