A couple with grown children
Say you have older, responsible kids. Why would you need a trust? It may protect your kids’ inheritance in the future, Stone said. While a revocable living trust you set up for yourself is not protected from creditors, under Florida law, assets that you pass to heirs in a trust are protected.
For example, if your son is a doctor who gets sued for malpractice, an inheritance in a trust would be protected. If your daughter goes into business and defaults on loans, creditors would not be able to touch the assets in a trust.
“Most people don’t live in fear of creditors,” Stone said. “But a trust can protect any child from potential creditor concerns.”
Another issue is children in bad marriages. If a child divorces, a trust can protect assets from a greedy ex-spouse, he said.
Families with second marriages
If a husband and wife have children from previous marriages, a trust can direct who gets assets if one dies.
For example, if a couple doesn’t have a trust, and one dies, everything in the couple’s joint accounts goes to the surviving spouse. That’s the case even if the deceased person intended to leave money to children from a previous marriage.
“We see that all of the time,” Gauthier said. “The titling of accounts is one of the most important parts of planning.”
A family with a special needs child “needs a trust to take care of that family member, and to protect their government assistance,” Gauthier said. A family member who is not good with money also can benefit from a trust, to have assets portioned out to them over time.
Can you DIY?
“In some cases it can work, but it’s easy to mess it up,” Stone said. He remembers the owner of a huge resort used a $99 will and trust kit he got in the mail to manage his $5 million estate. The estate racked up $500,000 in legal bills trying to fix the mistakes.
Look for an estate planning attorney, he said.
“If you’re scared of lawyers, go to a good financial planner or a trust planner at a bank,” he said, but be careful that the person you go to does not use the process to get their foot in the door to sell you other products that you don’t need.
“Sometimes it’s hard to distinguish whether someone is trying to sell a product or give you advice,” Gauthier said. “A product pusher sometimes sounds like a product planner.”
An estate plan that includes a will, trust, power of attorney and living will cost $1,500 to $3,000, the experts said. The price could rise to about $5,000 with the addition of specialized trusts.
If you open a trust, read it or have your attorney or financial planner summarize it to make sure it does what you think it does. Then, you have to retitle your assets to go into the trust. Revisit your plan every few years, because you’re financially active all of the time, Gauthier said.
“If you do get a trust, don’t go home and put it in a drawer or safety deposit box” and forget about it, she said.