The Government Has a Plan, Shouldn’t You?

The government has a plan for your money, shouldn’t you? Our government has been on a spending binge lately. Who pays for it? We do, in the form of taxes and possibly in the form of inflation. If you do not take certain basic steps to protect your property from unnecessary court involvement and taxes, then the results can be less than optimal.

Trusts and trust law has been around since the Crusades. Originally, the concept of a trust came into being during the crusades when people going off to fight holy wars entrusted their lands and property to a trusted person to take care of it for them and let it be used to benefit their family. It was an arrangement whereby a trusted person, a trustee, was charged with the responsibility of managing property (land, monies) for the benefit of someone else, the beneficiary or beneficiaries. Centuries ago, trusts were also used for Monks because their vows did not permit them to own property directly. So, wealthy donors wishing to support the Monks put their money/assets into trust for the benefit of the Monks. The Monks were the beneficiaries. They were not the Trustees.

Nowadays, we often create a revocable trust with the person who made the trust serving as the initial trustee and being the initial beneficiary. They name successor trustees to carry out their directions. What might those directions be? To leave assets in a tax shelter trust or an asset protection trust, with the remainder specified so assets stay in the family. Trust arrangements can accomplish a variety of worthy objectives, namely

     (1) probate avoidance…during life and at death,
     (2) tax avoidance (estate taxes and income tax deferral),
     (3) protection from claims of creditors (lawsuits, judgments),
     (4) protection from loss of assets in event of a child’s divorce, and to           ensure your assets will stay in your family through the generations.

The law of trusts is very complicated and there are many facets to understand. Every case is unique and careful analysis needs to be done to ensure it will all work as planned. Do not be misled by friends and neighbors who are not lawyers. I frequently hear from clients that they heard from their friend . . . this or that. My first response is to inquire whether their friend is a licensed lawyer. If they answer no, then I am compelled to inform them that their friend, to the extent that they are offering legal advice, is engaging in the unauthorized practice of law. You see, in South Carolina, to provide advice on the effect of legal papers or language constitutes the practice of law. In short, get your estate planning and asset protection advice from a licensed lawyer who only does this type of work, not a friend. Using an attorney to get these important matters in place for you and your family is prudent. Acting on the advice of a non lawyer friend……is not.

Contributed by
Mark F. Winn, J.D., LL.M. in Estate Planning, who is a local tax, asset protection and estate planning attorney.