Bushman Law Group Trust pros

Trust Facts

#1. A trust may save on taxes - Yes and No. Yes a Trust does not pay probate taxes, but a Trust will pay income taxes, If your Trust has Income. There are some Trusts that have no income, and may only hold property as a result. What happens when the Trust sells the property? The Trust may have to pay taxes on the any gain, and if those proceeds are invested in income generating property then the trust that paid no taxes in the beginning starts to pay taxes. Can a trust distribute the property to the heir instead of selling the property? Yes, but then why was the property in the Trust to begin with.

#2. A Trust is beneficial for Administration - Naming a Trustee or co-trustee that can act when the Trustor (the person who placed the asset in trust) becomes incapacitated or dead can be done through the creation of a trust. After placing a house in a trust, the trustee is charged with its maintenance. If the Trust has money, the Trustee pays the bills and can enter the house to make sure all is safe. The naming of a Trustee or Co-trustee is similar to creating a general durable power of attorney, except that the trustee is looking after the interest of the beneficiary's of a Trust as opposed to the interests of the donor of the power of attorney (if different).

#3. A Trust can help the irresponsible - Whether you have children that are spendthrifts, a spouse that does not understand the value of money, or a loved one with physical or mental disabilities, a Trust can allow you to govern assets past your death. Examples are easier to illustrate:

Example #1 - Two children are minors. Parents worried that if they die, then the children spend all the money. A trust can be set up to make sure the children don't unwisely spend their inheritance.

Example #2 - Husband and Wife have lived a long life, but Wife (sometimes its the husband) always handled the finances. Wife worries that Husband cannot or will not keep things organized. A Trust can relieve the Surviving spouse of learning about finances when they never balanced a bank book nor paid a bill.

Example #3 - Husband and Wife have four grown children. One child is involved in an accident and cannot care for himself. A trust can be set up to take care of that child and declare who will succeed the parents when they past away.

#4. An incomplete trust - In order for a trust to survive, it needs at a minimum: A Trustor, assets, Beneficiary. A court and the Virginian Code can complete the rest. The problem is one of planning. When rushing to put a house in Trust, a Trustor must make sure that there is a Trust account for the Trustee to pay the bills. Too many times, a Trustor place property in Trust and pays the bills out of a non-trust account. Then the testator is involved in an accident and cannot pay the bills. Who pays them? Well, if there is a Trust account with money then the Trustee can. If there is no Trust account, then the Trust must rely on a joint account. If there is no joint account, then, hopefully, there is a power of attorney. Then you hope the Trustee and the agent under the Power of Attorney get along. If no Power of attorney, then one must go to court for a Conservatorship, so they can set up a bank account and give funds to the Trustee.

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