Estate Planning: When Writing Your Will Won't Be Enough

August 28, 2017

Before we begin this article, we have three questions:

1. Do you have a will?
2. If you do, has that will been updated recently?
3. Are you certain the beneficiaries in your will can handle their distributions wisely? 

If you answered yes to all three, wonderful! If you answered no to any of them, best keep reading.

A will, the legal document by which a person expresses their wishes for how to their distribute their estate at the time of their death, is a crucial element in sound long-term planning. While legal and binding, the will has certain limitations; while it allows you to specify who should receive your assets in the future, a will can’t guarantee how well those assets will be managed after your heirs actually receive them. 

And sometimes, that’s the most important part.

For instance, if your heirs lack experience in handling large sums of money, they may make unwise investment decisions. Over time, bad investment choices could seriously reduce the size of your original bequest perhaps doing more harm than the good you intended.

And what if you have reservations about the maturity or the judgment of one or more of your heirs? Would you be comfortable leaving a large sum of money to a child or grandchild knowing that he or she might not be able to handle sudden wealth?

Fortunately, there is a way to ensure that your assets will be both managed productively and used for the purpose you originally intended. A trust under will (also called a “testamentary trust”) may be just the answer you’re looking for.

Such a trust is a flexible arrangement you create directly in your will. It allows you to direct that your assets will be held and managed by a trustee for the benefit of your beneficiaries upon your death. During your lifetime, you’ll still own and control your property but, after your death, your designated trustee takes charge of your property and manages it for the benefit of your beneficiaries. The trustee will follow the instructions you have provided in the legal agreement establishing the trust.

You can determine the amount—and frequency—of the distributions your trustee must make to your named beneficiaries. You could, for example, structure the trust to pay your spouse a lifetime income. And, if you choose, you could include a provision that allows your spouse or other beneficiaries to withdraw principal from the trust under certain circumstances, like a new home or a new degree.

Ensuring that your loved ones will continue to enjoy the benefits of the assets you’ve spent a lifetime accumulating is an important goal. As we have extensive experience as trustee with numerous trust-under-will arrangements, we can help you achieve it. 

Want to Learn More?

If you would like to learn more about a trust under will or about any other trust and estate service, please contact the Wealth Management team at Security National Bank.