I heard a statistic recently that is startling. Did you know only 40% of Americans have Wills or Trusts in place? Even well-known, wealthy celebrities have neglected their estate plans. Have you seen the news lately about Prince? He didn’t have any plans in place. So now, his sizeable estate will likely go to estranged family members.
This is one area where you definitely want to be in the minority. Think about it. What happens to your assets if something happens to you? Is your family protected?
So, what do you need for your estate plan? Well, that depends on what you want to accomplish and where you are in your life. There are two documents you can use to plan for your family if you die. One is a Will, the other is a Trust.
A Will allows you to decide who will receive what if you die. However, a Will requires your family to go through a Court process called probate to make transfers of any property not owned jointly. Additionally, Wills are required to be filed during the court process, so they are public record. Wills also do not allow you to put restrictions on your assets after your death. What does that mean? That means you cannot tell someone how your money is to be spent, or held for your children. You just get to pick who gets the money. Then, they get to go to court and possibly, fight it out.
With a trust, things are different. Your family can allocate assets privately, without having to go to court or file your estate records publicly. They will also be saved the costs of going through the court process of probate after your death. This can mean thousands of dollars to your heirs. You can choose how people will spend, or receive, your assets. You can use your trust to plan for your incapacity and give others the right to access and manage your assets if you are unable to, without having to give your manager joint ownership of your assets. And, in some cases, you can realize tax benefits.
Once you decide what’s important to you, who you want to receive what, who you want to help manage your assets, and what, if any, restrictions you want on how your assets are used, you’re ready to put a plan in place. The sooner the better. In fact, it is never too early to plan!