You’ve probably heard about trusts on popular TV and radio shows. Here are answers to some frequently asked questions about trusts:
Trusts – Defined
Is a trust different from a basic will?
Yes. While both a will and trust state who should inherit your property, only a trust can specify not only who inherits assets but how, when, and for what purpose. A trust also includes incapacity planning, and can protect a beneficiary’s inheritance from creditors and predators.
A will is still critical for parents with minor children as a will is the only place a parent can name a guardian for a child. Read more about Wills vs. Trusts
Who is in charge?
While you are alive and able, you are both the trustee (trust manager) and trust beneficiary. You will name a successor trustee to serve after you and beneficiaries to inherit trust assets.
Can a trust be changed?
Yes. You as the trustmaker can amend, restate or revoke the trust at anytime while you are alive and have capacity.
Does an old trust need to be changed?
Probably. As time passes, things change which can affect the functionality of your trust. In 2010, Arizona dramatically revised the Arizona Trust Code. As such, we are restating all pre-2010 trusts to correspond to these changes. Also, if your trust was drafted in another state you absolutely want to update it to reflect Arizona law.
Do you need certain assets for a trust?
No. While trusts are often beneficial for larger estates, those with modest estates can also benefit from a trust. Avoiding probate, specifying how and when assets are distributed and creditor protection are advantages everyone can benefit from.
Are there special situations when a trust is required?
Yes. Planning for a disabled beneficiary may require a special needs trust to ensure that the beneficiary remains eligible for benefits like Medicaid. We also recommend trusts to address the unique considerations of blended families.
Will a trust avoid probate?
Yes if properly funded. Probate includes the court’s oversight of transferring assets from a deceased person to the heirs. Trust funding is the process of transferring assets out of your name and into the name of the trust. Since the trust which “survives” the person, no probate is required when assets are all owned by the trust. Read more about using a trust to avoid probate.
Do you need a trust?
Maybe. It depends on your family situation, assets and estate planning goals. While everyone needs some basic estate planning, like a will and healthcare directives, many people can also benefit from advantages like avoiding probate and protecting inheritance from creditors/predators. Read more about who needs a trust.
We want to make sure you have the information to make the best decision for you and your family. Call Powers & Neal today at 480-699-7992 to discuss your estate planning needs and if a trust is right for your family.