Top Strategies For Financial Security
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Top Strategies For Financial Security

Hello, my name is Rhonda. If you have financial goals, this blog can help you achieve them. A few years ago, I realized that I didn't have a good plan for my future and I wondered if my financial needs would be met after I retired from my job. I immediately started planning for my future by speaking with a financial advisor and I learned a wealth of information at our meetings. By following the recommendations of my advisor and by learning everything I could about finances and money, I now feel very secure about my future. If you need financial help for retirement planning, college savings or even for an emergency fund, you can get sound advice by reading my blog. I believe that by following a few basic strategies, everyone can meet their goals and be financially secure.


Top Strategies For Financial Security

Beginning To Plan Your Estate? When Do You Need A Trust?

Kent Cook

If you've finally reached your retirement savings goals and are now discovering you may have some excess assets to pass down to your children, grandchildren, or other heirs, you're likely wondering about the best way to do this -- especially if your funds are held in an IRA, 401(k), or other account in which the withdrawal rules for account holders differ from those for inherited holders. In some cases, a trust may be the best tool in your arsenal when it comes to asset preservation. Read on to learn more about the role a trust can play in the distribution of estate funds, as well as a few specific situations in which a trust may be the best way to preserve and pass down your assets.

How do trusts impact the distribution of funds from an estate?

One of the primary advantages of a trust is its ability to take funds out of the control or direction of one individual (even the funder of the trust) and instead utilize them for the benefit of the trust's beneficiaries. In many cases, this allows a trust to bypass the probate process. 

For example, if an individual has $1,000,000 in personal assets and leaves these assets to his or her two children, the estate must be probated. An executor may use some estate funds for his or her own fees in probating the estate, and the probate court may need to approve before funds may be distributed. 

On the other hand, a trust of $1,000,000 listing both children as beneficiaries will endure even after the trust funder's death. There should be no interruption to the ongoing distribution of assets (if applicable), and -- unlike the public nature of probate -- no notification to the public that these assets even exist.

When do you need a trust? 

Although a trust isn't suitable for every estate, there are a few situations in which it may be the best financial and logistical choice.  

  • You value privacy

The confidentiality that comes from bypassing probate with a trust can be invaluable for those with substantial assets or grudge-holding family members.

  • Your state imposes an estate tax

Because a trust never becomes part of an estate, trust assets are not subject to an estate tax. 

  • You have complicating factors

If you have a disabled adult child, a blended family, or other factors that can make the division of your estate more complicated than most, a trust can help you iron out many of these issues prior to your death.