One For The Money

• More than a will [01:13]
• Trusts vs. wills [04:06]
• Inadvertent disinheritance [06:52]
• Finding unclaimed assets [10:40]

Without an estate plan, transferring an estate costs much more because a lawyer is necessary. Also, the process takes much longer because of the backlog in the courts. The records are 100% public, so there’s no privacy whatsoever. If you don't want scammers to harass your children by knowing how much they received, make sure you have an estate plan.

While avoiding expensive lawyers and keeping your final financial information private and away from the eyes of scammers are great reasons to have an estate plan, the primary reason is to preserve family unity. As I mentioned in the previous episode, family unity is the most important legacy you leave behind. Without an estate plan, your heirs may have some strong disagreements. Relationships could be ruined over a simple thing like money.

Some law firms prefer wills over trusts because the result is more lucrative. That’s why some law firms charge so little for wills; they want the probate business. Changing a will requires certain steps; the same witness must sign the updated will. Trusts are easier to change than wills, and assets will be distributed based on an attached document. That document can be periodically updated, and distributions are based on the latest version. 

A trust is much more flexible than a will to make those changes. Trusts are great when you have several beneficiaries on accounts. You won't need to update your accounts if you’ve named the trust as the beneficiary. With a will, you can’t control the distributions. With a trust, you can for some beneficiaries. 

Certain situations almost require a trust, as inadvertently disinheriting children is too easy, as with blended families. For example, if a husband and wife each have kids from a previous marriage, and the husband were to pass away, the wife may inherit everything. Then, when she passes, only her children may inherit all of the money. Inadvertently, this would disinherit the husband’s children from the previous marriage. Because of gift taxes and other complications, the solution isn’t as simple as inheriting children giving a portion to the others.

One important thing to note about the transferring of assets is that property transfers first by title, then by beneficiary designation, and finally by probate or will through the courts. Some assets can’t have a beneficiary named, like a house. So if your will states that your 401k will be split between your kids but names only one of your kids as the beneficiary, that beneficiary will supersede the will. In that scenario, the title beneficiaries would need to match the will. By establishing trust, you can easily address this concern. 

Securities and Advisory services offered through LPL Financial. A registered investment advisor. Member FINRA & SIPC.

• MissingMoney.com
• National Association of Unclaimed Property Administrators
• The Only Legacy that Matters - Ensuring Family Unity via Estate Planning , Ep #45