Estate planning is an important activity that no one wants to do but needs to be done. While most people think that having a will written solves the problem, there are many more problems that can arise unexpectedly. Here are three tips though that can eliminate them before they can ever happen.
Review Beneficiary Designations and Asset Titling – If you already have a will or revocable trust set up that designates how your assets are distributed among beneficiaries, then be sure to check that the asset titles match up as well regarding the beneficiary. More simply put, if you have IRAs or life insurance policies named in your trust to go to a particular person, make sure that the documentation with those IRAs and policies also designates that person too.
The reason being that once you are gone, those assets will pass onto the person originally listed on the beneficiary form, not who you name in your will or trust. Quite often, beneficiaries expect to receive funds from specific assets and find that instead those monies are automatically awarded to another person just because the asset was not retitled to reflect the assignor’s wishes. Making sure all paperwork is updated and in line with your wishes is an often overlooked but important step to make sure this problem does not occur for your beneficiaries.
Avoid Probate through A Revocable Trust – If you currently have a will then, like it or not, your heirs will be forced to take it to probate court to have its validity verified first, and then the assets designated within it will be distributed accordingly. Sounds simple but the process is anything but that, unfortunately. Going through probate court will usually take, at a minimum, six months to fully process and often longer for more complex estates. Moreover, there are fees and often delays which prevent your heirs from receiving what you have already decided once you pass away.
Establishing a revocable trust though will still allow you to designate which assets go to whom, but avoid the probate process altogether. A trust can assign assets to specific beneficiaries, however, unlike wills, when the assignor passes away, the trust can immediately distribute those assets without having to go through probate at all. It also avoids any issues if the person owned real estate, because any real estate holdings would have to pass through the probate courts within the individual states they exist within if assigned through a will. If multiple properties are owned across various states, all of those probate courts would have to address them individually.
Use Trusts to Hold Inheritances – Another trick that trusts can do for you are holding inheritances for your heirs with ease. For example, if you have an underage beneficiary that you wish to leave an inheritance to, it is much easier to do so with a trust. The reason being that you can assign a designated trustee to manage said inheritance and provide fund distributions to the beneficiary as needed until adulthood. For an older beneficiary, receiving an inheritance through a trust provides asset protection benefits from potential creditors rather than receiving it directly. An assignor can also designate that a trust holds onto an inheritance indefinitely for asset protection reasons as well.
The main takeaway here is that if you are not sure how to structure your estate planning, then a revocable trust is a strong vehicle for you to consider. Their ability to bypass probate, provide simplified asset pass through and asset protection capabilities are all important reasons why many people use trusts for estate planning purposes. If you’re interested in learning even more about them and potentially utilize one yourself, then contact us today to schedule a free 30-minute strategy session with our team. We have decades of experience working in this field; any questions you have regarding this planning, we can handle.
Learn from the best in business, whether you want to protect your existing assets, decrease your tax return or prepare for retirement, our Advisors can help with advice that fits your lifestyle. We can help you keep more of your income, no matter how you earn it.