In our recent estate planning blog posts, we’ve explored different types of trusts. Today’s post explores another benefit: longevity.
Specifically, a trust allows for long-term estate planning in a way that wills cannot. As readers know, a will generally must go through probate. Unfortunately, state law generally requires that probate -- and the accompanying settlement of debts and distribution of assets -- to be completed within a specific period after an individual’s death.
A trust does not suffer from that same time limitation. In fact, a trust document could direct the trustee to withhold the trust principal until beneficiaries reach a certain age. A trust may even withhold some principal to allow for the contingency of grandchildren.
Similarly, the benefit of time allows a trust to be more flexible in other ways. If a surviving spouse is a named beneficiary, a trust could contemplate the possibility of that spouse adopting children after the trust grantor’s passing. In vitro fertilization and other assisted reproductive technologies also make it possible for a surviving spouse to use the frozen sperm or egg of a deceased individual. A trust is a way to approach even this possibility.
Of course, it almost goes without saying that estate planning is a gentle reminder to prepare for emergencies. By establishing a trust, a grantor can take an inventory of all of his or her assets and get a better idea of the financial estate that will pass to beneficiaries. Since a trust also involves a trustee -- which might be the grantor’s attorney -- it is another way to ensure that beneficiaries will not be scrambling after a grantor’s death to access email accounts, find where important papers may be kept, and respond to creditors.