Why You Might Consider a Trust as Part of Your Estate Plan - Part 2

In Part 1, we covered the idea that a Trust is not relegated to those we would consider wealthy. It is more appropriately viewed as a tool that works for some people, but not others, depending on whether or not it relieves one of our “Hurt-Points”. Some areas that Trusts are especially helpful with are parents with minor children, families with individuals that have special needs, and people that have real property in more than one state. Since this is part 2, there are a few more “Hurt-Points” to cover. Again, some may strike you, or you may not be affected at all.

Anyone That Want to Keep the Government Out of Their Affairs

For many, it comes as a surprise to learn that having a valid Will not only goes through Probate, but actually requires it. Probate is a State, and many time County, controlled court process. It is a civil lawsuit, with evidentiary processes, hearings, timelines just like other lawsuits. Idaho does have an Informal Probate process that is used in many cases. A case initially filed as informal can quickly lose that characterization and become a full fledged formal proceeding, although this does not always happen.

Anyone That Wants to Maintain Their Privacy

Again, having a Will or no plan at all guarantees Probate. Probate is a Court Process and your case becomes part of public record. That means at any time, anyone can go down to the courthouse and request the Probate filings for that day, week, or month and those requests will be granted. Conversely, a Trust is a private document that does not require Probate and does not become part of public record. Here are a few high profile celebrities that had Wills and not Trusts that are easily searchable on the internet:

Anna Nichole Smith - http://i.a.cnn.net/cnn/2007/images/02/16/pleadings021607v2.pdf

James Gandolfini - https://cbsnewyork.files.wordpress.com/2013/07/gandolfiniwill.pdf

Mark Twain (AKA Samuel Clemens - Keep in mind that Mark Twain passed away in 1910 and we can still access this) - http://livingtrustnetwork.com/estate-planning-center/last-will-and-testament/wills-of-the-rich-and-famous/last-will-and-testament-of-samuel-clemens-mark-twain.html

People That Own Property in Joint Tenancy

Unless this is a married couple titling their assets as Community Property With Rights of Survivorship, this is potentially the scariest item listed. It is scary, because people elect this thinking they are doing a good thing by avoiding Probate, but do not realize the substantial potential risks involved. Typical situation, a parent has one child. Parent puts child on deed to home, thinking that parent will pass first and child will inherit without the need for probate. In a perfect world, this can work. However, our world is not perfect and here are a few risks.

  1. Incapacity of either the child or parent would make any transaction with property impossible without a court resolution or a power of attorney;

  2. Probate is not avoided if both die simultaneously. In Idaho, within 120 hours (5 days) is considered simultaneous;

  3. Wills invite litigation to any interested party to discover deceased person’s intent and whether or not they were pressured into making the decision to add the child onto deed;

  4. Probate is not avoided for the surviving owner; and

  5. A creditor of child can attach to and take parent’s home, because legally child owns it.

If any of these topics are “hurt-points” for you, call to schedule a free conversation with Jeppesen Law to see what your risks are and how to go about minimizing those risks. 208-477-1785