When considering the management of your assets after your passing, two primary options typically arise: wills and living trusts. Leaving a lasting impact holds significance, whether it involves passing down wealth to your family or contributing to an organization or cause close to your heart. Once you reach the age of 62, your financial advisor should be having an annual meeting regarding generational wealth transfer.

What distinguishes this process? Legal instruments are what help protect your family or organization in this process. Let’s delve into their differences.

Wills:

A will serves as a comprehensive document outlining the distribution of your assets following your demise. It legally specifies the beneficiaries, appoints an executor to oversee the implementation of your wishes, and can designate guardians for minors. Importantly, wills are public records, subject to potential scrutiny and contestation in legal proceedings. Wills are also subject to probate. 

Probate: This involves the legal procedures following an individual’s death. The court validates the will, resolves outstanding debts and tax obligations, and subsequently allocates the assets to the intended recipients. However, probate proceedings can be protracted, particularly in cases involving disputes or complex estates.

Living Trusts:

Enter the living trust, a discreet and efficient alternative in estate planning that bypasses probate entirely. During your lifetime, you transfer your assets into this trust, retaining control as the trustee. Additionally, you appoint a successor trustee to manage or distribute the assets according to your instructions in the event of your incapacitation or demise, without the need for judicial intervention.

Privacy: A notable advantage of living trusts is their confidentiality. Unlike wills, they remain undisclosed to the public, safeguarding financial privacy. Furthermore, their avoidance of probate diminishes the likelihood of challenges from dissatisfied relatives or opportunistic individuals.

Cost Considerations: While establishing a living trust may involve higher initial costs compared to drafting a will, it represents an investment in peace of mind. By circumventing probate fees, legal expenses, and potential litigation, significant savings may accrue over time.

The Bottom Line:

In the comparison between wills and living trusts, each harbors distinct advantages and drawbacks. Wills, though traditional, are subject to probate and potential public scrutiny. Conversely, living trusts offer confidentiality and probate avoidance, albeit with higher upfront costs.

Ultimately, the choice between the two depends on individual preferences, the complexity of your estate, and your tolerance for legal complexities. Nevertheless, regardless of the chosen approach, the overarching goal remains consistent: ensuring the orderly disposition of your assets to the intended beneficiaries upon your passing.

Navigating this conversation can be challenging, but your financial advisor can play a crucial role in facilitating the devised strategy. Their involvement ensures that all participants in the financial plan comprehend the subsequent steps towards crafting the desired legacy.

The Tranel Group is a registered investment advisor. Registration does not imply a certain level of skill or training.

This document does not constitute advice or a recommendation or offer to sell or a solicitation to deal in any security or financial product. It is provided for information purposes only and on the understanding that the recipient has sufficient knowledge and experience to be able to understand and make their own evaluation of the proposals and services described herein, any risks associated therewith and any related legal, tax, accounting or other material considerations. To the extent that the reader has any questions regarding the applicability of any specific issue discussed above to their specific portfolio or situation, prospective investors are encouraged to contact Firm Name or consult with the professional advisor of their choosing.