Do all wealthy people have marital trusts? How does that work?

[Anonymous]

I’d never heard of this until today. How does or did it work for the people you know with them?

This is far above my pay grade but I’d love to hear your experiences.

[Anonymous]

People create trusts to avoid probate and keep their finances confidential after death. My husband and I hold most of our assets in a revocable trust. If one of us dies, the assets automatically pass to the spouse without having to go through court proceedings. If both of us die, our assets go to a trust for the kids for their education and wellbeing.

[Anonymous]

How rich does one need to be to do this - that makes it worthwhile? Aren’t assets automatically transferred to a spouse?

[Anonymous]

Op here. This is so fascinating to me. I am curious as well. PP is this commonplace at a certain income level? Or when or how did you decide/at what financial point? Or did you both come from very wealthy backgrounds?

[Anonymous]

You can get a trust document drafted, but if you don't transfer ownership to it, like deed house to it, change accounts into trust name, etc., then not sure how helpful.

[Anonymous]

I guess for some accounts, you might get away with changing the beneficiary of account to the trust.

[Anonymous]

It doesn’t really have anything to do with being rich although more common at a certain amount of wealth. Anyone can set up a revocable trust. It’s estate planning. It is not very expensive for a lawyer to create. You can do a lot of the same things through a will but a will becomes a public document once filed in probate upon death. Trusts don’t become public. It provides privacy that a will can’t provide. Depending on the circumstances of your life or your death, you just don’t want the public, the media, or extended family to go through your finances.

[Anonymous]

Anonymous wrote:You can get a trust document drafted, but if you don't transfer ownership to it, like deed house to it, change accounts into trust name, etc., then not sure how helpful.

Yes, you do need to title property in the trust. It’s not that big of a deal. My husband and I have put our bank accounts and real estate in the trust.

[Anonymous]

I don't understand why a trust is necessary. If your spouse is your designated beneficiary on all accounts, there will be nothing to go through probate - it will all automatically go to the beneficiary.

[Anonymous]

Anonymous wrote:I don't understand why a trust is necessary. If your spouse is your designated beneficiary on all accounts, there will be nothing to go through probate - it will all automatically go to the beneficiary.

Not everything is that simple. Sorry that you don’t understand it.

[Anonymous]

We have my husband’s life insurance payout going into a trust, if he were to die, but otherwise everything else (10s of millions) just goes straight to me. I believe that is for tax purposes. If we both die, our money goes into a trust because we don’t want our child to have access to such a large amount of money all at once or in her twenties.

[Anonymous]

I’m PP. Yes, it is also done for privacy. To protect our child so know one can see how much wealth she has inherited.

[Anonymous]

Anonymous wrote:I don't understand why a trust is necessary. If your spouse is your designated beneficiary on all accounts, there will be nothing to go through probate - it will all automatically go to the beneficiary.

A will becomes public after death. There are lots of things you own that don’t simply pass to your spouse. There are also tax benefits to estates.

[Anonymous]

Most people still need a will even if they have a trust. The trust allows anything managed by the trust to avoid probate, which is long and costly. Management of any assets in the trust automatically turn over to the beneficiary of the trust. With a will, it has to go through probate. If two spouses, with no children from outside the marriage, own a house together, not a huge issue. If there are other heirs at play, then a trust is the best way to seamlessly transfer management of anything within the trust.

[Anonymous]

Anonymous wrote:I don't understand why a trust is necessary. If your spouse is your designated beneficiary on all accounts, there will be nothing to go through probate - it will all automatically go to the beneficiary.

There are instances where a trust is helpful. Like if a home is in both names and one spouse dies. The remaining spouse cannot sell the home while the deceased’s name is on the mortgage. Or say if you are leaving money to a spouse, what happens if they remarry? Would you be ok if money went towards that new spouse, especially if the surviving spouse dies? Or would you like to specify that the remainder should go to the children?

Look up Paul Rabelais on YouTube. He explains it very well.