Ep 6 - Should I suggest a trust for my parents? Explained in less than 10 min.

In this episode, Melissa takes you through the research she did on the topic of Trusts and Wills. And the conclusion she came to for her family. Hopefully this episode will inspire you to give this topic more thought! Together we thrive. 

Transcript

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Welcome to the Helping Our Parents Thrive podcast. I'm Melissa Uppleshoden, your host. I created this podcast to support adult children of seniors like me. I interview experts on topics related to aging, but with a focus on how we, the adult children of seniors, can best support our parents without losing ourselves today, we are digging into the extremely important, but unglamorous topic of wills and trusts. I'm glad you're here. I had this revelation while I was working on this podcast that in a way I am using this as an accountability tool. I have been procrastinating doing this research for my parents, and by committing to our Hop Thrive community, I cannot procrastinate any longer. This is just one of those topics that you think that you can keep putting off, because really, I don't need it right now. Both of my parents are healthy and alive, right? But we have no idea when our parents last day will be, or ours for that matter. So I needed a fire lit underneath me to actually do it. So thank you. Now on to what I learned. The reason I started looking into this is because I kept hearing the word trust coming up in conversations among people that I really respected in the finance world. I figured I better at least know the basics about it and know whether it's a tool that would be helpful for me to suggest to my parents. And I know they would want to make it easier for us to handle their estate when they eventually do pass. So let me cut to the chase though. So for our family, I am not going to recommend that my parents get a trust. And in the rest of this episode, I will take you through what wills and trusts are and why I made that decision. But a huge disclaimer, I did this research for my family and what I am suggesting for my family may not be the right decision for your family. So please do your research. It is my hope that this podcast will inspire you to do that and to put a plan together. Let's dig in. First, the basics. What is a trust and how does it differ from a will? A trust is a legal arrangement where a third party known as a trustee Is assigned to manage someone's assets based on their instructions and a trust starts working the moment it is signed and continues while they're alive. And after they pass. This is why you sometimes hear it being called a living trust at times. Importantly, a trust does not avoid estate taxes in most circumstances. However, tax laws do vary state by state, so check yours out. I originally thought that we could avoid it and I live in Georgia, but that is definitely not the case. The main goal of a living trust is to keep heirs from having to go to probate court where assets are reviewed and distributed And it can be a very lengthy process. Now A will is a legal document that describes how someone would like their property and other assets distributed after their death. That is a key. It doesn't take effect until after their death. A will must go through a probate process involving lawyers and the court to ensure that the assets are being distributed according to the will. It typically takes 18 months and can cost between 3 7 percent of the estate and even more if it's a smaller estate. Another scenario is if somebody dies without a will or a trust. This is called intestate. And the state statute determines how the assets would be distributed in this case. And it also involves a probate lawyer. Now Let's explain trust a little bit further. In order for a trust to work, you have to have assets that are transferred into the trust. This is called funding the trust, and there are two types of assets. One are probate class assets, and the other are non probate class assets. Let's start with the non probate. These are assets that have a beneficiary listed in them, such as a retirement account, life insurance policy, or bank accounts. These types of assets, non probate assets, do not have to be moved into a trust in most circumstances, because they have a beneficiary listed on them, but make certain that a beneficiary is indeed listed For probate assets. These are things like personal items, house, rental property and stocks where there is typically not a beneficiary listed these assets. must either go through the probate process, but if your parent has a living trust, you can avoid that process by transferring those assets to the trust. For anything with the deed, you would formally transfer that item to the trust via the deed. But for tangible assets, such as family heirlooms and jewelry, when your parent sets up their trust, they will use a document called a transfer document to indicate where those tangible assets should be distributed. So, here are a few things to note. A grantor is the person who has the assets that they want to pass along. A trustee is a person they ask to manage the trust, and the trustee then distributes the assets to the beneficiaries upon their death. So, again, with the trust. The process is supposedly much faster. Another benefit is that there are also some unique ways that you can manage your assets within a trust. Ways that are not possible in a will. I remember my great aunt left a little bit of money to my daughter in her will. But my son wasn't born at the time when she wrote her will. He was alive when she passed, but he wasn't specifically listed in the will, so he wasn't included If she had a trust, she could have addressed that. And I know that she would have wanted to include my son in her will, So bottom line, trusts are faster and you can be more creative. Those are the basics. Now, let me share the four reasons why I decided to suggest my parents go the will route versus the trust route. So, number one, believe it or not, my parents and all of my siblings and I live in Georgia. The probate process here is rather simple, which means it's not going to be as costly for us. Number two, no one in my family is in a huge hurry for assets. We will be very grateful for any assets, but no one is in dire need, thankfully. Number three, my parents assets are mainly non probate. And number four, my siblings and I actually like each other, which makes things easier. If any of those situations were not true, we most definitely would consider a trust. And in that case, if it was a complicated estate, I would hire an estate Planning lawyer. I found one locally just by Googling. I had an initial introduction call with her and she made me feel incredibly comfortable and her reviews were just amazing. So if you are in the Atlanta area and you would like her information, please just email us at hello at hop thrive. com. Now if somebody has a rather simple estate, I would go with trustinwill. com. Their reviews were absolutely phenomenal and the cost can't be beat. At the time of the recording, it was 499 for an individual and 599 for a married couple. That includes unlimited changes for the first year. Just to clarify, I am not sponsored by trust and will or the estate lawyer that I mentioned previously. So, that is the sum of my research. Thank you again for helping me cross this to do off my list. My next action here is to share my findings with my parents and my siblings. And my siblings and ensure everyone's on the same page. If you need some accountability, please join our Facebook group, helping our parents thrive. You can find out more at hop thrive, H O P T H R I V E. com. Thanks for listening. I appreciate the opportunity to serve the hop thrive community and for all the aligned, caring adult children. It is attracting like you. If you got something out of this episode, please be sure to follow or subscribe wherever you listen to podcasts. And please share both the Helping Our Parents Thrive podcast and Facebook community with anyone that you may feel needs a little support as well. us at hopthrive. com for more information. Together we thrive.