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You Don't Have to be a Rockefeller to Need a Trust

by Doug Koenig and Leslie Gibbens, Personal Trust Department at Union Bank & Trust Company

Marcie called the other day and said her friends think she needs a trust. Marcie said, “I’m not a Rockefeller, why do I need a trust?” Marcie explained that she is widowed and has three grown children and five grandchildren. Her total estimated estate value is $2.5 million.

Marcie, who is a Nebraska resident, won’t owe any Federal or State Estate tax. There will be some inheritance tax but because she wants to give her estate to her three children it will only be a 1% tax. So why does she need a trust?

A trust can be a very important cornerstone of an estate plan. The customary cornerstones of an estate plan consist of:

  • Will
  • Living Revocable Trust or Testamentary Trust
  • Durable Power of Attorney for financial matters
  • Health Directive (living will)
  • Power of Attorney for health care.

Marcie asked whether a trust department charges a fee to have her trust. During her lifetime and while she is mentally competent, she will be the trustee of her own trust and life goes on as normal without a trust department getting involved or charging a fee. At the time she passes away, becomes incapacitated or simply wants assistance; a trust department can become the successor trustee at which time a fee is then assessed. The trust department will protect her assets for her benefit and for the benefit of beneficiaries to be distributed according to the provisions she specifies in the document. The trust department can collect her income, pay her bills, invest her assets, do all record keeping, prepare and file her income tax and much more. If she puts her assets in a trust during her lifetime her estate will avoid probate which will avoid extra expense and time settling her estate.

Marcie commented that instead of naming a trust department to serve as a successor trustee she would name one of her children. We explained that she could certainly do that but she will want to think about that very carefully. Will her successor trustee have the skills, expertise, time, flexibility and be a good impartial decision maker? When you put one child in charge of all the other siblings’ inheritance’s sometimes that doesn’t turn out so well for keeping good family relationships. Naming a trust department as successor trustee would ensure that everything that needs to get done, gets done timely and efficiently with the expertise of qualified officers and staff. It is what a trust department does every day.

If you would like more information or would like to talk about your particular situation, please give Doug Koenig or Leslie Gibbens a call at 402.323.1324 or 888.239.5135.