New York residents who were saddened by the deaths of celebrities Joan Rivers and Robin Williams could also be interested in a glimpse into how they managed their finances. Trusts played a big part in the way that both of their estates were managed. Because of them, their loved ones won't be forced to deal with avoidable financial complications regarding their inheritances. As the public interest in trusts since their deaths has increased, the usefulness of trusts could become something that many more individuals and families are seriously considering. There are, however, three common myths regarding trusts that can be easily dispelled.
The first misconception is that trusts are only an option for the rich and famous. The fact is that many less wealthy people should consider the advantages that a trust can produce. While legal fees associated with the creation of a trust may in some cases be higher than the costs of preparing a will, the fact that probate can perhaps be avoided later on can result in overall cost savings.
Many believe that the funding of a trust with non-cash property will require burdensome work in properly changing the title to those assets into the name of a trust. In reality, what may only be required for some financial assets is to add a provision stating that those assets will be payable to the trust upon the death of the owner.
While many people think that trusts are only valuable after the owner dies, that is also not the case. The trust instrument can include provisions directing the trustee to make certain decisions regarding its assets if the owner becomes incapacitated. The most significant advantage of trusts is their flexibility. An estate planning attorney can work with a client to determine whether such a vehicle is appropriate.
Source: Daily FInance, "3 Myths About Trusts That You Can't Afford to Believe", Dan Caplinger, September 20, 2014