According to a 2015 survey from Rocket Lawyer, 64 percent of Americans don’t have a will.1 A will is often the most basic step in developing an estate plan as it provides guidance and instruction on which assets should flow to which heirs after your death.
A will is a valuable tool, but it can’t do everything. Even if you have a will, you may still have needs and goals that aren’t sufficiently addressed by your current plan. You may want to consider a trust.
Many people assume that trusts are only for those with a sizable net worth. However, a trust can benefit anyone who wishes to exercise control over their legacy and protect their loved ones. It’s important to consult with an estate planning professional to determine which type of trust is most appropriate for you.
Not sure if you could benefit from a trust? Below are a few reasons why people use trusts as a legacy planning tool. If these sound familiar to you, it might be time to consider a trust as part of your estate plan.
One of the biggest differences between a trust and a will is that a trust allows you to retain control over your assets even after you pass away. A will allows you to state who should receive your assets. However, you can’t use a will to direct when and how those assets are distributed. They’re simply transferred to the intended heir.
With a trust, you can specify when assets are distributed and how they are managed in the meantime. For example, you might state that grandchildren receive their inheritances when they reach a certain age or after they accomplish a major life goal. You could specify that assets be paid out as annual or monthly income instead of in a lump sum. The choice is yours when it comes to distribution.
Your assets are managed by a trustee until they are distributed. The trustee could be an adviser, a friend, a relative or an estate planning professional. Whomever you choose, that individual has a legal obligation to follow the instructions you set forth in the trust document.
Are some of your heirs unable to manage a sizable inheritance? Perhaps some of your heirs are minor children. Obviously, they don’t have the maturity, mindset or legal ability to manage a substantial amount of money. A trust could be used to manage the funds on their behalf until they reach legal age.
You may also have adult heirs who face challenges. Perhaps they are handicapped and are unable to manage their own financial affairs. Maybe you have a child who’s a spendthrift or who has faced substance abuse issues. In those instances, you may feel more comfortable setting up a trust that slowly distributes assets rather than leaving them a sizable lump sum.
Even if you have a will, your estate will still have to go through a process called probate. This is the legal process for settling an estate. During this time, the court and your executor settle outstanding debts, file tax returns, liquidate assets, notify heirs and more. The process can be time-consuming, and it can generate substantial administrative and legal costs.
Assets that are held in a trust avoid the probate process. Instead of going through probate, those assets are simply distributed to heirs according to the terms of the trust. You can use a trust to get assets into your beneficiaries’ hands faster and with reduced legal expense.
Ready to explore whether a trust makes sense in your estate plan? Let’s talk about it. Contact us today at MasterPlan Retirement Consultants. We can help you analyze your needs and refer you to an estate attorney for further assistance if necessary. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
Investment advisory services offered through MasterPlan Retirement Consultants, Inc. a Registered Investment Advisor in the state of Georgia. Insurance products & services offered through Fricks and Associates, Inc. MasterPlan Retirement Consultants, Inc. & Fricks and Associates, Inc are affiliated companies.
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