A prior column, “Five reasons trusts work for incapacity planning,” looked at the benefits an alter ego or joint partner trust can offer clients, compared to a power of attorney.

For clients older than 65, these trusts can also help with succession planning; because, while a will takes effect only after someone dies, a trust takes effect immediately once it’s established (so it can work while someone’s still alive).

Read: Demystifying trusts

Using an alter ego or joint partner trust for succession planning can help in these five ways:

  1. Avoid probate

    If clients put property in a trust before they die, that property passes outside their estates on death. They can also use the trust to set out how that property is distributed.

    This means clients can save money by avoiding probate fees or equivalent, and preserve more privacy, since a probated will becomes a public document.

  2. Provide continuity and liquidity

    If a will goes to probate or equivalent, the settlor’s assets can be effectively frozen until the court confirms the estate trustee’s authority to deal with the assets.

    But, if assets are held in a trust, funds can continue to be immediately accessible. If your client has an active business, it’s critical that any transitions go smoothly, and a trust helps ensure there won’t be any asset freezes resulting from the need for probate.

  3. Simplify estate administration

    Setting up a trust can simplify estate administration since the settlor can put everything in order prior to her death.

    The settlor can also remove assets from the potential future estate and put them into the trust. This process minimizes the risk of the estate trustees’ being unable to find assets after clients die.

  4. Protect against estate litigation

    Assets put in trust while the client is alive will remain under the trustee’s control after the client dies. With a will, estate trustees gain control of assets after the client dies.

    At that time, disgruntled relatives or others may challenge the will’s validity. That may be much easier than challenging a trust’s validity,
    especially if your client established the trust
    several years before she died.

  5. Simplify transfer of foreign assets

    If your client owns assets offshore, she can use a trust to transfer those assets so they won’t go through the probate process in that jurisdiction. That will save time, money and aggravation. Just make sure trusts are legal in that jurisdiction.

Read: Trusts are essential to estate planning


Inter vivos

A trust established during one’s lifetime


A person who settles property for beneficiaries