When a Will is Not Enough: Five Reasons You Might Consider a Trust
If you’ve been thinking about estate planning, you’ve likely heard of two methods – wills and trusts. And while every individual should have some measure of an estate plan – a set of legal documents that ensures your assets will be handled according to your wishes upon your death – there are certain reasons that you might consider one method over the other.
Drafting a will is a good first step, but many individuals – especially those with a complex estate – should also consider creating a trust. A trust is a legal arrangement that assigns a “trustee” the authority to hold your assets (which could include investments, real estate and personal property), and manage and distribute them as directed in your absence. Compared to a basic will, a trust can provide extra layers of control and protection.
There are many types of trusts, so it’s best to work with a wealth advisor and attorney to meet your specific needs. Here are five common ways a trust could serve you and your beneficiaries:
- Avoiding probate: If you die with only a will, your estate will be administered according to state law (performed separately in every state in which you own property). This can be a tedious and time-consuming process that often requires publicly disclosing private information. A trust can bypass probate and distribute your assets quickly and privately.
- Tax efficiency: Certain types of trusts, such as charitable trusts or generation-skipping trusts, can be used to minimize the amount of tax owed by your estate, leaving more for your loved ones or the causes you support.
- Incapacity planning: If a serious medical issue leaves you unable to handle your own affairs, your designated trustee (rather than a court-appointed guardian) can manage your assets during that time and make certain all of your needs are met.
- Asset protection: Trusts may be used to shield assets from lawsuits, spendthrifts, and creditors — ensuring your estate will continue to benefit your heirs for generations.
- Making stipulations: A trust allows you to make specific rules about who receives certain assets, and when and how this occurs. For example, you might set age thresholds for when young children or grandchildren receive money, or arrange timed distributions to care for a special needs family member in perpetuity.
The more complex your financial affairs, the more essential it becomes to choose an experienced estate planning partner. Contact Brad Clark at 214.515.4870 or Brad.Clark@frostbank.com for help securing your legacy and preserving your wealth for future generations.
Investment management services and trust services are offered through Frost Wealth Advisors of Frost Bank. Investment and insurance products are not FDIC insured, are not bank guaranteed, and may lose value. Brokerage services offered through Frost Brokerage Services, Inc., Member FINRA/SIPC, and investment advisory services offered through Frost Investment Services, LLC, a registered investment adviser. Both companies are subsidiaries of Frost Bank. Additionally, insurance products are offered through Frost Insurance. Deposit and loan products are offered through Frost Bank, Member FDIC.
Frost does not provide legal or tax advice. Please seek legal or tax advice from legal and/or tax professionals.