Estate Planning Myth: Estate Planning Is Only For Wealthy People
Maybe it is due to the stereotype of a “trust fund baby.” Or it could be the way trusts are depicted on television and film. Regardless, there is a general misconception that if you aren’t extremely wealthy, you do not need to create a trust. That simply isn’t the case. Trusts are for anyone who has assets. With that in mind, trusts are indeed for the wealthy, but they are for you too.
Once you learn and accept that you can benefit from trusts, you may discover how valuable they can be for you if you have minor children or have assets worth more than $500,000. Before we go on, we need to address that last point. On the one hand, we are stating that you don’t need to be ultra-wealthy to have a trust, but we also just said that you should consider one if you have more than $500,000 in assets. Though that amount may seem high, it may not be when you factor in your:
- Retirement Accounts
- Life Insurance Policies
- Bank Accounts
Why are we recommending trusts for people facing these circumstances? It saves a significant amount of money that would otherwise be spent during the probate process. Generally, probate may cost about 3% of the gross value of what you have. If you have a $500,000 estate, that equates to $15,000. And again, trusts do not pass through probate. When you fund a trust with your assets, you no longer own them. The trust does. Your attorney can still ensure you can access and use these assets (e.g., your home).
Another significant advantage of a trust is that it prevents your assets from being locked down in probate. If the probate process takes a year—which isn’t abnormal—your children would have access to the money you left them until the probate process ends. Some people may want their children to have access to the assets and funds you left them immediately. Their children may even be reliant on the money or home you leave behind.
Family First Firm
Should you avoid probate? The answer to that question depends on your circumstances. When you meet with the estate planning attorneys at the Family First Firm, we will take the time to understand what assets you have and where you want them to go. Then we will suggest the plan that fits your needs. Contact us to schedule a consultation.