When meeting with clients for their estate planning matters, regardless of age, health or marital status, I always recommend that the clients have a Will, Durable Power of Attorney, Health Care Proxy and Declaration of Homestead (if they own real estate).
For clients who have minor or disabled children or grandchildren, I would also recommend that you have either a revocable trust or a testamentary trust in place to receive any share of your estate that you leave for the benefit of your children and/or grandchildren.
A revocable trust is a separate trust document which can be funded during your lifetime if desired, but is usually funded at death through your Will and beneficiary designations. The creators of the trust (settlors) can amend or revoke the trust during their lifetimes. Since the revocable trust is a separate document from your Will, the terms of the trust are only available to the trustees and beneficiaries. It does not get filed with the court upon your death. The clients are usually the initial trustees and alternate trustees would be named to serve in the event of your own incapacity or death.
A testamentary trust is a trust created within the terms of your Will. Upon your death, your Will will “pour over” assets into the testamentary trust. Since your Will gets filed with the Probate Court upon your death, it becomes a public document. This type of trust is for clients who do not plan to fund a trust for their children or grandchildren during their lifetimes and who are not concerned about privacy.
Some of the reasons to have a trust for a minor or disabled beneficiary are:
- To ensure that the beneficiary is not inheriting assets outright upon your death leaving them subject to a person’s control that is not of your choosing;
- So that you have a trusted individual or individuals who will manage the assets as trustee(s) for your minor or disabled beneficiaries until they reach an age of your choosing;
- So that you can control how and at what age you want distributions to be made to the beneficiaries; and,
- If you have a disabled beneficiary, I can help create a special needs trust to help preserve eligibility for any public benefits he or she will be or is receiving.