Trust Services: Answers to Your Most Frequently Asked Questions
What are the benefits of a trust?
A trust is a legal entity that can “own” assets. Benefits can include the ability to control the asset long after you pass, protect your assets from creditors, and reduce estate taxes. It simply depends on the type of trust you choose and what your specific goals are.
Who needs a trust?
You may benefit from a trust if:
- Your beneficiaries are not ready to receive a lump sum inheritance (including grandchildren)
- You own real property in multiple states
- Your total estate is above the estate tax exemption limits (in Washington State, the 2020 limit is $2.193 MM)
- You require asset protection from creditors
- You want to provide asset protection for a surviving spouse
- You have a beneficiary who has special needs (including substance abuse and addiction)
- A beneficiary is incarcerated
- You are concerned about your beneficiaries’ spouse(s)
- You have a blended family
- You may need protection from unintentional disinheritance
- You want to eliminate opportunities for a family feud or emotional stress
Keep in mind that not every situation will require a trust. It’s best to speak with your advisor and attorney to determine which estate planning documents are necessary.
Why would someone want to designate a trust company as trustee?
If you create a trust, you name a trustee—someone who holds title to a property and/or asset and manages or distributes them according to your wishes. We have a fiduciary responsibility to carry out your wishes, but without the emotional cost to family members.
We call this a FACT:
Fair. We follow the instructions in the document, as you want them to be carried out
Affordable. Our minimum fee is $3,750, with no additional fees for managing financial assets*
Compassionate. We understand the sensitive nature of managing your estate
Trusted. You can trust us to carry out your wishes, without any emotional toll
*Charges for property managers, required real estate appraisals, inspections, environmental surveys, and tax returns prepared by outside accounting firms will be deducted from the trust.
When do the fees begin?
No fees are charged until the work begins. Simply naming HFG Trust as trustee does not incur any fees. Fees begin when we, as trustee, begin to manage the trust assets.
Is creating a trust complicated?
Trusts have become fairly straight forward, and a lot less costly to form. While setting up a trust may cost slightly more upfront than simply writing a will, there are cost-savings and tax-savings benefits to consider, along with the notion that you will have greater control over your assets than you might achieve with an ordinary will.
Can you have multiple trusts?
Yes. It all depends on your goals and objectives.
Which attorneys do you work with?
We are familiar with most estate planning attorneys in the Tri-Cities area. We can work with your current attorney, or we can recommend one based on your unique need—whichever is best for you.
Beneficiary: Person or organization that receives payments or assets from a trust.
Grantor: Known as the “trustor” or “settlor,” the person who transfers the property or asset into the trust.
Trustee: The individual or entity responsible for holding and managing trust property for the benefit of the beneficiary (i.e. manager).
Statutory Trust Advisor or Trust Protector: This position is responsible for making sure the trustee is doing their job. It also holds significant power to review or replace the trustee.
Estate Assets / Taxable Estate: All assets (including property) owned by the decedent on the date of death. All assets, even if located in another state, and any asset that was revocably transferred. This also includes transfers taking effect at death (e.g. a Transfer on Death Deed)
Testamentary: Created by or within a Last Will and Testament
Irrevocable: Cannot be changed by the grantor. Assets cannot be reclaimed.
Revocable: Can be altered or changed at any point during the grantor’s lifetime, and assets can be reclaimed. Typically, a revocable trust becomes irrevocable upon the grantor’s death.
Have more questions?
Most people do! We offer free consultations so you can speak to us directly about your needs, and work with you to identify the goals you have for your legacy. Please feel free to come with a list of questions. We are also happy to review your documents if you are comfortable.
Jenny Hubbard, Trust Administrator