Estate Planning 101: The Basics of a Trust, & How to Create One That Is Best Designed for Your Goals

• What are the roles of a grantor, beneficiary, and trustee?
• What does the process of creating a trust look like?
• What types of assets can go into a trust?
• What are the advantages and disadvantages of a trust?
• What are the different types of trusts, and how do you choose one that's right for you?

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Steve Altishin 15:59
So it sounds like this isn't necessarily a do-it-yourself thing. It sounds like this is something where you probably want to talk to an estate planning attorney and maybe a CPA or something like that.

Triston Dallas 16:11
Correct. Especially depending on the types of assets that you have. You know, if you have assets that are going to generate income, or assets that are going to have some tax implications-- like retirement accounts and things like that-- there are a lot more nuances that need to be considered. And that's why it's important to have an attorney and a financial advisor or CPA involved in the process, because you want to make sure that you're not creating unintended consequences while trying to accomplish your goals.

Steve Altishin 16:40
So let's talk about probate for a second, because you mentioned that. A lot of people hear the word probate and they immediately think, 'Oh my gosh, that's terrible.' Why do people want to avoid probate?

Triston Dallas 16:53
Probate is not necessarily terrible. I think that's a misconception. There are absolutely situations where probate is needed and beneficial. But probate is a court process. And anytime you involve the court, there is going to be time involved, there are going to be filing fees involved, and there are going to be certain procedural hurdles that have to be met. So one of the benefits of a trust is that if assets are properly funded into the trust, then when someone passes away, those assets can be distributed according to the terms of the trust without having to go through that court-supervised probate process.

Steve Altishin 17:29
So if somebody has a trust, does that mean they don't need a will anymore?

Triston Dallas 17:35
No, not necessarily. In fact, most times if you create a trust, you're also going to create what's called a pour-over will. And the purpose of the pour-over will is basically to catch anything that was accidentally left outside of the trust. So if somebody forgot to put a bank account into the trust, or they purchased a new vehicle and forgot to title it into the trust, then the pour-over will is going to direct those assets into the trust after death. It's kind of a backup safety mechanism.

Steve Altishin 18:08
That makes sense. So when somebody comes in and says, 'Hey, I think I need a trust,' what kinds of questions are you asking them?

Triston Dallas 18:19
A lot of it starts with goals. What are you trying to accomplish? Are you trying to avoid probate? Are you trying to provide for a child with special needs? Are you trying to protect assets for minor children? Are you trying to minimize taxes? Are you trying to protect assets from creditors? Once we understand what the client's goals are, then we can start talking about what type of trust makes sense, and whether a trust even makes sense at all. Because sometimes a simple will-based estate plan is perfectly sufficient for that person.

Steve Altishin 18:52
So there are times where maybe a trust is overkill?

Triston Dallas 18:57
Absolutely. If somebody has a very simple estate, maybe very few assets, maybe everything already passes by beneficiary designation or joint ownership, then a trust may not make sense for them. That's why it's important to sit down and actually discuss your situation with somebody instead of just assuming everybody needs a trust.

Steve Altishin 19:18
And I imagine laws change too. So if somebody created a trust 20 years ago, maybe they should have somebody look at it again?

Triston Dallas 19:29
Absolutely. Laws change, tax laws change, family situations change. People get divorced, remarried, have additional children or grandchildren, acquire new assets, move to different states. All of those things can impact whether the trust is still doing what it was intended to do. So estate plans really should be reviewed periodically.

Steve Altishin 19:53
So one thing people ask all the time is, 'How often should I review my estate plan?'

Triston Dallas 20:01
Generally, I tell people every three to five years, or anytime there is a major life event. Marriage, divorce, birth of a child, death of a beneficiary, moving to another state, purchasing a significant asset, retirement-- all of those are good times to review your estate plan and make sure it's still accomplishing what you want it to accomplish.

Steve Altishin 20:24
That makes complete sense. So if someone is listening today and thinking, 'Maybe I should look into a trust,' what's the first step they should take?

Triston Dallas 20:35
The first step is really just to schedule a consultation with an estate planning attorney. Sit down and talk through your goals, your assets, your concerns, and your family dynamics. From there, the attorney can help guide you toward whether a trust makes sense, what kind of trust makes sense, and what additional planning documents you may need along with it.

Steve Altishin 20:58
Well, this has been really informative. Trusts always seemed complicated to me, but you've done a great job kind of breaking down the basics and making it understandable. So thanks so much for joining us today, Triston.

Triston Dallas 21:12
Of course. Glad to be here.

Steve Altishin 21:15
And I also want to thank everybody who tuned in today. If you have any questions about trusts, estate planning, or family law issues, feel free to reach out to us. Until next time, stay safe, stay happy, and have a great day.

Outro:
This has been Modern Family Matters, a legal podcast focusing on providing real answers and direction for individuals and families. Our podcast is sponsored by Landerholm Family Law and Pacific Cascade Family Law, serving families in Oregon and Washington. If you are in need of legal counsel or have additional questions about a family law matter important to you, please visit our websites at landerholmlaw.com or pacificcascadefamilylaw.com. You can also call our headquarters at (503) 227-0200 to schedule a case evaluation with one of our seasoned attorneys. Modern Family Matters, advocating for your better tomorrow and offering legal solutions important to the modern family.

