Below is a short story on how I got peace of mind by learning about the 5 most common kinds of trust that exist.
So, we just hosted our biggest Thanksgiving. There was my wife and I, and our two beautiful daughters. We also had a few other people; my brother, his wife, kids, and my in-laws. We just retired now and are looking forward to our golden years. I was a website developer with a small advertising firm, and my wife was a 2nd-grade schoolteacher.
I, like my in-laws, raised two beautiful, smart, modern women. But, my father-in-law (Papa Joe) has always been a little reserved toward me. I always get the feeling that he never thought I was good enough for his daughter, and in some ways, I actually agree with that. But, after the pumpkin pie, and after watching some football, Papa Joe asked me to join him on the back patio so he can light up a cigar. Not even 5 seconds after we walk out, Papa Joe looks at me and in a firm serious tone, asks if I had taken steps to protect my family. Not sure exactly what he was meaning, I blurted out that I have a substantial amount of life insurance and that I had regularly contributed to my 401k up until the day I retired. He replied, “that is great, but what happens if both you and my daughter pass away? Have you taken care of that yet?” To be honest I never thought about it. I think my confused puppy dog face was obvious, and Papa Joe goes on and says he is referring to things such as Wills, trusts, those types of things. I did not really know what he was talking about. I mean I know what a Will is, but a trust? We talked about a few more things, like is Stafford the man for the Rams, and walked back in as it was getting late and about time to call it a night.
The next day I couldn’t get our conversation out of my mind. I went and did an online search for trusts, but that was apparently too vague. I got results ranging from the definition of the word “trust” to an advice columnist’s response on a cheating boyfriend. So, I added the word “Will”. Okay, good, we are on the right track, but then in the search, I see revocable trusts, irrevocable, testamentary, charitable, gun trusts, etc. Ugh! But, it is my day off and Papa Joe believes it was important enough to make a point of it last night, so I started clicking.
Gun Trust
The first thing I clicked on was “What is a Gun Trust”. I have a 12-gauge shotgun my Father gave me, though I have never used it. I thought I should read up on it. I found out such a trust allows for the legal transfer of certain guns after you pass. It can actually be illegal to give certain types of weapons to your children when you pass, even if they are of legal age. To my surprise, a 12-gauge doesn’t apply, but a “short-barreled” shotgun would. The reason being a person needs to go through a background check to own these weapons and it could also be illegal to transport them. The owner is the only person that can fire them. So, to transfer such guns to a child after you pass, a gun trust becomes useful and handy. However, in my case, it is not what my daughters will eventually need.Charitable Trust
Next up was a “Charitable Trust”. Surprisingly, it is exactly what its name implies. It’s nothing more than a trust set up to make charitable donations. Someday we would like to have enough money to set up one of these, but not this year, not with Christmas coming up and not this early into our retirement.Revocable Living Trusts
Okay, now I clicked on “Revocable Living Trusts” and bingo. This is exactly what Papa Joe was talking about. A revocable living trust is a way to transfer assets to your kids without going through a probate court. We control all assets while we are alive, and even when one of us passes. But, it definitely saves time and money if and when the time does come, and we can make sure the kids get their inheritance virtually hassle-free. It is also good in case either of us becomes incapacitated, as I learned that our daughters would be able to make financial decisions and manage our assets because of Alzheimer’s disease, or if some other dreadful illness strikes like a stroke or Parkinson’s.Irrevocable Trust
Next in line was an “Irrevocable Trust”. This is a similar type of trust as a revocable living trust whereby we can leave our assets to any beneficiary. The main difference, however, is that unlike a revocable living trust we cannot manage the assets during our lifetime. They become permanent assets of the trust and can only be used for the trust’s intended purpose. It seems to work best for persons who want to protect assets from creditors or to not allow the beneficiaries to control the assets.Testamentary Trust
Lastly, the “Testamentary Trust”. This is the most confusing for me, but I am sure it has a useful purpose. It appears you do a Will first, then have to go to probate court and the actual trust is not set up until after you pass away. The probate court will be involved as long as the trust exists. This whole thing seems more expensive, not to mention, we want to get it all done while we are alive. After learning all this, I now understand Papa Joe’s concerns and why we need to get something done fairly soon. Heading into our retirement, there are a few things you just need to have in place. But, by also getting it done sooner rather than later, it is one less thing we do not worry about, and rather just look forward to hosting more Thanksgivings. If you would like to learn how to obtain peace of mind and an affordable living trust at a price of only $599 (no hidden fees), you can click here right now and comfortably watch an informative and educational 45-minute video. It gives a great overview of just how simple it can be to understand and establish a quality living trust portfolio.Watch Our FREE Educational Webinar
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This area of the website is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of the author, not of the National Association of Family Services, and have not been evaluated by the National Association of Family Services for accuracy, completeness, or changes in the law.