|
Getting your Trinity Audio player ready...
|
Wills and Trusts are important documents. Some are simple, some are complicated. They are, however, necessary for a smooth transition of your wishes after death.
A trust is basically a holding company for assets. It’s a document that allows your assets to pass to any beneficiary without going through a probate process. The creator of the trust is called the grantor and, in a revocable trust, the trustee. After death the successor trustee disburses the assets per the instructions in the Trust. A trust does not go through probate (the Courts) and everything in it remains private. All assets (cars, house, bank accounts, stocks, etc.) MUST be titled in the name of the Trust. An “unfunded trust” creates a Will and goes through probate.
There are two types of trusts. Revocable (you oversee all your assets) and Irrevocable (once signed you cede control of all your assets to another person or entity.) Both have their uses and depending on the amount of assets at issue there might be more than one trust.
John Ritter, one of the stars of “Three’s Company” died very suddenly at the age of 54 from a torn aorta. His estate was passed on to his wife and children with little fanfare because it was in a trust. His widow sued the doctors who treated him and a settlement was reached. The proceeds from the lawsuit went into a pour over will which leaves property not mentioned in the trust, to the trust. Once in the trust, the settlement is private.
A Will is a document that states what assets to pass to which beneficiaries. It’s less expensive to draft, but many dollars can be spent taking the Will through the probate process. The more complicated the Will, the more complicated the process. It’s also a public document.
IMPORTANT DIFFERENCE: Creditors cannot collect from a Trust unless they’re specifically mentioned. In a Will, creditors can file for payment and will be the first paid out of the proceeds.
Joe Robbie, the owner of the Miami Dolphins (and a lawyer) had a trust. When he died, everything went to his wife Elizabeth who would receive trust income for the rest of her life and upon her death the body of the trust would go to the named beneficiaries, his living children.
Mr. Robbie’s largest assets were the Miami Dolphins Football team and Joe Robbie Stadium. At the time of his death (1990), nine of his eleven children were alive. Three were named successor trustees and one offspring, Mike, worked for the Dolphins. The trustees fired Mike and sold 15% of the team. This infuriated their mother who then demanded her elective share. (An elective share allows a married woman to claim 30% of her husband’s estate).
The trust was set up to defer taxes until after her death which means if she were given her ‘share’, taxes would be due. The fight began. Mrs. Robbie died before its conclusion, but the courts found for Mrs. Robbie and that meant the estate owed $47 million in taxes plus interest. The team and stadium had to be sold. Her estate was shared among six of the nine children. (She left the three original trustees out.) The family is still not on speaking terms.
Bottom line, prepare now. Find an attorney you trust and let him or her guide you. Whether you’re worth a hundred thousand or a hundred million, peace among the beneficiaries begins with your Trust or Will.
About Frances Reaves
A graduate of University of Miami Law School, Frances spent ten years as a litigator/lobbyist. Today, she is an accomplished business woman who, when her parents could no longer take care of themselves, learned the ins and outs of senior care (or the lack thereof). She founded Parent Your Parents to assist seniors and their children through the myriad of pitfalls and options of “senior care” in the 21st century. You can contact her at parentyourparents.com
