High net worth clients have many different options of how to distribute their wealth to their beneficiaries. Some might choose to simply leave money outright to their daughters and sons in their will as direct cash disbursements. However, it is often a good idea to include trusts in order to make sure that the money is managed well.
Trusts can designate a chosen and highly respected trustee, who can then manage assets in accordance with specified terms. This structure can be particularly helpful for minor beneficiaries, who may not be ready to make all financial decisions on their own. They also might not be legally empowered to make those decisions and might need to be protected by the trustee from those who would take advantage of them.
The high net worth client may also want funds to go to very specific purposes. For example, he or she may want some to go to educational expenses for the beneficiary, while another amount can go to living expenses. Others may be purely discretionary. Such specific designations protect young beneficiaries from their own immaturity.
For example, if the money was just left as a direct disbursement via a will, the beneficiary might blow it all on a sports car or pleasure trips. With the trust, however, it can be assured that set amounts will be spent only on college. This ensures that the intent of the person setting up the trust will be honored.
It’s fair to say that having that control is important to many people. For that reason, trusts are definitely something that high net worth clients should look into. An experienced attorney can provide valuable advice about the process.
Source: Insurance News Net, “Why High-Net-Worth Clients Need Trusts In Estate Plans” Jamie Golombek, Jun. 11, 2014