Estate Planning is Not Only for the Wealthy

finance goals

Estate planning is not only for the wealthy, rich and famous. We’ve all heard about trusts, but it seems that most people believe that they are only for the uber-wealthy families. If the concept of a trust fund baby works well for the very wealthy, then maybe it is something the more modestly wealthy to consider for their families as well.

Another important distinction for trust funds, is that the entire process is kept private, as opposed to the probate court process that can leave loved ones open to public attention and scrutiny.

What is a trust?

A trust is an entity (like an actual living person is an entity too) created through paperwork to serve as a holder of funds and assets. A beneficiary or multiple beneficiaries are selected to receive the funds. This occurs with specific instructions about how and when funds will be distributed.

What is the purpose of a trust?

A trust can serve multiple purposes, but some of the major uses of a trust are to create a secure environment to pass on wealth to the children or beneficiaries of the trust holder. A trust can help to reduce estate taxes on inheritance by transferring funds directly to beneficiaries rather than through the standard will and probate court process. This can be useful if the estate is large enough to be subject to the estate tax. Families with more complicated relations, such as step-siblings or half-siblings can more explicitly direct how funds shall be dispersed following the death of a trust member. Another important distinction for trust funds, is that the entire process is kept private, as opposed to the probate court process that can leave loved ones open to public attention and scrutiny.

Setting up a trust for your family and loved ones is not difficult, and will pay for itself in tax reductions. It is a way to ensure that your wishes and privacy are maintained when the inevitable happens. Contact us today to discuss your options regarding this financial planning tool.