Even to me when I first started in this business, the word “trust” evoked an image of some pampered, hot rich kids with overly styled hair, ridiculously small shorts, imbibing on a sailboat off Martha’s Vineyard which I incidentally also picture to be a literal vineyard owned by someone named Martha who looks like the lady on those little boxes of raisins. In spite of my initial assessment I have since found trusts to be extremely useful to people more in line with my own modest pay grade for the following reasons:
First, trusts avoid probate. Probate is the court process wherein a judge orders a deceased person’s property to be distributed to living individuals or creditors according to the terms of a will. If there is no will, this process is the same except the judge orders property to living folks according to the default laws of intestacy. This process can be expensive, and overly long. In Utah a deceased person’s estate must go through probate if they owned a home, had too many vehicles or more than $100,000 in the bank. For most people home ownership is the triggering event. A trust skips the probate process because it holds title to everything an individual owns so that when they die, there is nothing for the judge to issue orders about. This allows a person to flexibly leave their property behind with very low costs of administration and no court.
The second major benefit of a trust for everyday folks is protection during incapacity. Some of the saddest cases I come across are of kids or other trusted persons caught stealing an elderly person’s money. Often there is really no way to recover stolen funds. A trust can be a protection against financial abuse because it appoints specific people to be in charge of funds during incapacity while also putting in place a system of reviews on the actions of those designated individuals. A solid trust plan can also remove the need for relatives to ever need to go to court for a guardianship over an incapacitated adult; this results in more freedom and independence at a time in life when both of those can feel fleeting. Takeaway: trusts can be very helpful to just about anybody.