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What do Frank Sinatra, Michael Crichton, Robin Williams, and President Dwight D. Eisenhower have in common? Besides the obvious fact that they are all famous and accomplished men, they all shared one common estate planning tool - the living trust. They each chose to incorporate a living trust into their estate plans because they understood the benefits of a trust and what the use of trust services could provide.
The great thing about trust services is that you do not need to be rich and famous to use them. However, many of the rich and famous do because they realize the benefits these services can provide.
Sadly, a recent celebrity to join the above group is the late Matthew Perry. Matthew is known for bringing laughter and approachability to a broad audience in many of his film and television roles and is most remembered for his role in the TV show Friends. He reportedly earned close to $1 million per episode nearing the end of the show's run, and his estimated wealth when he passed was $120 million.
According to estate planner Tereina Stidd, blogging for the American Academy of Estate Planning Attorneys, Perry did not have a will--at least, none has been produced in the time since his recent death. But he did do some estate planning in the form of a trust.
How could a living trust have been a friend to Matthew Perry?
When possible - the Trust keeps his secrets. Because of the use of the trust in his estate planning rather than a will, the rest of the world does not know the terms of the trust. We do not know who the beneficiaries are. We do not know if there were charitable dispositions included to reduce the potential ~$40 million in estate taxes that might have been owed. We may never know unless there is a legal contest, which has not arisen to this writing.
The Trust will change when requested. When the living trust is drafted, instructions are given in an attorney-drawn trust agreement. Under the terms of that agreement, the grantor (in this case, Matthew) of the trust retains the right to cancel the trust or change the trust instructions. Nothing is tied up. If Matthew suddenly wants more control, or to become more hands off regarding investment management, he can adjust that right away.
The Trust does favors for the grantor. While trusts are mostly thought of as a tool for estate planning, they can be a terrific way to increase the amount of time one has by offloading other financial chores. Tasks such as paying household bills and taxes, or perhaps even hiring a housekeeper or other necessary assistance for you can be included in the terms of the trust. The trust could also provide incentives for beneficiaries to reflect the desires of the grantor, such as a wedding gift or reward for meeting certain milestones.
The Trust steps in to help in the case of incapacity. Although it is impossible to escape the risk of debilitating illness, having a trustee who is familiar with your finances who can step up to keep taking care of everything while you recover can be a big deal.
The Trust puts Matthew's needs first. Trustees are held to a fiduciary duty, the highest standard of care, so the trust officers administering the trust legally must put the needs of the client first.
However, as we learned in the TV show Friends, there may be some downsides in every friendship too. When it comes to a living trust, there are costs to consider both in terms of the initial drafting and reoccurring administration costs. Like any other service you must determine whether the cost justifies the benefits. This reminds me of a quote by Warren Buffet, "Price is what you pay. Value is what you get."
We at Garden State Trust Company are extremely proud of the work we do for our clients and take immense pride in the fact that we provide the highest quality service and value they deserve. If you think that you can benefit from our trust services, give us a call.
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