Trusts, once thought of as vehicles reserved for the wealthy, have been garnering attention from families at all income levels. In fact, trusts are becoming as ubiquitous as wills, providing individuals with the assurances that their wishes for asset distribution and care of loved ones will be followed upon their death and done so rather quickly and outside the public eye.
When someone passes away without a will, the laws of his or her state of residence will decide who receives his or her property after a court-appointed administrator pays all his or her outstanding liabilities. If the decedent has no living family members, his or her assets could be passed to the state.
Conversely, a will allows you to name executors to initiate the probate process 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 a decedent was the family’s primary breadwinner, his or her 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 the decedent had outstanding loans before his or her passing, the court could require those creditors to be paid before making any distributions to 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 home 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.
There are a variety of different types of trusts individuals may use for an equally wide range of reasons, including asset protection and preservation during your life, tax management and mitigation, and ensuring you leave behind the legacy you intend to care for your 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 Raymond James Financial Services. For more information, call (954) 712-8888 or email info@provwealth.com.
Provenance Wealth Advisors, 515 E. Las Olas Blvd., Ft. Lauderdale, FL 33301 (954) 712-8888. Lee F. Hediger is a registered representative of and offers securities through Raymond James Financial Services, Inc., Member FINRA/SIPC.
Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors + CPAs.
PWA is not a registered broker/dealer and is independent of Raymond James Financial Services. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc., and Provenance Wealth Advisors. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of the advisors of PWA and not necessarily those of Raymond James. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, 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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Posted on August 26, 2021