I Want a Little Red Wagon
Ever Had a Little Red Wagon?
Our grandson has a little red wagon at our house. We keep it for him, but it’s his and he knows it. He can put all his stuff in it. What comes out of it? You guessed it. His stuff.
Our grandson has a trust. Here’s how.
Lessons from a Little Red Wagon
Did you have a little red wagon when you were young? What went in your wagon? Anything you wanted, right? Could you take your stuff out of your wagon? Sure you could. It was your wagon and your stuff.
Where did you go with your wagon? Anywhere you wanted. To a neighbor’s house or a park. And who got to play with your wagon when you got through with it? Whoever you said could play with it. After all, it was your wagon, so your rules applied. You didn’t know it, any more than my grandson does, but you already know what it’s like to have a trust.
Imagine for moment that we could contain all of your current assets, your stuff, each in their own box. Your house is a box. Your bank accounts are in a box. Your brokerage accounts are in a box. If you’re like most people, you’re trying to carry your modern-day boxes around yourself. Your boxes are in your name. So you are going through life and and you’re carrying these boxes in your arms.
What if you become disabled or die along the way. What happens to your boxes? They fall to the ground. So how do we pick up your boxes? There are just two ways. A person with your power of attorney can pick them up . . . but only if you are alive. If you’re no longer alive, your power of attorney is no longer valid. So after your death, your executor can pick them up . . . but only after a judge authorizes it when we go through the legal system called probate.
If I’m alive, my power of attorney picks up my boxes. But since there are no instructions with a standard power of attorney, he does whatever he thinks I would have wanted him to do with them. I just authorized him to pick up my boxes. I didn’t tell him what I wanted done with them after he did.
So when we pick up these boxes, we hope the kids get along and figure it out. Or maybe they don’t. Wouldn’t it be nice if we didn’t have to worry about that?
What if I took these boxes and put them in my wagon? Now what if I fall down while I’m going down one of the streets of life. What if I’m not carrying them anymore? If I fall, what hits the ground? Only me and the handle of my wagon. All of my boxes are right where they were, safely packed and still in my wagon. Attached to the handle of my wagon is my instruction book. And what does that instruction book say?
My instruction book says who will be in charge of the wagon, who gets to put stuff in the wagon and what gets to come out of the wagon. It says who gets to benefit from the boxes in my wagon and when. The person in charge of the wagon? That’s my successor trustee. I’m the trustee and I’m pulling the wagon as long as I’m alive and able. When I can no longer pull it, my rule book (my trust agreement) tells my successor where they can go with my wagon. Can they go to a certain investment advisor? Can it be in stocks or bonds? Do I want them to work with a particular advisor? I decide, and when I’ve decided I put all my instructions in my rule book.
So if I have a rule book, and I put everything in my wagon, and I give a bunch of rules about who’s in control, who gets access and when and how, when something happens to me, what happens next? Just follow my rule book. Who follows it? My successor trustee. Does he or she need the permission of a probate judge to follow my rules? NO! They only need my rules to follow!
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