By Kathi Dunlap
Faith Investment Services
You open your mailbox and see a glossy invitation for a steak dinner, promising a short presentation on Wills or Trusts. Promises like “Avoid probate with a Trust” or “Don’t let the nursing home get everything you’ve worked for” seem to make a lot of sense and who can pass up a free steak?!
We have found, in many years of assisting clients, that “free lunches” don’t always end up free. They come with pressure and can lead people to make decisions they typically wouldn’t make – ones based on emotion, fear, and incomplete information. Here are some guidelines for all financial decisions:
• If you can’t explain it, you probably shouldn’t sign on the dotted line.
• If it sounds too good to be true, it probably is. If you are not sure that it is as good as someone says, seek counsel from outside advisers – unbiased professionals, trusted family members or friends, and/or experienced advisers.
• What you don’t know CAN hurt you.
• If you don’t have an ongoing relationship with the adviser, you might not know whether they have your best interest in mind or not. Watch out for transactional advisers – whether lawyers, tax professionals, or financial advisers. Go for relationships built on trust!
Here are some specific guidelines for using a trust to handle the distribution of your assets:
• They are not needed in many cases. Most assets can be passed directly to heirs through beneficiary arrangements or TOD/POD (transfer on death) designations. Nearly all of your assets can be passed without going through probate…without the use of a complicated trust.
• An irrevocable trust is often advertised as ‘protecting your assets from Medicaid’ in the event of a long-term care situation. However, the word irrevocable should be taken quite literally. If you sign an irrevocable trust, you are giving up rights to your assets and this process is irrevocable (NOT able to be revoked or changed.) There are all kinds of tricks that can be played here (such as attempting to keep control through a friendly trustee, etc.) but when you maintain control you may be subject to Medicaid’s ‘look back’ and they can overturn the idea that the trust was ever irrevocable in the first place. You cannot “have your cake and eat it too.”
• Most people do not properly title the assets that they intend to put into a trust. There is significant time and effort involved in keeping to the legal statutes once you set up a trust. It is not a one-and-done type of affair, but must be maintained as you buy and sell assets over time. Depending on whether the trust is revocable or irrevocable, you may not actually have the authority to do the buying and selling yourself but it may require your trustee to do it according to their discretion.
• Places like Legal Zoom, Rocket Lawyer, etc. are designed for do-it-yourselfers. But let’s be honest – if you knew how to do it yourself and knew all of the ramifications of a major legal decision, you probably could just write the contract or trust yourself, right? The catch is – most people don’t know law. They just want a quick-fix to avoid some pain or get some perceived gain. On big decisions like this, wouldn’t it be wise to consult trusted advisers who know you and know your situation BEFORE you take action?
Contact us if you’d like to have a no obligation conversation about your options for estate planning. Faith Investment Services 419-358-4207 or www.myfaithinvestments.com/contact
**The information within should not be considered as tax or legal advice. Neither Faith Investment Services, LLC nor the CFD companies offer legal or tax advice. Advisory Services are offered through Creative Financial Designs, Inc., a Registered Investment Adviser, and Securities are offered through cfd Investments, Inc., a Registered Broker/Dealer, Member FINRA & SIPC, 2704 S. Goyer Rd., Kokomo, IN 46902. 765-453-9600. Faith Investment Services is independently owned and not controlled by the CFD Companies. Neither Faith Investment Services, LLC nor the CFD companies offer legal or tax advice.
