Estate Planning Through Trust

“Planning, Managing and Preserving Wealth for Generations”

Each one of us toils hard to create assets for our children. The assets may be fixed assets like properties or movable assets such as a car, liquid assets like savings, and bank deposits, or even assets like personal possessions.

What happens to these assets in the event of the unexpected death of the asset creator?

Has a plan been put in place for the next generation to be able to enjoy and later enhance these assets? All this needs to be done by incurring minimal taxes, and legal fees and without any legal proceedings in court.

Covid-19, the pandemic, has taught us a lesson. Estate planning is very crucial. Estate planning is not a post-retirement or post-death activity. It has to be well thought out for the contingencies and planned well in advance.

WHAT IS ESTATE PLANNING?

Estate Planning means making a plan well in advance, and documenting the beneficiaries, either individuals or organizations, who should benefit from the assets.

It is not only for the High Net Worth (HNI) individuals but for everyone, as each one of us has assets in some form, which we wish to pass on to our loved ones.

Estate Planning is not a one-time activity. It is an ongoing process of reviewing and updating the plan as per the family and financial circumstances.

WHAT DOES ESTATE PLANNING INCLUDE?

Estate Planning includes several provisions by which the assets can be used for self and made available to others while protecting those assets.

Estate Planning includes:

Financial arrangements for education, healthcare, and marriage expenses of the loved ones
Instructions for personal care and managing financial affairs in the event of incapacitation, before death
Arrangements for disability income insurance to replace other income sources in the event of illness or injury
Arrangements for long-term care insurance in case of prolonged illness or injury
Life insurance provisions for the family at the time of death
Provisions for transferring the business at the time of retirement, disability, incapacitation, or death
Provisions for loved ones who cannot manage finances
Provisions for protecting the beneficiaries from creditors
Appointing a guardian for minor children’s care and inheritance process
Provisions for loved ones with special needs
Minimizing taxes, and legal fees, avoiding court proceedings and legal hassles, etc.

WHAT HAPPENS IN THE ABSENCE OF AN ESTATE PLAN?

Many people ignore estate planning because they

Are not aware of the estate planning benefits and do not know how to get it done
Think that they do not have enough assets and therefore it may not be viable
Feel that they have enough time on hand to do it
Find it expensive and confusing

If there is no estate plan during disability, and the business cannot be conducted due to incapacitation, the court will supervise and control how the assets can be used, through conservatorship or guardianship. This can be highly time-consuming, stressful, and expensive. It can be really challenging to close the entire issue.

In the event of death without a valid estate plan, the assets without a beneficiary, will be under the state and distributed as per laws of the state through a court-supervised probate process. In such a situation the estate maybe not divided as it had been desired.

It’s time, people realize that Estate Planning is for everyone and it’s the most important job on their hands.

Estate Planning is the best to keep control of your assets and distribute them as per your wish and terms without court proceedings and any external interference.

ESTATE PLANNING THROUGH A WILL

Estate Planning through a Will is one of the commonly followed options for managing your estate. However, has its flip side.

The Will:

Is a legal declaration, in which, the creator of the will (the testator), specifies his/ her intentions about the assets?
Comes into action after the death of the testator
States the instructions, but has to go through the probate process
Mentions as to how the assets will be distributed, but the proceedings are through the probate court before the beneficiaries can receive those assets
Has to undergo probate processes for distribution of assets can be expensive, time-consuming, tiring, and stressful
Through its probate proceedings open to the public, involves creditors being notified of their claims and an opportunity for their receivables through payments or a share during estate distribution
Makes the court control the time of the distribution of the assets
Can be difficult to change in case of incapacitation

Therefore, a revocable living trust, along with a pour-over will is highly recommended.

ESTATE PLANNING THROUGH A TRUST

Trust is the most effective tax management tool for asset management. Trust can be private or public in nature.

Estate Planning through a revocable living trust is highly preferred due to the following reasons:

A revocable Living Trust:

Avoids probate in the event of death
Avoids multiple probates, if properties are owned in different states, at the time of death
Prevents the court from controlling the assets, if the person is incapacitated during his life term
Ensures privacy, by bringing assets under one roof
Can change the instructions and beneficiaries at any point in time
Continues long even after death, being managed by the trustee(s)
Manages the assets until the beneficiaries reach the desired age of inheritance
Manages assets for a long, to keep providing for loved ones who need special care
Protects the assets from creditors
Ensures wealth management for future generations

An all-inclusive Estate Plan having a Living Trust and pour-over will is highly cost-effective and hassle-free, which ensures great family togetherness and wealth creation for generations.

“Estate Planning is creating a financial legacy for generations”

ADDVALUE is one of the leading Family Business Advisors assisting members of family businesses to design their Estate Planning, under the guidance of expert Family Business Consultants.