Steve Altishin 15:17
I get that. I mean if I say, 'Okay, when I die, you get my house, and you get my cars, and you get my furniture.' I just couldn't, you know, wait to die. I don't have to do anything. But in a trust, you buy new furniture, new cars and new houses, you've got to do stuff. So trusts obviously do a ton of stuff, and they do them in different situations, and it sounds like they do a great job. But what doesn't a trust do? Aren't there kind of myths out there about if I have a trust, it does this? So what don't they do?

Triston Dallas 15:59
Yeah. You know, I would say there are some some pretty common misconceptions about what trusts can and cannot do, or what the grantor or the creator of the trust should or shouldn't do. One of the first ones is, I've created a trust, and so now I'm automatically like protected from creditors, and I avoid estate taxes. It's not accurate. Just because you have a trust doesn't mean that you no longer will incur taxes. Just because you have a trust does not mean that if you pass away that you your estate would not have to pay for your credit or pay off your creditors or anything like that. That is not the case. Now there are things that we can do to limit your potential estate taxes, or limit the ability for some creditors to "go after" certain assets, but it's a little more of a convoluted processes. And you're probably giving up some ability and autonomy over assets. But generally, just having a trust is not going to do those things. Another thing is, and we talked about before, it's like, 'Okay, I created a trust, and I want all my assets to be in there, therefore my trust is going to handle that for me. There isn't anything else you need to do.' And that's also not accurate. Once you create the trust, you must fund the trust. So you can't, like I said, it's not like a Will where you can create the document and say, 'I want these assets to go to this individual,' and you're good to go. With the trust, you can list those things and how you'd want some assets or distributions to go to children or specific individuals. But those assets must actually be owned or titled to the trust before they'll actually pass through the trust. So there's kind of an extra step there. But again, because you've taken that extra step, you wouldn't necessarily have to take that step again, down the line, like through a probate process. Which again, going back to one of the pros of having a trust, is avoiding that probate. And then, one of the things that happens that people think sometimes, is that the trustee is the person that owns the assets in the trust, which isn't accurate. Now, it is important to note that some things will be titled, or if a trustee is going to sign for things for the trust, the trustee will find their name as trustee of the X Y & Z Trust. But the trust itself is the actual owner of what the asset is titled in, not the trustee. The trustee is essentially there just to manage the assets and anything in the trust, whether it be cash or what have you, and to make sure that the instructions are followed as to how distributions or anything like that is supposed to happen based on the trust document. But the trustee is not the actual owner. Now, those are probably the three most common critical myths that I think I've run into, or questions that I run into. Probably that second one is the most common. People think they created a trust and therefore that they're protected, or that their assets are in the trust and, more times than you would think, somebody has a trust and there's nothing actually in it.

Steve Altishin 19:13
So how does someone choose a trust or begin to figure out what trust or kind of trust might be right for them?

Triston Dallas 19:25
Yeah, like I mentioned before, it's going to be based on your goals. It's going to be based on a lot of factors in questions. You know, are you married? Are you single? Do you have children? Do you own a business? Do you have retirement? Are your children dealing with any type of special needs? Do you have firearms? What is your specific health situation? What type of planning things do you want to do? Is there going to be anticipation that there's going to be a lot of taxes? What's your age, as well? I feel like the way that a person may want to deal with a trust and plan is going to be different when you're 35, as opposed to 75. When you're more close to the twilight of life, you're probably going to be a little more willing to do things like an irrevocable trust for some reasons, in order to plan to get certain assets "out of" your estate. So it really just depends. Having a consult with an attorney, and based on your goals and what you want to accomplish, we'll be able to explain or give you options as to routes that you can take. Or advise you or recommend some routes you can take, based on your goals. But like I mentioned before, there are so many different types of trusts, multiple types of trusts that are out there, and that can be used. Life estates, and special needs, and dealing with retirement accounts; all those types of things. And with the ever changing legislation when it comes to estates and taxes and things like that, your goals, and what that person wants, may be different, And they are different today than even five years ago. And so it really just depends on what you want, and what you're looking for. That being said, almost everybody--if their goal is to avoid probate-- there's some way to create a trust in order to do that, if that's the sole goal. But everybody can benefit from potentially some type of trust, but certainly everybody will benefit from estate planning in some way.

Steve Altishin 21:26
You know, you hear the commercials, you hear it said online, 'Everyone needs a trust,' because of the outrageous cost of probate, and you save money, and you save taxes, and you don't pay anything. And that's not necessarily true. I mean, it's like you said, different kinds of trusts have different, not just tax, but vehicles in which they transfer property. And if you aren't thinking about how all these things, you know, atleast your lawyer is. So, final question. What do you recommend that someone does after they make their trust? We talked about this stuff, we talked a little bit about funding, but you know, a trust is made, it's done, and they walk out of your office. What do they still need to be considering?

