In our rapidly changing world, the average person wonders how to improve and maintain their quality of life. Little attention is paid to what happens when they become incapacitated or die. For some people, the idea of ââsetting up structures only occurs at the end of adulthood.
According to FBNQuest, âIf this sounds like a lot to you, consider putting in place a financial plan as soon as possible. The two main ways to make the transfer of your assets transparent after your death or when you are incapacitated are through a written will or through the use of a trust.
FBNQuest describes this as a legal document that captures your wishes and the allocation of your assets, clearly outlining who should take responsibility for managing your assets until they are distributed.
He goes on to say that with a trust, a trustee is appointed during your lifetime to hold and manage your assets on your behalf for your beneficiaries.
âWhen a will or trust is not in place before your death, a lot of paperwork is often required to sort out the process of transferring to a beneficiary. This will obviously have an impact on traditional assets such as bank deposits, retirement savings with a pension fund administrator, equity holdings, real estate and other physical or financial assets.
âThe process of transferring these assets could take months or even years just because the person did not have a will or trust in place.
âApplicable taxes on assets not mentioned in a will may also result in a reduction in the value of the original asset transferred to a beneficiary. In addition, the increase in the use of digital platforms means that if you are unable to create and maintain such records with a corporate trustee for safe retention, online accounts and passwords that are not securely registered may become inaccessible after your death. It is therefore possible that some of the assets you own will be lost forever, âFBNQuest pointed out.
Benefits of trust
You can specify the terms of the trust, which means that a trust can help you be strategic if you want to protect your assets after a divorce. For example, control when children get your money, or control how people spend the money you leave them.
Trust assets do not have to go through probate.
Approval can take several months. Trusts can avoid probate and return assets to your heirs more quickly.
Potential tax savings
Certain types of trusts can lower your estate taxes. However, most people don’t have to pay estate taxes, so talk to a financial advisor before setting up a trust. There is no reason to use a trust to avoid taxes that you may not have to pay anyway.