When a will isn’t enough — why you might consider a trust
By When you’re early in your career, much of financial advice focuses on the essentials — budgeting, saving, retirement contributions — but what a lot of people neglect is what would happen to those assets in case of an early or unexpected loss of life. It’s not a fun topic, but, especially once you’ve started a family, it becomes really important.
Most of us know what a will is. It’s a legal document that designates who receives your assets and an executor to carry out the instructions. For many people, a will may be sufficient for their needs. It’s usually something like: If they die, their spouse receives those assets. If both parents die, there is a guardian in place to take care of the children, and those children get access to the assets at a certain age.
If you have a fairly typical financial life where your assets are in banks, retirement accounts, life insurance, etc., a will, along with designated beneficiaries, may be sufficient, especially if you want them to transfer directly to a spouse or adult child.
But there are a few situations where beneficiaries may not work as well, and where a trust may come into play. For example:
- You are in a more complex situation where you own several rental properties, a business, or something similar.
- You don’t want your minor children to inherit the entirety of your assets when they reach 18.
- Your beneficiaries have special needs and will need someone to help manage their finances.
- You want to avoid probate.
- You become incapacitated for an extended time and want to dictate how your assets are managed while you’re still alive.
In short, a trust can be helpful if you just want more control over your assets from beyond the grave. Only you know whether that’s necessary in your situation, but talking to a professional like an estate attorney or even a financial advisor can be helpful to determine if that’s the case.
Have you neglected your legal documents and are looking to protect your loved ones? Reach out to us today and let us take a look at your unique situation to see how we can help.
Estate planning services provided in conjunction with your licensed legal professional.
Legal advice is not offered by Family Financial Partners. Please consult with your licensed legal professional for additional guidance appropriate to your specific situation.
Article by Kyrk Davis, Wealth Advisor at Family Financial Partners — a financial services firm in Lexington, Kentucky.