The Importance of Trusts

“Who’s Sitting on Your Nest Egg? Pg 61-62

Properly drawn trusts are extremely important tools which can be legally set up to avoid probate, even over several generations. This is especially important in the case of Individual Retirement Accounts (IRAs), which dictate the number of years over which funds must be withdrawn. By structuring what’s known as A “Stretch IRA,” withdrawal of the funds accumulated in an IRA can be “stretched” over the life expectancy of the beneficiary, a child, or even a grandchild, thus lengthening the number of years over which withdrawals are required.

Trust documents should be prepared by an attorney who specializes in that field. The problem with a “do-it-yourself” trust is that its faults won’t be discovered until after the owner’s death, when it’s too late to correct them.

In doing estate planning, it’s important for the owner to think like a parent. The goal should be to make certain everything is handled after your death as you’d handle it if you were still alive. Where there are multiple beneficiaries (children, for example), this can be very complex. A good advisor will establish separate accounts for each child, which may help avoid disputes among the heirs and, in turn, the heirs of the heirs.

A qualified financial planner may be able to help you and your heirs avoid the kinds of legal entanglements, heavy expenses, and long delays that could have been avoided by proper estate planning. Sadly, disputes over the assumed, but not clearly stated, intentions of the deceased person can cause bitter and long-lasting disruptions of family relationships-disruptions which could have been avoided.

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