Triston Dallas 22:27
I mean, the important things is really just, I mentioned it before, that maintenance. Obviously, on the outset, your trust is an actual document that's built, for the most part, in a way to know that the trust is valid, is what the instructions are, and all that. So keep the trust in a safe place somewhere, like you would do with a will, whether it be a safe, safety deposit box, what have you. Keep it somewhere you can access it at any time. Make sure those who are playing a role in your trust, or your estate plan, are aware. Successor, trustees, those type of things. Maybe give them a copy of the document itself. Those are kind of the initial basic things; just to keep obviously, your documents safe in some way where you know where they are. You'll likely be in contact with your bank. And sometimes the bank will have a copy. And they'll ask for a copy of it, or at least a portion of the document itself. But the main things, like I said, are going to be that maintenance. Continue to review the trust, Continue to review, if the grantor or settler is not the initial trustee, continue to review things with the trustee, Make sure that it's complete funded. Make sure it's still following the goals that you are hoping to accomplish. And if your goals change, be willing and ready to have a conversation about maybe, potentially some type of trust amendment, or statement, or change to the trust, if needed, based on changes in your goals. Or, creating a new trust for a whole separate reason. It's really what you need to do with any estate plan. You know, we've mentioned this in many webinars and Facebook Lives that we've done, Steve, between you and I on estate planning. Every few years, you really just need to take accounting of kind of what's going on in your estate and what's changed, where your goals are, where your head is, and what you want to accomplish. A lot can happen in a very short period of time. I mean, just look into the COVID situation. Life has been very different over the last 18 months. And the way that we think about things and do things has been different from March of 2020 to now. So it's just important to keep keep up with all the changes and the goals and stuff you want there. You know, make sure you're not putting things into the trust that you didn't intend to, Make sure you're not removing things from the trust that you didn't intend to. Just focus on the purpose of the trust and keep in contact with your attorney. Trusts are very different from Wills, in a sense. You know, you can--I wouldn't recommend it-- but you can "get away with" creating your own will and still, for the most part, have your wishes followed. Creating a trust without the the advice of attorney is just not recommended in any way. And you're going to run into a lot more issues and problems down the road. So once your trust is created, if there's anything that needs to be done or changed or what have you, just make sure you're in touch with your attorney. And you'll be all good.

Steve Altishin 25:18
So I mean, life happens, like you said. Kids grow up, trustees move to Italy, all kinds of things can happen. And if someone needs to make a change, because maybe their kids now have kids. Or your best friend, who was your trustee, took everything and moved somewhere for whatever reason. It's not a difficult procedure to come in then to you and say, 'Can I name a new trustee? Or what do I do about the kids?' Are these things you can do afterwards?

Triston Dallas 25:59
Yes. So after--considering an example with a revocable trust--yeah, you'd be able to make those changes at anytime, depending on what happened or where your goals are. Or, like you said, life happens, and sometimes there are negative things where you need to readjust and refocus. And whether that's if you need to create a whole new trust, or restate it, or amend the trust, or what have you, you have the opportunity and ability to do so.

Steve Altishin 26:29
And, you know, looking at our law firm, if someone's getting divorced, and they've got a trust, that's the time to come see you.

Triston Dallas 26:36
Absolutely. Absolutely. I mean, like I said, the estate plan is the first casualty for blended families. Just because if you're not paying attention, assets and things are going to point to individuals only, or leave out other individuals. Or things may pass in a way that you may not necessarily want to, despite the fact that your previous documents stated that it did. So absolutely; divorces, births, new children, deaths, all those things are very important times to review and reconsider what your estate plan is, trust or will.

Steve Altishin 27:19
So folks are listening now, and may want to know more about this, or want to talk to you about their particular situation. How do they get a hold of you?

Triston Dallas 27:30
They can give our office a call at anytime at 503-227-0200. And they can set up an initial consultation to discuss their estate plan and their goals, which is a free initial consultation.

Steve Altishin 27:44
I love it. Well, I think we're done. I now kind of understand the basics of a trust. And I really thank you for providing what really is a complex issue and making it easier to understand by folks like me. So again, thanks Triston for joining us today.

Triston Dallas 28:01
Thank you for having me.

Steve Altishin 28:03
Oh, I always like to have you on the other side of it. And I also want to thank everyone who's listening today. We really need you to like us, to come and listen to us, we offer a ton of different stuff. And if anyone has any questions about today's topic, as always, post it here. And you can even shoot me an email at saltishin@pacificcascadefamilylaw.com. And until next time, everyone, stay safe. Have a great day. Thank you.

Outro:
This has been Modern Family Matters, a legal podcast focusing on providing real answers and direction for individuals and families. Our podcast is sponsored by Landerholm Family Law and Pacific Cascade Family Law, serving families in Oregon and Washington. If you are in need of legal counsel or have additional questions about a family law matter important to you, please visit our websites at landerholmlaw.com or pacificcascadefamilylaw.com. You can also call our headquarters at (503) 227-0200 to schedule a case evaluation with one of our seasoned attorneys. Modern Family Matters, advocating for your better tomorrow and offering legal solutions important to the modern family.