Are you one of the one-third of Americans with a will? According to a 2015 survey from Rocket Lawyer, 64 percent of Americans haven’t taken the most basic and fundamental step in estate planning.1 A will provides guidance and instruction on which assets should flow to which heirs after your death.
Even if you have a will, though, you still could have gaps in your estate plan. Although a will is a valuable tool, it can’t do everything. You may have needs and goals that can’t be achieved with just a will. If so, you may want to consider a trust.
Many people assume that trusts are only for the ultrawealthy. However, a trust can benefit anyone who wishes to exercise control over their legacy and protect their heirs and loved ones. There are many different types of trusts to meet a broad range of needs, so it’s important to consult with an estate planning professional to determine which type is most appropriate for you.
Not sure what estate planning strategy is right for you? Below are a few objectives to keep in mind. If these sound familiar to you, it might be time to consider your estate planning options.
Control over your assets.
Perhaps the most important benefit of a trust is that it 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 might specify that assets be paid out annually rather than all at once.
You name a responsible friend or adviser as trustee, and that person has a legal obligation to carry out the trust’s instructions. That may give you confidence that your wishes will be met and your legacy will be put to good use.
Protection for heirs.
It’s possible that you may not trust some of your heirs with a sizable windfall. 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 certain 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 estate planning as part of an overall retirement income plan? Let’s talk about it. Contact us today at Coventry Financial Group. We can help you analyze your needs and develop a strategy. 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.
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