Ok, What is a Trust?

If you are anything like me, you hate the thought of trying to understand legal terms! I have never had any interest, other than to get it done! We had a very bad legal experience when getting our Trust in place many years ago.

The attorney wouldn't answer any of our basic questions. She said, "Go to my website and all your answers are there." She refused to explain in common English what was happening. She wanted us to give her thousands of dollars and sign the papers while we had NO idea what was going on! We felt outraged and embarrassed and humiliated. It was a terrible experience. I don't think that grown adults should be treated that way!

I wasn't stupid; I just didn't have any education in this area and all I was wanting was basic information. That's why I am passing on this information: I want to take the scare factor out of this legal process. I'm not an attorney, but I am wanting to bridge the gap and give you useful information so that you can speak intelligently with a legal professional if you choose to do so.

If you go to the Merriam Webster Dictionary and look up the word trust, it is a "property interest that is held by one person for the benefit of another."

It is simply a container.

Think of a trust like you would a fish tank – as a container – it's holding items. This mental image was sure helpful for me. It's embarrassing to say that I spent my adult life really not understanding what a trust was, because, frankly, I just didn't care. But, I am assuming that YOU care, and so I want to help simplify this.

Just like a fish tank you can see through, you can see what's in your trust. You place items in the trust, and they move around and they change, just like in a fish tank. Fish go in, fish go out. Things go into the trust and things come out of the trust. It's a living breathing organism, really; that's why it's called a living trust because it is alive and it is changeable.

You create it when you are alive and change it as many times as you want.

Allow me to repeat, you change it as many times as you want!

It does not have to be permanent as long as you are alive. You could change it every day if that's what you wanted to do. It is a good habit to check your trust. After you create it, look over it from time to time.

Every year when you file your taxes, make a little mental note reminding yourself to look at your trust. Ask if you purchased anything new this year that you had forgotten to put in the trust. It's always a good idea to take inventory of what you have and remember to place it in the trust.

When it comes to placing items in a trust, it's basically what you want anyone to get without having to pay taxes for or to wait for. You want them to have it immediately. Probate takes four months up to years and you don't want your loved ones having to suffer while waiting for that legal process to clear. These items in a trust would include your house, whatever vacation homes or primary residence, your accounts and investments. Some bank accounts will be titled POD or TOD (Payable On Death or Transferrable On Death). If you have those, they don't need to go into a trust. But other accounts and investments should be placed in the trust because you want your family to have this money immediately upon your passing. They will need it to pay bills, handle the funeral. Make sure they can get it right away without any trouble. Your vehicles are going to go in the trust and this is super important. If they get stuck in probate, your family cannot use them and they have to wait while still making payments. So make sure they go into the trust. Your businesses, properties, business equipment needs to be in the trust as well so your family can access them immediately.

Now sometimes, you forget to put things into the trust and don't want to draw up new documents or go to an attorney to fix it. There is a way around that, a pour-over will comes to the rescue. It's like when you have a fish tank and you squirt the liquid into the tank to balance the water pH. You are just adding. Let's say you have a vacation condo somewhere and you want your daughter to get it, but your son is wild at heart and you don't want him to destroy it. You know your daughter will take care of it and you forgot to put it in the trust. You can go ahead and create a pour-over will. The items will still have to go through Probate which will take a little bit of time, but it's not the entire amount or quantity of assets that you own. A Pour-over will is for something smaller than all your assets. It will require a bit of a wait as it goes through the process of probate, but your heirs are not waiting for the entire estate to process. It will only be a small part of the estate.

If you forget to add things into your trust and don't have time to get an appointment with your attorney, you can do it yourself with a pour-over will and direct your assets where you want them to go.

Think of it this way, if you will your children a house key, they'll have to wait months for a court to give it to them. A trust is like giving your kids a spare key – if you pass away, they can just let themselves in and feed the cat. 

So, friend, do you have a trust set up?