Steve Coker, CFP
A Living Trust Is for Life
Many times when people set up their trusts, they focus on what will happen to their assets upon their death. However, a trust is also an important tool in life to shepherd your assets when you are no longer able to take care of your own affairs, due to age or incapacity. With life expectancies rising, more and more of us are living to an age where we simply need a little help. Moreover, as we age we become a target for scammers, whether over the phone, internet, or even by friends and neighbors. A trust can designate a trustee, a person that you trust, to manage your affairs when you are no longer able, and guides the trustee on how to use those funds.
My family experienced the importance of having a trust just this month. My father-in-law has begun to decline and is forgetting. He has always bought and sold cars, and can’t remember what cars he owns, or where they are, or what he paid for them. He has become the victim of a neighbor who seems to be targeting him for cash, and in his current state he has simply given her his ATM card. She has used his checking account to pay her bills. Sometimes he gets angry and files a police report. Sometimes he swears that he meant to give her the money. We aren’t sure which is true.
For his own benefit, it is best for someone else to begin managing his finances. Thankfully he set up a trust several years ago and designated in advance what he would like to happen at this point. He has designated a successor trustee, someone that he trusts, who will take over his finances. Importantly, the successor trustee is bound by the trust, which specifies that all funds must be used to care for him during his lifetime. The trustee doesn’t ‘get the money’ but is ‘responsible for the money’. The trust guides the successor trustee, binds the successor trustee as a fiduciary to follow the instructions laid out in the trust.
Thankfully, my father-in-law has recognized that it is time for him to resign as trustee of his own trust. The decision was much easier because he had thought through the steps in advance and had made his decisions clear in the trust. He is still aware enough to recognize his forgetfulness. He simply resigned as trustee, and the instructions, via the trust, were already established. Our family is close, and all the family has my father-in-law’s best interest at heart. Still, there are many difficult decisions. I for one am so thankful that my father-in-law had a trust.
My father-in-law’s story is hardly unique. As we wrestled with the decisions over these past few months I was amazed by the number of friends who shared their own stories of financial difficulties or even financial abuse of their unaware elderly relatives. These are deep waters and there are many difficult decisions along the way. Making decisions in advance helps you and your family protect your assets during your life and after your death. We encourage all of our clients to create a living trust to navigate these difficult times of life.