You might be a candidate for a trust that you never needed before.
A trust is a great tool within an estate plan, one with unique goals depending upon the one making the plan. Some goals are very common, while others don't exactly follow the mainstream.
A recent lighthearted Forbes article titled “Six Trusts For The Person Who Has Everything Else” pulled back the curtain for a look into the world of unique trusts for unique circumstances. [Spoiler alert: There are really four trusts, one special bank account, and one misguided attempt to emulate the trust format.]
Here is an overview of how the article described these six trusts:
1. Totten Trusts: These are specialized bank accounts rather than actual trusts, often known more appropriately described as “payable on death” accounts. The account allows the depositor to name a beneficiary for the account, and such beneficiary receives the account upon the passing of the depositor entirely outside of probate or, if you are careful, outside the knowledge of your other heirs. The article notes that Totten Trusts are especially well-suited secret heirs, paramours, lopsided giving or other hushed motives, unless the wronged someone has access to bank statements or tax returns.
2. Purpose Trusts: These trusts are not designed for people but for a “purpose.” In this sense it is actually a class of trusts, and amongst the most common purposes is the health, happiness, and continued well-being of a prized and/or pampered pet. Think Leona Helmsley. Then again, the maintenance of a collection is also a strong purpose behind setting up a purpose trust.
3. Funeral Trusts: Like the name itself, these trusts are solely designed to ensure the payment of funeral expenses because you believe either your heirs should not be so burdened or you do not trust them to be responsible about it. Basically, you want to make your passing a non-issue. You can always pre-pay for a burial plot or other accoutrement, but the trust gives discretion to a trustee while still footing the bill.
4. Blind Trusts: This is a trust that leaves you, the trust settlor, blind regarding what your own trust owns, how the investments are doing, or any other information that may compromise you. Namely, you would be compromised if you could accidentally get tagged for an insider trader (an executive holding stock in their own company) or the fact that healthy investments can be politically disadvantageous (note the use of the Blind Trust by many a politician, not least of which being the former presidential nominee Mitt Romney).
5. Rabbi Trusts: No, these trusts have nothing to do with Judaism. On the other hand, they do have everything to do with timing of compensation – salary, bonuses, or other compensation from an employer – to stash that money away while limiting the income tax hit in any given year.
And finally,
6. Secret Trusts: In the estate planning world, secrets can be manageable if often ill-advised (secrets breed distrust, and distrust breeds long and painful lawsuits for heirs). In reality, the secret trust is not even a trust at all, even if you do keep it secret. Essentially, this is the attempt to emulate a trust by getting an executor to agree, outside of the will, to disperse estate funds in any particular way. That is a tricky spot to be for an executor, a nasty secret for an excluded heir to discover, and an easy way to see everything go downhill after that.
That is a quick list and explanation of unique trusts, and one non-trust as a lesson in what not to do. Read the original article for more in-depth coverage of the topic. So, have you made appropriate estate planning arrangements with a trust or two designed with your goals in mind?
Reference: Forbes (January 2, 2014) “Six Trusts For The Person Who Has Everything Else”