Filbrandt Reports

Celebrity Duo Had Trust

Volume 17, Issue 3

Executive Summary:

Trusts are often used to place assets such as investment accounts under the control of someone the account owner “trusts,” so the assets will be transferred to heirs or others as intended.

Trusts are not exclusively for the wealthy, contrary to popular belief.

A living trust has advantages over a will, including that it avoids probate and may save you money.

  • A living trust provides privacy
  • Handling out-of-state property
  • Choice of trustee

Filbrandt & Company provides counsel and service on a comprehensive suite of trust options.

Carrie Fisher, Debbie Reynolds Protected Family With Trust Prior to Their Deaths

The death of actress Carrie Fisher just before the end of the year was a shock to her many fans. But it was something for which the Star Wars star had planned.

Fisher had considered her own mortality, and had made arrangements for the benefit of her daughter, actress Billie Lourd, prior to her unexpected passing.

“We want (Lourd) to have whatever she wants. Carrie wanted that,” said Todd Fisher, 58, Carrie’s brother. “There is a trust set up.”

The terms of trusts are private, but it is likely that Lourd will inherit portions of the fortunes of both her mother and her grandmother, actress Debbie Reynolds, who died 24 hours after her daughter Carrie.

In a scenario in which two family members pass within 24 hours like Fisher and Reynolds, the estate process could have been chaotic if not for their forethought to create a trust.

Filbrandt & Company often recommends a trust to our clients as part of our comprehensive financial planning service, which includes estate planning.

According to the IRS, a trust is a relationship in which one person holds title to property, subject to an obligation to keep or use the property for the benefit of another. Trusts are often used to place assets such as investment accounts under the control of someone the account owner “trusts,” so the assets will be transferred to heirs or others as intended.

Common misconceptions about trusts include that they are only for the rich. Even though most wealthy families have trusts in their estate planning, they are a minority of trust customers.

Celebrity Duo Had Trust

Other Common Misconceptions About Trusts

  • A trust is expensive. There is expense in establishing a trust, more than starting a typical investment account because trust documents must be drafted by a lawyer. A trust costs more because it does more.
  • A trust “ties up” your assets. The restrictions imposed by a trust are potentially for asset   protection. Therefore, it is an advantage, not a disadvantage.
  • the person who specifies that the trust be created, usually as a part of his or her will, but it may be set up in abeyance during the person's lifetime. This person may be called the grantor or trustor, but is usually referred to as the settlor;
  • The trustee, whose duty is to carry out the terms of the will. He or she may be named in the will, or may be appointed by the probate court that handles the will;
  • the beneficiary(s), who will receive the benefits of the trust;
  • Although not a party to the trust itself, the probate court is a necessary component of the trust's activity. It oversees the trustee's handling of the trust.
  • Asset protection trust: designed to protect a person's assets from claims of future creditors. These types of trusts are often set up in countries outside of the United States, although the assets do not always need to be transferred to the foreign jurisdiction.
  • Charitable trust: benefits a particular charity or the public in general. Typically charitable trusts are established as part of an estate plan to lower or avoid imposition of estate and gift tax.
  • Special needs trust: set up for a person who receives government benefits so as not to disqualify the beneficiary from such government benefits. This is completely legal and permitted under the Social Security rules provided that the disabled beneficiary cannot control the amount or the frequency of trust distributions and cannot revoke the trust.
  • Spendthrift trust: established for a beneficiary which does not allow the beneficiary to sell or pledge away interests in the trust. It is protected from the beneficiaries' creditors, until such time as the trust property is distributed out of the trust and given to the beneficiaries.
  • Tax by-pass trust: created to allow one spouse to leave money to the other, while limiting the amount of federal estate tax that would be payable on the death of the second spouse.

living trust (sometimes called a "revocable" trust) is a written legal document through which your assets are placed into a trust for your benefit during your lifetime. After your death, the assets are transferred to designated beneficiaries by a "successor trustee" of your choosing.

On the other hand, a will is a written legal document with a plan of distribution of your assets upon your death. Your executor, as named in the will, oversees this process, and notably, nothing in your will takes effect until after you die.

Celebrity Duo Had Trust

Advantages of a Living Trust Over a Will

  • A living trust avoids probate: This often means a faster distribution of assets to your heirs—from months or years with a will down to weeks with a living trust. Your successor trustee will pay your debts and distribute your assets according to your   instructions. Notably, both documents allow you to choose a guardian for your children in the event of your death.
  • A living trust may save you money: The costs for probate are taken from your estate. More importantly, the time cost involved with probate is unknown and can be expensive in prolonged in many ways.
  • A living trust provides privacy: A living trust is not made public, so upon your death, your estate will be distributed in private. A will, on the hand, is public record and so all transactions will be public as well.
  • Handling out-of-state property: With a will, that property will have to go through probate in its own state; a living trust can help you avoid probate.
  • Choice of trustee: A living trust is written so that your trustee can automatically jump Into the driver's seat if you become ill or incapacitated. On the other hand, if you simply have a will without a durable power of attorney, the court will appoint someone to oversee your financial affairs who will have to report to the court for approval of expenses, sales of property, etc.

Another type of trust we often recommend is a testamentary trust. Unlike a living trust, which is set up during the person’s lifetime, a testamentary trust is set up in a will and established only after the person's death when the will goes into effect.

Celebrity Duo Had Trust

There are Four Parties Involved in a Testamentary Trust

It is created to address any estate accumulated during that person's lifetime or generated as a result of a postmortem lawsuit, such as a settlement in a survival claim, or the proceeds from a life insurance policy held on the settlor. A trust can be created to oversee such assets. A trustee is appointed to direct the trust until a set time when the trust expires, such as when minor beneficiaries reach a specified age or accomplish a deed such as completing a set educational goal or achieving a specified matrimonial status.

For a testamentary trust, as the settlor is deceased, he or she will generally not have any influence over the trustee's exercise of discretion, although in some jurisdictions it is common for the testator to leave a letter of wishes for the trustee. In practical terms, testamentary trusts tend to be driven more by the needs of the beneficiaries (particularly infant beneficiaries) than by tax considerations, which are the usual considerations in living trusts.

Other Common Types of Trusts Include:

We can tell you more about the many scenarios in which a trust may be preferable to a will, including whether or not your personal estate would benefit from the creation of a trust. We can also provide you even more scenarios than those listed above in which various types of trusts may benefit you and your beneficiaries. Call us at 800-431-9740 to speak with one of our estate planning experts about whether or not a trust is right for you and your family.

Volume 17, Issue 6

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