Trusts have become an increasingly popular estate planning tool among individuals at all income levels who want to avoid probate and ensure the quick and private transfer of assets to their loved ones upon their death. This level of control complements the use of a will and provides users with the added peace of mind that their family members will continue to be cared for without interruption after they are gone.
A will allows you to name executors to initiate the probate process after your death and carry out your specific wishes for distributing assets to your named beneficiaries. However, even with a will, the probate process is public record and can take quite some time before beneficiaries receive any funds from a decedent’s estate. While some assets for which you named a beneficiary will automatically bypass probate, including life insurance proceeds and certain retirement accounts, most other assets will not. Therefore, if you are the family’s primary breadwinner and you pass away, your surviving spouse and children may not have immediate access to funds needed to pay monthly bills, including a mortgage, health insurance, college tuition and other required expenses. Moreover, if you had outstanding loans before your passing, the court could require those creditors to receive payments before any distributions are made to your named beneficiaries.
One of the best ways to pass assets to heirs outside of probate is with the use of trusts. Not only do trusts shield assets from public view and protect them against creditors and legal claims, including divorce, but they can also provide unique benefits to you during your lifetime.
With a revocable trust, you may transfer or retitle assets, such as bank and investment accounts, a house or other physical property, to a trust that is managed for your benefit. During your life, you retain the right to change or revoke the trust at any time. Should you become incapacitated and unable to care for yourself, the trust can ensure that your bills will be paid, and your family members will continue to be cared for.
After you pass away, the trust assets may be immediately distributed to your named beneficiaries or used to continue paying required expenses for your heirs. This is critical for ensuring your family members receive the same care and maintain the same lifestyles they enjoyed while you were alive, rather than leaving them at risk of losing their homes or suffering financial difficulties. Moreover, the trust assets may be used to pay for the long-term care of a disabled family member without jeopardizing that person’s rights to government benefits, such as Medicare.
Individuals may use various types of trusts for an equally wide range of reasons, including asset protection and preservation during life, tax management and mitigation, and ensuring they leave behind the legacy they intend to care for their loved ones. The professionals with Provenance Wealth Advisors help families across the world create and manage trusts that meet unique needs and achieve intended goals.
About the Author: Lee F. Hediger is a co-founding director with Provenance Wealth Advisors (PWA), an Independent Registered Investment Advisor affiliated with Berkowitz Pollack Brant Advisors + CPAs and a registered representative with PWA Securities, LLC. He can be reached at the firm’s Fort Lauderdale, Fla., office at (954) 712-8888 or info@provwealth.com.
Provenance Wealth Advisors (PWA), 200 E. Las Olas Blvd., 19th Floor, Ft. Lauderdale, FL 33301Â (954) 712-8888.
 Lee F. Hediger is a registered representative of and offers securities through PWA Securities, LLC, Member FINRA/SIPC.
This material is being provided for information purposes only and is not a complete description or a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the preceding material is accurate or complete. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.
Any opinions are those of the advisors of PWA and not necessarily those of PWA Securities, LLC. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of PWAS, we are not qualified to render advice on tax or legal matters. You should discuss any tax or legal matters with the appropriate professional. Prior to making any investment decision, please consult with your financial advisor about your individual situation.
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Updated on July 19, 2024