Do you have a will that provides instructions about how your assets should be distributed after your death? If so, you’re in the minority. According to a 2019 survey from Merrill Lynch, nearly half of Americans over 55 do not have a will.1
While a will is an important planning tool, it may not be sufficient to meet your needs. It could be possible that you also need a trust to achieve your estate planning objectives. Trusts aren’t just for the ultra-wealthy. They can benefit anyone who wishes to exercise control over their legacy and protect their heirs.
Not sure if you could benefit from a trust? Below are a few questions to ask yourself. If you answer yes to any of these questions, you may want to consult with us to determine whether a trust might benefit your estate plan.
Do you want to control when and how your assets are distributed?
A will can dictate who should receive your assets, but it doesn’t state when or how they receive them. You simply state who your heirs are and which assets they’ll receive. Then your assets are distributed to those heirs after the probate process is complete.
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.
Do you want to protect your heirs from others or even from themselves?
You may have some heirs who are unable to manage a large inheritance. Minor children are a good example. While you may want them to benefit from your assets, they don’t have the skills or knowledge to manage a sizable amount of money or property. 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.
Do you want to minimize probate costs?
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.
Does a trust make sense in your estate plan?
Schedule your complimentary consultation with us today. We will analyze your goals and needs to help determine if a trust is the right tool for your estate plan.