Last week, we highlighted the reason why a lot of us are averse to Estate Planning. We saw how Philip Seymour Hoffman (an American actor, director, and producer) who was prolific in both film and theatre repeatedly rejected professional advice from his attorney and accountant, both of whom had advised him on the need to create a Trust. Today, we examine further some interesting myths about Revocable Living Trust using the Hoffman’s experience.
Myths about Revocable Living Trusts – Philip Seymour Hoffman Experience
Hoffman obviously fell victim to this myth. While many believe that a large trust fund can lead to spoiled children, we believe that it does not have to be that case. Trust, when used properly and creatively, can achieve the opposite. You can set up an Incentive Trust and spell out the object of the Trust, putting some restrictions as to when each child is expected to receive benefits.
You can state that you want your children to receive money when they have a special project that needs funding; this however should not deprive them from hard work. In fact, this can actually promote better work ethics by setting up a matching trust fund that pays each child a certain amount based on how much money they earn themselves (complete with exceptions for those who do charitable work, serve in the military, choose to teach children, or any other condition or exception Sting wants).
The point is that a good revocable living trust can achieve almost any goal. A person who sets up a trust with a good estate planning attorney can craft special language to tie the distributions to any number of conditions or events, based on that person’s values and goals.
Hoffman obviously believed that using a Trust means all (or most) of his money will pass to their children. This necessarily does not have to be the case. Anyone can set up a Trust and name anyone as beneficiaries – charities, family members, trusted friends or employees – the list is endless. One thing is certain; you cannot spend all your money during your life time. A Revocable Living Trust can help you distribute your assets in the way that you want, with the expected peace of mind thereafter.
As the name implies, a Revocable Living Trust can be revoked, meaning that you can be change, amend, cancel altogether, or add to, whenever you want to – as long as your remain competent to do so.
Trusts can also be used to foster control even after the Settlor has passes on. By setting up a detailed, specific, and well-crafted Revocable Living Trust, you can control when, if, why and how your money passes, and of course, to whom. That means more control for you as the Settlor – not less.
Many of us think that we do not need a Trust, claiming that Trust is only for millionaires. As professionals, we hear this all the time. However, an understanding of the dynamics of Trust will help out. A properly-funded Revocable Living Trust can help avoid probate court entirely.
More importantly, a Revocable Living Trust allows the Settlor control over his legacy even from the grave. Just assuming you do not care what happens to your loved one after you are gone, Living Trust can also help in many other ways. By setting up one, you can pass on the management of your assets to another person (preferably an institution) during your life and when you become unable to do so any longer the Trustee acts on your behalf under the same conditions that you want. This, again, can all be done without the need for a court proceeding – unlike where you have not had a proper plan in place. Once funded with assets, Revocable Living Trust starts to work even during your life time.
We will advise that no one should make the same mistakes that Philip Seymour Hoffman made in not listening to sound advice. You can talk to us today to discuss if and whether a Revocable Living Trust makes sense for you and your family.