I don’t trust anybody…
My family set up two trusts for our parents. One was for the property and the house where they lived in town.
The second was for a farm inherited by our father. His maternal grandparents came from Norway and settled in northwestern Minnesota. The farm was recently designated as a Century Farm meaning it has been in the same family for a hundred years or more. My maternal grandmother inherited it with her seven siblings which then trickled down to lots of cousins. Our father bought the shares from his cousins and his deceased brother’s sons. Thus, the farm was owned by Dad. Our brother, Russ, is the trustee for the farm trust and has spent many years improving the value of the property.
I had no idea what a trust was or how it worked, neither did our Dad. But, thankfully Russ did understand why it was crucial for our family. He contacted a lawyer and had one drawn up.
Once Dad understood that it would ensure the farm stayed in the family, he signed willingly. He didn’t trust anybody in general, so turning the farm over to Russ was fine with him. He directed Russ, “don’t let those sonsofbitches in the government get it”.
A trust is a set of instructions to ensure that your assets are protected during your lifetime. There are many types of trusts, each outlining different goals and having different purposes. You can have more than one trust depending on your assets.
Some trusts are IRREVOCABLE. This type of trust requires that you give up control of your assets during your lifetime. Sounds scary, doesn’t it? Your trust will have a trustee chosen by you who will manage the trust and the assets you include in it. As in the case of our farm, this was the best option since Russ was taking all the responsibility for over 400 acres of land and the infrastructure. He was in complete control of everything which includes miles and miles of government red tape and stacks of forms that need annual updates.
Other trusts are REVOCABLE. The trustee of this trust is usually you and also names a trustee who takes over the trust if you die or can no longer manage your own affairs. If you have a falling out with your designated trustee, you can replace him or her.
You may have heard of a MILLER TRUST. This particular trust is used to hold income for someone who is trying to qualify for Medicaid. I want to address this trust when we get to discussing applying for and qualifying for Medicaid.
These are the most common trusts and each has its own set of rules, its own purposes, and its own pros and cons.
- Trusts Avoid Probate
- Trusts Are Private
- Trusts Control Inheritances
- Trusts Help during Periods of Incapacity
- Trusts Can Protect Your Assets From Creditors