Most people agree we are in the middle of an economic recession in this country. Unemployment is high and the stock market is like a roller coaster. How does the recession affect your need for a trust or affect your exisiting trust you already have?
If you do not have a trust and have assets of over $100,000, you do need a revocable living trust even in this economy, and some people would say, even more so. If you have real property out of state, a trust will avoid probate in both California and the state where the property is located. Many people have young children and need a trust with guardians set up in case something happens to them. Death is inevitable, recession or not, but a trust will enable your estate to be distributed faster and less costly than with a will or with no estate plan at all.
If you already have a trust, the recession may also affect you. In a recession, some investors try to recession-proof their portfolios by switching their IRAs, 401(ks) or other investments into different funds or CDs. Have you remembered to always title new investments in the name of your trust and made up to date beneficiary designations? Changing accounts, sales of real property, refinancing, etc. all increase in times of rescession, leaving open the possibility that assets are not properly titled in the name of the trust.
A second way your estate may be affected is by the type of trust you have. Your trust, even if old, is still valid, but may not be optimal. Estate plans written in the 90’s often require a division of the estate into two separate trusts upon the death of the first spouse. These trusts are called A/B trusts, exemption trusts, or marital trusts. That was a good choice in those days but today with an inctease in the estate tax xemption to $3.5 million ($7 million per couple) you may want to update the type of trust you have. Revising your trust may save on trust administration after the first death and give the surviving spouse more flexibility.
Lastly, the economy may affect not only you but your beneficiaries. Do you have beneficiaries that have become dependent on public assistance? Are some facing bankruptcy? Maybe you need to create a special needs trust or make sure your trustee has the power to postpone distributions if a beneficiary is in bankruptcy.
We can’t control the stock market and other effects of the rescession, but we can control our own estate plan by creating the appropriate documents and revising them from time to time as necessary. Contact us if you need to discuss these issues.