Continuation of the 5 P's
Today, we are picking back up on last week's #FindOutFriday post to talk about the last 3 of the Trust P's.
3. Prevention - Trusts are a wonderful tool to use in blended families because they can be structured to prevent the accidental disinheritance of children. Every day kids are being disinherited because their mother or father gets remarried and prepares a Will that says everything goes to my new spouse if I die and to my kids if my spouse is also deceased. If you new spouse survives you, your kids will not see a dime of your estate. Everything will go to your new spouse. And whom do you think your spouse has as the beneficiaries to his or her Will? His kids or her kids...not your kids. I've worked with clients who have seen the family house, the family land, the family business end up in the hand of someone outside the family because of this simple, but costly, mistake. A revocable living trust can fix that in a way a Will cannot.
4. Protection - As I mentioned in last week's post, there are huge privacy issues at play here. The best way to protect your loved ones from those who might prey upon them due to their newfound wealth and inheritance is to never let that information get in the public domain in the first place. That's the kind of protection a trust provides. But the trust also offers protection when it comes to creditors. As long as the money is being held in a trust and is not in your heir's hands, no creditors can come after that money. A trust can also be used to protect the heir from himself or herself. For example, if a loved one has money management issues, has drug or alcohol dependency issues, is too immature to be financially responsible, or is in a destructive relationship, safeguards can be put in place in the trust. A Will simply isn't designed for this level of complexity.
5. Preservation - In North Carolina, a trust can live on into perpetuity. There is no required end date to a trust. A trust can be used to preserve wealth for generation after generation. It can also be used to preserve income streams (such as the income a rental property provides) for your children or grandchildren. In other words, there is no requirement that the property be sold or that stocks be liquidated if these assets are being held in trust. Not all states allow trusts to live on indefinitely, but we are fortunate that North Carolina does.
This discussion of the 5 P's is not intended to be an exhaustive presentation of the benefits of revocable living trusts. But it does hit the highlights. If you would like to learn more about how a trust might be beneficial for you or your family, please give us a call to schedule a consultation - (919) 678-5761.