What Questions Should You Ask about Trusts?

Estate planning is a complex process, not a standardized product with a set price. Every trust must be tailored to the individual’s goals, assets, family dynamics and tax situation. According to a recent article from Forbes, “If You’re Asking What a Trust Costs, You’re Already on the Wrong Path,” a truly effective plan requires defining objectives, evaluating various trusts and estate planning strategies and then creating a personalized structure.

There’s no such thing as a standard, packaged, one-size-fits-all trust. The number of different provisions and languages used in any document is considerable. When beginning the planning process, here are some of the questions to ask:

• How many trusts should be created?
• Which assets belong in which trusts?
• Should the transfer of assets be structured as gifts? Sales? Some combination of the two?
• What level of control should beneficiaries have?
• Similarly, what level of control should the settlor creating the trust have?
• What state is the trust in, and how do the state’s laws impact what the trust can and cannot do?
• What tax risks are acceptable, including state and local gift, estate, inheritance, and income taxes?

Any estate plan and trusts evolve as these questions are explored, refined and aligned with the person’s goals. There are more questions to consider: the structure of the trust, whether to use one or several trusts, in which jurisdiction to establish the trust and whether to incorporate charitable planning into the overall estate plan.

Some people like to simplify things. However, while this may seem like an easier solution, doing so may also end up costing heirs far more in the future. A simple plan may be more vulnerable to taxes, creditor claims, or internal family disputes.

Using pricing comparisons for estate planning and trusts can lead to a poorly designed plan with poor outcomes. What appears to be a lower-cost plan can often be far more costly in the long run.

Yes, cost matters. However, it should be considered after all of the objectives are clear, not before. A better question to ask: “What are we trying to accomplish—and what’s the best way to achieve it?”

Legacy One Law Firm, APLC is an estate planning and probate administration law firm in Los Angeles, California, serving families throughout the State. We help individuals and families establish living trusts, wills, powers of attorney, advance healthcare directives, and other essential estate planning documents designed to protect their loved ones and preserve their legacy. Schedule a quick and easy consultation with estate planning attorney Sedric E. Collins, Esq., or call 323-900-5450.