We often say that estate planning is an important part of financial planning overall. Not only should you be concerned with saving money for your own retirement; you also need to decide what will happen to your assets in the event that you pass away. That’s why many people do things like draft a Last Will and Testament, and regularly review their life insurance beneficiary designations. Knowing that your property will be distributed according to your wishes, and that your loved ones are safe, might bring you peace of mind.
However, don’t make the mistake of thinking that everything will go as smoothly as you planned. Did you know that even if you fill out all of those beneficiary forms and leave a Will, your estate will still be required to pass through probate court? Since the process can last anywhere from nine months to several years, your loved ones probably won’t receive your assets as quickly and efficiently as you had intended.
In the worst-case scenarios, anyone who contests your Will could cause the process to drag on for years and years. Your heirs might even spend considerable amounts of their inheritance fighting to keep it! We all hope these things won’t happen in real life, and that they’re mostly fodder for television dramas, but we’re wrong to assume that. It absolutely could happen to your beneficiaries.
On top of a long, drawn-out and costly court fiasco, there’s one more reason to avoid the probate process: Once your estate passes through the courts, everything becomes permanent record. Anyone who takes the time to visit the courthouse and do a little research can discover your heirs names, how much they inherited, and more.
Luckily there is a way to prevent all of these headaches, and protect your loved ones’ personal information. Establishing a trust allows you to pass assets directly to your heirs upon your death, bypassing the probate system and saving everyone a lot of time and money.
Trusts can be tricky to establish. There are many different types of trusts, offering different benefits and possible drawbacks. We can discuss this issue at our next financial planning meeting, and help you decide if a trust is the right way to leave assets to your loved ones.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual
LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.