Financial & Estate Planning

Don’t create a trust when it’s not necessary. Trusts can help avoid probate and smooth the transition in case you become incapacitated. However, depending on the shape of your portfolio, you might not need a trust for those purposes.

Jointly held property goes directly from one co-owner to the other. Insurance proceeds and retirement funds go to named beneficiaries. Such assets don’t go through probate; nothing in a will or trust can alter this disposition.

Thus, if your estate is likely to consist mainly of an IRA, a life insurance policy, and a jointly owned home, you won’t need a trust to avoid probate or incompetency.

If you decide to create a trust, be sure to back up your trustee. Some mechanism should be in place to name a successor if the trustee dies, becomes ill, or moves across the country. Either a successor can be named in the trust documents or a procedure can be set out. For example, if your original trustee can no longer serve, the three trust beneficiaries can name a replacement, as long as the new trustee is an unrelated party.