Why Bad Advice Says That Trust Planning Is Only For Larger Estates Estates?
By Steven J. Gibbs, Esq.
“You have lost your camel, my friend And all around you people are full of advice Your don’t’ know where your camel is, But you do know that these casual directions are wrong.” Rumi
There is a great deal of information out there about trusts and estate planning. One common misnomer is that “estate planning” only applies to the wealthy. Another common misconception is that trusts are only appropriate for those who have millions of dollars. So this week’s topic is my attempt to dispel the myth that a family trust is something reserved for the Kennedys along with Rembrandt in the sitting room and beluga caviar.
Here are 3 reasons why trust planning may be even more important for a small estate than for a large estate.
1. Small estates do not have the luxury to pay seasoned experts to resolve issues with the estate. Often times, small estates can become every bit as complicate as large estates. For example, issues with numerous beneficiaries can arise or creditors can come out of the woodwork. If there was no trust planning then all of these issues must be resolved in probate through the court system and regardless of the size of the estate, if things get complicated it will get expensive to resolve. The problem is that small estates often do not have the budget for this work and the proceeds to beneficiaries can be become very minimal or even extinguished by legal fees and court costs. These scenarios can be minimized or eliminated by proper trust planning.
2. Probate requires a lot of time and this burden can be more traumatic for small and medium sized estates than for larger ones. To add to the reasons discussed above, small estates may need to liquidate assets quickly in order to create cash flow and this can become difficult where an probate process has been required and the parties are all awaiting a court order before real property can be sold or other assets liquidated. Larger estates can often hold and bear this burden easier than smaller estates.
3. It can be more difficult to obtain help with smaller estates than larger ones. Simply put, lawyers and accountants swoon to scoop up the larger estates for the simple reason that they are a big payday. On the other hand, smaller estates may be shunned as unattractive and families can face frustration in finding competent counsel and tax advice in settling these estates. For this reasons, family members seeking to resolve small estates often need to advance fees out of pockets to procure the professional assistance that is needed. This is never an issue with larger estates.
As for Rumi, his point is well observed. Many people simply follow the crowd and go the path of least resistance and thus avoid planning and this is especially prevalent in smaller estates.
The path of intentionality is required to really engage in your estate planning. I contend that the naysayers suggesting that trust planning isn’t necessary for small estates have not considered these and other questions and simply may be those in the poem who are “full of advice”, but you know that these casual directions are wrong.
Be intentional in your life and family.
I hope this is helpful…until next time.
Gibbs Law Office
Steven Gibbs founded the Gibbs Law Office in January 2009, committed to providing client-centered legal services.
Steve as he would rather be called, is not your typical attorney. If you appreciate the staunch egotistical mannerism of most firms, you will be delighted with Steve’s unpretentious approach to educating and then assisting his client. Instead of giving you his complacent and lofty ideas, he would rather pursue your expectations with professional conversation about resolving your concerns under the Law. It’s your life and it’s his job to make your legal expectations come true while using years of his guidance and knowledge.
Steve was admitted to the Minnesota Bar in 1999, the Florida Bar in 2007 and was recently admitted to the California bar. Keeping abreast of law changes in these three States, as well as the United States, assists him in all aspects of the types of law the firm practices.
Along his career path, he was an associate attorney for an insurance defense law firm; an in-house real estate negotiator for Target Corporation; and corporate counsel for Civix, LLC and Vice President for North American Properties where he was responsible for various real estate transactions, including legal issues and negotiating unresolved business issues. Prior to opening Gibbs Law Office, PLLC, he was an associate with the firm of Roberts & Engvalson, P.A. where he gained his knowledge of trusts, estate planing and Wills. He opened his own firm in 2008 and now focuses on laws that will enrich the needs of his clients throughout their lives and those of their children. The firm has developed a practice dealing only with Trusts and Estate Planning, Wills, Medicaid Planning, Elder Law, Real Estate, Business Law and Probate.
Quoting from Steve “I decided to practice in areas that families will need as they progress down life’s path. To help them with a solid foundation that will carry them throughout there lives is a rewarding experience for me and my staff.”