Pinnacle offices in the National Capital region are closed today due to inclement weather. All office and weather updates will be posted to PNFP.com/Weather.
Pinnacle offices in the National Capital region are closed today due to inclement weather. All office and weather updates will be posted to PNFP.com/Weather.
In 1999 a movie called The Bachelor debuted in theaters. The plot involved a young man who unexpectedly learns he will inherit $100 million if he is married by his 30th birthday, which happens to be the very next day. The young man spends the majority of the film attempting to find a bride. Although the movie was panned by critics and audiences alike, it illustrates the power of estate planning documents. Presumably the young man’s grandfather had a trust with a contingency provision—a gift of $100 million contingent on the beneficiary’s marriage by 30 years old.
Many would agree that a provision demanding marriage by 30 years old or forfeit an inheritance is an unreasonable requirement. However, there are plenty of good reasons for trusts that contain constructive provisions. Though they may be less exciting for big screen adaptation.
What is a Trust?
What exactly is a trust? And how do you know if you need one? These questions are often asked of myself and my colleagues in Pinnacle Bank’s Trust department.
Very simply, a trust disposes of (distributes) everything you own to the people you name as beneficiaries and in increments that may extend many years after your death. By comparison, a simple will disposes of everything you own shortly after you die.
In general, a will is a simple instrument, whereas a trust can be complex. For example, a will may direct that your antique desk goes to your cousin, Joe, and your two dogs to your niece, Sally. Everything else you own will be split equally between your three children. A trust on the other hand may specify that the antique desk goes to Joe, your dogs to Sally, but everything else will be split between your three children provided they have graduated from college. Prior to graduating, your children may only use the funds for college expenses and once they graduate they may take the remainder of what’s left, in equal portions.
Do You Need a Trust: Six Things to Consider
Now that you have a basic understanding of what a trust is, how do you know if you need one? The answer to this question can be complicated and is certainly subjective.
In summary, it is crucial that you have some type of estate plan. And if you already have a will or a trust then you are ahead of most people. Not everyone needs a trust. But there are circumstances in which you may be better suited with a trust over a will and vice versa. Hopefully this article helps you determine which plan suits you best.
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