Why a Living Trust?

Introduction

A Forewarning

Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Chapter 10
Chapter 11
Chapter 12
Chapter 13
Chapter 14
Chapter 15
Chapter 16
Chapter 17

Why a Living Trusts : Trusts Manage & Protect A Young Person's Inheritance

Guarding Against Youths’ Indiscretion With Your Money
Clients are rightfully concerned about a young child’s, or young adult’s ability to properly manage an inheritance. Most would agree that a child under 18 is too young. As well, many do not feel a child is magically old enough the moment they hit 18 either. However, the law says anyone is legally entitled to take over their inheritance if they are at or over the age of 18 -- unless of course you take steps to draft an estate plan that clearly provides otherwise.

If You Are Going To Bother With Trust Clauses Make It A Living Trust
Technically speaking you can specify an older age in a Will. At that point however you are essentially drafting a trust within a Will -- called a testamentary trust. With testamentary trusts the Will is fully probated, and at the end, the probate court signs off on the trust.

The first point to consider is that if you are going to bother to pay for and draft a trust, why not make it a Living Trust to begin with? Secondly, Wills have to transform themselves into something they were never primarily designed to be – a management vehicle. As such Wills do not usually do a very good job of it. Trusts created by Wills not only have to suffer probate, they often tend to be awkward, thin, ambiguous, and poorly written with very limited language.

Living Trusts Are Designed To Manage
It sounds like an odd statement but good Living Trusts are already adept at being trusts. They start their existence this way. The very foundations and primary missions of Living Trusts are specifically built from the ground up to be management vehicles in each and every case. It is the very nature of the beast.

Not so of Wills. Their primary mission does not begin life as that of a management vehicle and in fact the vast majority of Wills contain no trust language. It is not the primary nature of the beast – it has to be added. Since many attorneys who draft Wills are not experienced at drafting trusts this attempted addition often leaves much to be desired.

It is customary for most good Living Trusts to already have 20, 30, or 40 pages of trust clauses drafted and already contained as part of the standard language of the document. (How many 40 page Wills have you seen?) These include management clauses, power clauses, trustee clauses, incapacity clauses, accounting clauses, distribution clauses, definition clauses, etc. These clauses may make for boring reading, but they reflect a long evolution of collective wisdom and experience in the trust legal community as smart and necessary standard language designed to adapt to, flex, clarify and properly address the many situations a trust does or might encounter. As a result it is not much of a stretch for a Living Trust to incorporate an effective, high quality Young Person’s Trust – and in fact most well-written trusts already do. A Living Trust easily adapts to managing assets until 25 and/or 30 (or whatever age you specify) while simultaneously allowing distributions for health, education, and support of the young person.

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