15 Sep Estate Planning Beyond a Will

At Phelps LaClair in Phoenix, estate planning is our passion. Our goal is to see all of our clients covered by a well-designed estate plan. Our clients come to us because they want to be assured that the inheritance they leave to their family is going to be a blessing and a legacy. Many of them want to know whether they need a will or a trust. Often, the answer is both.

A Will

A will dictates how your property and assets will be distributed after you die. It can also include guidelines for guardianship for minor and disabled children. These aspects of a will are also an important part of an estate plan. However, when you only have a will, there is no guarantee that your wishes will be followed, even if you spell them out, because a probate court may decide against your wishes. Even with a favorable decision from probate, the inheritance passes to the beneficiaries who can spend or invest as they see fit. If they are unwise, irresponsible, or immature, your hard-earned estate could be squandered.

A Trust

A Revocable Living Trust, on the other hand, allows you to control how your assets are spent after your death. When your assets are in a trust, the terms of the trust determine how the assets are managed. In this way, you can ensure that your estate will pass on to your beneficiaries so they can truly benefit from the inheritance you leave.

An Estate Plan

A properly written estate plan considers the liquidity of the estate to determine what outcome will be best for the beneficiaries. Will they need cash, or will they need income? Will they need protection from their own spending habits? Will they want to make a wise investment or perhaps start a business? The assets named in a trust can be directed towards these goals with a variety of instruments within the trust:

• Protective Inheritance Trusts – The beneficiary may have full flexibility and control over his or her own protective inheritance trust— the beneficiary may be his or her own trustee, control how the assets are invested, decide how and when money is distributed. This kind of trust also directs who may receive the left-over assets when that beneficiary passes away. On the other hand, if a beneficiary is ever experiencing a crisis, the assets in the trust are protected because technically the beneficiary does not “own” the assets; they are owned by the trust and are secure against claims from ex-spouses, lawyers and creditors.
• IRA Inheritance Trust – This is a revocable trust set up separately from your living trust. The IRA Inheritance Trust is then named the primary or secondary beneficiary of your IRA (or company retirement plan), but you remain the owner in full control of your assets during your lifetime. You can also make changes to the trust during your lifetime. When you pass away, your IRA distributions pour over into the IRA Inheritance Trust. The trust can then help assure the maximum tax “stretch-out” and better protect your spouse, children, and grandchildren from the influence and claims of caretakers, unwanted third parties, lawsuits, and creditors.

There is much more to an estate plan than simply choosing between a will or a trust. Phelps LaClair, with offices in Phoenix, Chandler, and Mesa, is here to serve you in navigating all the complex aspects of designing an estate plan. Call us for a consultation—the first one is free! This process has the potential to be stressful for everyone involved, but let us help you ensure that the legacy you leave behind will be a blessing to future generations.

 Images used under creative commons license (Commerical Use)  09/15/2019   Photo by Matthew Henry from Burst