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Ask Dave

Trusting in the Family

When is a good time for Angie to create a family trust?

QUESTION: Angie in Colorado wants to know when a couple should think about creating a family trust.

Dave's ANSWER: The family trust can mean a lot of different things. One time that it would be created is if both husband and wife were to pass away. It's not unusual for the will to create a family trust to be managed for the good of minor children.

As far as a family trust in order to avoid estate taxes, you don't have to look at that until you have assets in excess of $5 million. You begin to have an estate tax problem at that point, based on current law, anyway. I don’t think there’s a time where you would create a family trust to manage money while you’re alive unless it has some estate-planning implications.

Our family reached the point with our giving that we chose to start running our giving through a family foundation that one of my daughters runs. But that would be at the point where the level of your giving is high enough that you can justify the legal expenses and the tax expenses of setting that up and operating it.

When we were giving a small amount away, if we had set that up, it would have all gone to the lawyers. That would not have made sense. We had to reach the point that our giving was big enough that it made sense.