Why Get a Trust? … Two Compelling Stories

by David D. Holland


  As a CERTIFIED FINANCIAL PLANNER™ practitioner, I am often asked, “Should I/we have a trust?” My answer is the same every time: “While I have completed specialized training by earning the Certified Trust & Financial Adviser designation, I’m not an attorney and cannot give legal advice. However, if you have assets that need to be managed, conserved, or invested during your lifetime (should you become incapacitated) or after your death (for your beneficiaries), then the answer is probably, ‘yes.’” Here are two recent situations which illustrate my point.


Story #1: “Mark” had accumulated about $2,000,000 by age 55. Divorced and without children, he made provisions for family members and certain charities through a trust. A few years passed; Mark became ill. Since his attorney had recommended a power of attorney document as part of his estate planning, Mark’s bills got paid and his finances remained in good order. I was named his successor trustee and personal representative (executor). Unfortunately, Mark died not long after. I paid his final debts and expenses and then disbursed the remaining assets according to his wishes. Half of Mark’s estate went discreetly to select family members, while the other half went into his trust to be distributed annually to his favorite charities. Mark’s death came prematurely. Without proper planning, his estate would have been in chaos, fees would have been significant, and his assets would not have been distributed as he intended.


Story #2: Including their house and investments, “Larry” and “Lucy” have about $500,000. Their Social Security benefits and pensions allow them to avoid dipping into their savings for income, so they expect to leave a $500,000 inheritance. Their daughter, “Meg” is in her 30s, and is currently unmarried with no children. The couple is concerned about Meg’s lack of maturity and history of substance abuse. They fear inheriting such a large amount of money would be like “pouring gasoline on a fire.” So, Larry and Lucy have decided to establish a revocable trust, which they can amend (for grandchildren) or revoke (if Meg straightens out). After Larry and Lucy die, their assets will go into the trust and it will become irrevocable. The trust calls for a trustee to pay their daughter $2,000 a month for life or until the assets are exhausted. The trustee can also make special disbursements in case of an emergency; however, Meg can’t make the trustee give her any more than $2,000 a month. (Nor can her creditors.) At her death, the trust will terminate and the remaining assets will be distributed to Larry and Lucy’s distant relatives and preferred charities.


It’s easy to see why a trust can be a good idea. If you need advice or trustee services, please call my office; the initial consultation is always free.




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David D. Holland, a CERTIFIED FINANCIAL PLANNER™ practitioner, hosts a weekday radio show at 9AM on AM1380 Ormond Beach, AM1230 New Smyrna Beach and AM1490 Deland. He has also authored two books in his Confessions of a Financial Planner series. Holland offers investment advice through Holland Advisory Services, Inc., a registered investment adviser in Ormond Beach. He can be contacted at (386) 671-7526. Email your financial questions to info@DavidHolland.com.