April 21, 2021

Estate Planning Mistake of Not Having a Trust

Trust is one of the most powerful Estate Planning tool that is available. In this episode of Daily Wisdom, Attorney Chris Berry discusses the pros and cons of having a Trust.

Estate Attorney and Advisor Chris Berry of Castle Wealth Group answers questions on retirement and estate planning every Wednesday at 1pm. Register via this link or give our office a call at 844-885-4200.

Castle Wealth Group and Christopher Berry help families with estate planning, elder law, retirement planning, and tax planning from their offices in Brighton, Ann Arbor, Livonia, Bloomfield Hills, and Novi.

Castle Wealth Group helps families with their legal, financial, and tax planning for their retirement and legacy.

With the use of legal structures like revocable living trusts, Castle Trusts (asset protection trusts), Chris Berry and Castle Wealth Group can help your family plan, protect, and preserve what is important through their Retirement and Legacy Blueprint Process.

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Episode Transcript

Utilizing Trust

Hey there. Chris Berry with Castle Wealth Group. Today we’re going to talk about the estate planning mistake of not having a trust. If you like this information, please make sure to subscribe to our YouTube channel.

Christopher Berry is a leading estate attorney and advisor in the area of retirement and legacy planning. He has been featured in publications such as Forbes, Kiplinger’s, Crain’s Detroit and more. He’s the host of the weekly radio show and podcast, The Chris Berry Show. He’s a national through leader as it relates to retirement and legacy planning and has authored the Amazon best selling book, The Caregiver’s Legal Guide.

One of the big mistakes we see is people not utilizing a trust. A trust is one of the most powerful estate planning tools that’s available. Now, a trust is not for everyone because our process, we always figure out what are your goals, figure out the best strategies to help you achieve the goals and then pick the right tools at that time. Now a lot of times a trust is a tool that we’re going to want to use but not all the time. But, let’s talk about why a trust may make sense. First of all we need to understand what happens when someone passes away. We need to understand estate administration. What happens when someone passes away is that the assets need to transfer to beneficiaries and they transfer through one of four ways. First, joint ownership. Second, beneficiary designations. Third, trust and that’s what we’re going to focus on.

Beneficiary Designation

But if an asset doesn’t pass through joint ownership, beneficiary designation, trust, then it ends up going into probate and that’s what we want to try to avoid at the end of the day because that’s a court process. It’s time consuming and it’s costly. Now you notice I didn’t mention a will because a will does not avoid probate. A will gives instructions to the probate court on how to administer your estate. If you’re looking at avoiding probate, then you’re going to want to rely on either joint ownership, beneficiary designations or trusts. In other Daily Wisdom videos, we’ve talked about the pros and cons of joint ownership. We’ve talked about the pros and cons of beneficiary designations.

Now let’s talk about the pros and cons of trusts. Let’s start with the negatives of the trust. Trusts are typically a little bit more of an investment to set up and also I would say that a lot of basic estate planning attorneys oversell trusts. Because if you’re comfortable giving everything outright to your kids and you’re not concerned about divorces, creditors, bankruptcies and your kids are adults, you might not need a trust. But if you walk into a lot of these basic estate planning offices or trust mills, everyone gets the same basic revocable trust. When we do trusts at our office, typically we’re trying to achieve more goals than just avoid probate. For example, let’s say that your children are adults. You trust them. They have good heads on their shoulders, but what happens if you pass away, leave everything outright to them and then they get a divorce? Where might half that money go? It might go in that divorce.

Trusts Can Protect You

Or what happens if you leave the money to them, you pass away, they inherit it and now they pass away. Where might all that money go? To the in-law, the spouse, who might remarry versus going down to your grandkids. So a lot of times when we’re using trusts, we’re not using trusts just to avoid probate, while they can do that, we’re using trusts to protect the beneficiaries. Not necessarily always from themselves but we’re trying to protect them from the outside environment. Because let me ask you this question. If you pass away and then your child passes away, wouldn’t you want that money to stay in the family, stay in the bloodline, flow down to grandchildren or the other siblings versus going to an in-law who might remarry right away and now that all that money has left the family. Well through a trust that’s what we can protect against. We can protect your children from divorces, from creditors, from bankruptcies and then if they pass away, the money stays in the family. It doesn’t go to the in-law or that spouse so we can protect that bloodline. So that’s something that’s available through a trust.

Also with trusts we can protect you. We can protect you from creditors, lawsuits and very important to a lot of our clients, with the right type of trust, a Castle Trust, we can protect you from the devastating cost of nursing home care or that Medicaid spend down. Does everyone need a trust? No. Is a trust a powerful tool depending on what your goal is and the strategies we’re going to want to utilize? The answer is, yes. So I would consider … And one of the first things that we always do when we’re talking estate planning, legacy planning with our clients, is figure out first what are your goals. Let’s help develop the strategies to help you achieve those goals and then and only then pick the right tool.

Maybe it is a will-based estate plan and you don’t need a trust. Or maybe it is a trust and if it is a trust, we need to figure out what trust is the right trust. Is it a basic revocable trust? Is it a revocable legacy trust or is it a Castle Trust? So there’s more than just one type of trust out there so understand that as well. This has been Chris Berry with Castle Wealth Group. Hopefully you found this information helpful. Thank you so much.

Castle Wealth Group has clients across the nation and helps families plan, protect and preserve what is important by creating a retirement and legacy blueprint.