By the time I meet with clients (usually in their 50s or 60s, if not older), they have a pretty good idea of how
their children will make out: whether their marriages will be successful, whether they will have children, and what
their prospects are for a sound financial future. All this is good to know when preparing an estate plan.
Lately I’ve been seeing a lot of clients who have done well financially themselves, but who can see that their children
are never going to enjoy the same level of material success as they did. They love their children and grandchildren to death
— but they worry about how they will fare financially in the future. Typically these clients have two main concerns:
- Providing a mechanism to assure that their children will have
something to live on when those children are no longer able
to work. - Providing their grandchildren with the ability to get a college
degree without being burdened with a large debt.
With respect to each of these concerns, there is more than one
way to approach the issue, and there are special considerations
with respect to each approach.
For many people, the process of estate planning begins with the question: “Do I need a Trust?”
In the remainder of this article, a question and answer approach will be used to help the reader understand what a “Trust” is, and what considerations go into deciding whether having a Trust would be beneficial in their situation.
What is a Trust?
A Trust is an agreement. In fact the term “Trust” is shorthand for “Trust Agreement.” agreement is between the person who creates the Trust (the “Settlor,” sometimes also known as “Grantor”) and the person who receives the property from the Settlor, the “Trustee.” The Trust is the document that spells out the manner in which the Trustee will handle any property that the Settlor transfers to the Trustee.