In our fast-paced world, the average person is consumed with how to improve and sustain their quality of life. Little attention is paid to what happens when they become incapacitated or pass away. For some people, the thought about putting structures in place only takes place at the tail end of their adult life.
According to FBNQuest, “If this sounds a lot like you, consider putting a financial plan in place as soon as possible. The two primary ways to make the transmission of your assets seamless after your demise or when you are incapacitated, is through a written Will or the use of a Trust.
FBNQuest describes this as a legal document that captures your wishes and the distribution of your assets, clearly outlining who should take on the responsibility of managing your assets until they are distributed.
It goes on to say, with a Trust, a Trustee is appointed in your life time to hold and manage your assets on your behalf for your beneficiaries.
“When a Will or Trust is not in place prior to your demise, a lot of paperwork is often needed to fix the process of transfer to a beneficiary. This will obviously impact traditional assets such as bank deposits, retirement savings with a pension fund administrator, stock holdings, real estate and other physical or financial assets.
“The process of transferring these assets could take months and even years simply because the person did not have a Will or Trust in place.
“Applicable taxes on assets not stated in a Will may also lead to a reduction in the value of the original asset being transferred to a beneficiary. In addition, the rise in the use of digital platforms means that if you fail to create and keep such records with a Corporate Trustee for safe keeping, online accounts and passwords that are not recorded securely could become inaccessible after your demise. It is therefore possible that some assets that you own may be lost forever,” FBNQuest pointed out.
Advantages Of Trust
You can specify the terms of the trust, which means a trust can help you be strategic if you want to protect assets after a divorce. For example, or control when kids get your money, or control how people spend the money you leave them.
Assets in trusts do not have to go through probate.
Probate can take several months. Trusts can avoid probate and get assets to your heirs faster.
Potential Tax Savings
Some types of trusts can lower your estate taxes. However, most people do not have to pay estate taxes, so talk with a financial advisor before setting up a trust. There is no reason to use a trust to avoid taxes you may not have to pay anyway.