Lose Your Camel? 3 Reasons To Use A Trust For A Small Estate.


Hello Valued Friends & Colleagues!

Today’s great topic warrants some poetic philosophy:

“You have lost your camel, my friend.  And all around you people are full of advice.  You don’t’ know where your camel is.  But you do know that these casual directions are wrong.”   Rumi

There is a great deal of information out there about trusts and estate planning. One common misnomer is that “estate planning” only applies to the wealthy. Another common misconception is that trusts are only appropriate for those who have millions of dollars. So this week’s topic is my attempt to dispel the myth that a family trust is something reserved for the Kennedys along with that Rembrandt in the sitting room and beluga caviar.

Here are 3 reasons why trust planning may be even more important for a small estate than for a large estate.

1. Small estates do not have the luxury to pay seasoned experts to resolve issues with the estate. Often times, small estates can become every bit as complicate as large estates. For example, issues with numerous beneficiaries can arise or creditors can come out of the woodwork.   If there was no trust planning then all of these issues must be resolved in probate through the court system and regardless of the size of the estate, if things get complicated it will get expensive to resolve. The problem is that small estates often do not have the budget for this work and the proceeds to beneficiaries can be become very minimal or even extinguished by legal fees and court costs. These scenarios can be minimized or eliminated by proper trust planning.

2. Probate requires a lot of time and this burden can be more traumatic for small and medium sized estates than for larger ones.  To add to the reasons discussed above, small estates may need to liquidate assets quickly in order to create cash flow and this can become difficult where an probate process has been required and the parties are all awaiting a court order before real property can be sold or other assets liquidated. Larger estates can often hold and bear this burden easier than smaller estates.

3. It can be more difficult to obtain help with smaller estates than larger ones. Simply put, lawyers and accountants swoon to scoop up the larger estates for the simple reason that they are a big payday. On the other hand, smaller estates may be shunned as unattractive and families can face frustration in finding competent counsel and tax advice in settling these estates. For this reasons, family members seeking to resolve small estates often need to advance fees out of pockets to procure the professional assistance that is needed.

As for Rumi, his point is well observed. Many people simply follow the crowd, going along the path of least resistance and thus avoiding planning and this is especially prevalent in smaller estates.

The path of intentionality is required to really engage in your estate planning.   I contend that the naysayers suggesting that trust planning isn’t necessary for small estates have not considered these and other questions and simply may be those who are “full of advice”, but you know that these casual directions are wrong.

So the take away here is a simple reminder to be intentional in your life and family.

I hope this is helpful…until next time.


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