High Five: The Zen Guide to Creating a Trust

Orange City Iowa Estate Planning

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Last week, we talked about the fact that many people see estate planning as an intimidating, even scary, process – only 45% of people have had their will prepared! But we also showed you the zen approach to creating your will with the help of an estate planning expert through planning ahead, organization, communication and clarity. And, surprise, those same principles apply to creating a trust. But, while the principles are the same, the zen of trust planning can be quite different from creating a will. [Read More]

Last week, we talked about the fact that many people see estate planning as an intimidating, even scary, process – only 45% of people have had their will prepared! But we also showed you the zen approach to creating your will with the help of an estate planning expert through planning ahead, organization, communication and clarity.

And, surprise, those same principles apply to creating a trust. You can achieve peace of mind about your financial legacy through trust planning as well, by planning ahead, getting organized, being clear, communicating, and working with an expert.

But, while the principles are the same, the zen of trust planning can be quite different from creating a will.

1. Plan Ahead

The first step toward creating a trust is knowing whether you even want a trust. To make that decision, start by familiarizing yourself with the differences between a will and a revocable living trust. One good resource might be our blog about just that topic: High Five: 5 Big Differences Between Wills and Trusts.

In order to decide whether you want or need a trust, you’ll need to identify what you’re trying to achieve with your estate plan. A trust might be appropriate if you’re looking to keep your wishes and your children’s affairs private or if you want to reduce the costs of administering your estate, but it may also be the best approach if your family has unique needs like a special needs child or grandchild or even just to give your kids access to certain protections that they couldn’t get otherwise.

2. Get Organized

The easiest way to create a comprehensive, complete trust document is to follow a discrete process. The process starts with (1) planning ahead to determine your goals for your estate plan. After you’ve made some decisions about what you want to achieve, you can (2) design a trust that accomplishes those goals. Your lawyer should walk you through those design decisions then (3) draft a trust document to match. Once (4) you sign the trust document, the final step to achieving peace of mind is to (5) fully fund your trust with your assets.

Trust planning is complicated, but it doesn’t have to be difficult. If you follow a series of steps like this, the process becomes quite simple. You can further simplify things by getting your financial information organized in advance. One approach is to keep copies of your property titles, most current account statements, and beneficiary designations together in a single file. That way, when it’s time to fund your trust, you have everything your lawyer will need all together in one place.

3. Be Clear

Clarity is a big part of creating effective trusts. The trust will be in force while you are still living, so it’s important to make sure you spell out how your property should be managed while you’re still living but unable to be trustee. Make sure to include your spouse as a current beneficiary if you want the trustee to take care of him or her when you become incapacitated.

After you pass away, you won’t be around anymore to answer questions about what you meant to do, so it’s important that your trust is specific and easily interpreted. Use plain language whenever possible, but use the correct legal terminology when necessary to achieve your desires. It’s a good idea to include definitions of terms right in the trust document if those terms could be seen as ambiguous.

4. Communicate

The easiest way to avoid hurt feelings or mistrust between your heirs or between your spouse and children after your death is to be as clear about why you included certain terms as your about what those terms are. When children have expectations about how a parent’s estate will be divided between them, a surprise reality that doesn’t meet those expectations can create hurt feelings toward you or toward their siblings. This is especially true when one child is treated differently than the others.

Communicating your reasoning can reduce or even eliminate these hard feelings, but it’s not a cure-all! Sometimes siblings will resent each other because of a personal slight perceived unfairness during childhood, and your passing brings all those hard feelings to the surface. In those scenarios, your clarity about the ‘why’ can protect your other children from undue influence claims.

5. Work with an Expert

Fortunately, you’re not on your own in the trust-creation process. To get real peace of mind that your wishes will be followed, hire an expert to walk you through the needed steps. An expert will talk with you about the effect funding has on your trust’s effectiveness, and they’ll know how to make sure all the necessary accounts flow through the trust to achieve your wishes.

It seems like every lawyer claims to do estate planning, doesn’t it? You need a lawyer who understands that estate planning means helping you control your property while you’re alive and able; taking care of yourself and your loved ones if you become disabled; and giving what you have to whomever you want, in the way you want, and when you want. If you want to find an estate planning expert near you, start by doing an online search for estate planning lawyers at EstatePlanning.com or by searching on the lawyer rating service Avvo.

Creating a trust can be a daunting prospect. But there are ways you can take the stress out of the equation.

Plan ahead and understand what a trust is and does before you visit your lawyer then think through your desires and intentions for your assets.

Find a lawyer who puts you in charge through a simple, straightforward process for designing, drafting, and signing a trust that achieves your goals. Organize your financial information so it’s easy for you, your lawyer, and your loved ones to access when the time comes.

Write your plans clearly and carefully using plain English. Use your trust document to communicate the ‘why’ behind the provisions of your trust.

Most importantly, work with a lawyer who knows the point of estate planning is allowing you to make sure your assets are used, managed, and transferred the way you want, both while you’re alive and after you pass away.

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