Worried about your spouse’s financial security after you’re gone? You’re not alone. Many share this concern but don’t know how to translate their concern to action. A well-crafted estate plan offers peace of mind and stability for your loved ones. While an updated will guides asset distribution after your death (until 120!), blended families often find that trusts work better to ensure assets are handled according to their wishes. What’s the difference between a trust and a will?
Understanding Trusts: More Than Just Legal Jargon
Recently, a client shared a common concern: ”Doug, I need to make sure my wife is taken care of if I pass away before her.” This worry is particularly relevant since men often die before their wives. He wanted to ensure his second wife could maintain their lifestyle while also providing for his children from his first marriage. A trust proved to be an effective solution. By placing assets in a trust, he ensured his spouse would receive a steady income, with the principal eventually going to his children. Lawyers often suggest trusts since they can offer clear directives, reducing disputes and ensuring your wishes are honored.
Investing Within a Trust
When we talk about trusts, the conversation often turns to investments, which is where I come in (since I’m not a lawyer and don’t give legal advice). My client wanted to grow the trust’s assets during his lifetime to ensure his wife could draw income from it later. This required a specially designed portfolio which, in his case, meant investing for growth now and planning to shift to income-producing assets like bonds or CDs down the road.
Before You Meet Your Lawyer
Start early by establishing your estate plan while you’re healthy to reduce conflicts and ensure your wishes are clear. Clearly define asset distribution to prevent future family disputes. Communicate openly with your family to build trust and prevent misunderstandings. Plan for growth and income depending on your specific family situation. Trust the trustee you choose to manage the assets according to your wishes, avoiding the temptation to micromanage from the grave.
If you’re considering setting up a trust or need advice on managing your investments within a trust, reach out to start a conversation at 02-624-2788.
Douglas Goldstein, CFP® is the director of Profile Investment Services, Ltd. www.Profile-Financial.com. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation on how to set up your American assets to meet your financial goals. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.
Published August 20, 2024.