A Stronger Legacy Doesn't Require More Money -- It Requires the Right Trusts and Wills
Legacy sounds like one of those financial concerns only the wealthy need to think about. But anyone with any assets to pass down has a legacy to leave.
Estate planning experts explain why everyone should consider setting up trusts and wills to secure their legacy, no matter the size.
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How Trusts and Wills Turn Values Into Action
Estate planning tools are more than legal documents; they are mechanisms for shaping how your wealth is used and what it stands for. Evan H. Farr, certified elder law attorney and retirement planner at Farr Law Firm, P.C., explained that for there to be both the transfer of wealth and the transmission of values, "There need to be two equally important parallel systems working together simultaneously."
In other words, a trust and a will.
Families can also use these tools to create opportunities for their family beyond simply spending those assets, such as entrepreneurship or education, according to Brian Tullio, JD, LL.M., certified financial planner (CFP) and a partner in wealth advisory services at Fairway Wealth Management.
Types of Trusts That Actually Help Everyday Families
Trusts are often misunderstood as tools for the ultra-wealthy, but many are designed for practical, everyday use. First, they help avoid the time and expense of probate, Tullio pointed out. Second, they provide better privacy because they're not public record. Third, they're "an effective way of structuring the access and control of assets during the grantor's lifetime and after their death, and help simplify complex situations such as incapacity," he said.
Here are some types of trusts:
Revocable living trusts for control and probate avoidance
Irrevocable trusts for asset protection and long-term care planning
Special needs trusts to preserve government benefits
What Happens When You Don't Have an Estate Plan?
Without a will or trust, your legacy is left to state law, which often creates outcomes you didn't intend.
If a person dies without having either a will or a trust, their assets will go through probate and distribution will follow "a fixed statutory formula which may not mirror the deceased person's actual wishes," Farr said.
That can lead to delays and added costs, public exposure of the estate and open it to family disputes.
Biggest Estate Planning Mistakes That Weaken a Legacy
Many people assume creating a will is enough, but Farr warned that's not the case and estate planning should not be treated just as "a document-driven process."
Without a trust, even after assets have been given directly to heirs, they can be subject to creditor claims, divorce settlements or reckless spending, to name a few concerns, he pointed out.
"Another common mistake occurs when beneficiaries on various insurance products, retirement plans etc., are not aligned with the overall plan," Farr added." Beneficiaries can override all other aspects of the plan."
When To Update Your Estate Plan
Estate planning isn't one-and-done. It should evolve with your life, Tullio said.
"Most major inflection points in life warrant a review of your estate plan," he added. "Marriage and having your first child are common life events that prompt individuals to create an estate plan for the first time."
The goal is for your estate planning documents to reflect your life up to that point.
How To Start Building a Legacy Plan
Tullio advised starting the estate planning process by finding a reputable estate attorney and having an initial consultation.
Then, Farr added, "Determine what you currently possess, whom you wish to benefit, who you desire to act as fiduciary and what you wish your money to achieve across generations."
Some key steps to take include:
List assets and beneficiaries
Choose key decision-makers
Decide what your money should do, not just where it goes
Align titles and beneficiary designations
With the right trusts, wills and structure, even modest assets can carry your values forward for generations.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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