Safeguarding Your Legacy: Why Your Trust Should Be the Beneficiary of Your Will

Introduction:

Welcome to a further blog in our series on estate and asset protection planning.

A great estate plan is like a well-conducted orchestra. Each section, from string instruments to woodwinds, plays an important role. Similarly, in estate planning, every document matters, with the trust and will playing the central melodies. Just as an off-note can mar a symphony, not integrating your trust and your will can expose your estate to potential pitfalls.

With our estate plans, your will normally forgives any loans that the Trust owes you when you pass away, and after any bequests (gifts) that you want to make, leaves the rest of your estate to the Trust. A number of clients have been advised by their lawyers to change their wills and leave their assets to their partner and then to their children or other loved ones. This seemingly straightforward approach may unintentionally jeopardise the financial security of your loved ones.

Advantages of Channelling Assets to Your Trust:

Protecting your Surviving Partner: If your will leaves your assets to the Trust this ensures a layer of protection for your partner during their lifetime. Such a move protects these assets from potential threats like geriatric care costs, unexpected lawsuits, and any unforeseen liabilities that might emerge.

Empowering Your Loved Ones with Choices and Protection:

On your passing, if your assets are owned by the Trust, it gives your children a profound advantage. They inherit not just assets, but options. They can choose to transfer these assets into their trust, or directly inherit them. It's like giving them a tool to make the best decision based on what's happening in their lives at that time. Put simply, if your loved ones inherit assets in a Trust, no one can take them from them, as they were never theirs.

An Illustrative Real-Life Example:
Alex was bequeathed a substantial amount in his father's will. At the time, Alex was undergoing a challenging financial phase due to business difficulties. Soon after receiving his inheritance, Alex's creditors came knocking. A significant portion of his inheritance had to be used to pay his outstanding debts. Had Alex's parents left their assets to their Trust, Alex could have kept the assets in their Trust shielded from claims by his creditors.

This example emphasises the pivotal role of strategic thinking in estate planning. By channelling assets to the Trust, you're not only preserving wealth but also ensuring that your legacy serves its prime goal: to offer security, adaptability, and an armour of protection to your loved ones.

Important Reminder:
It's essential to remember that your will cannot govern the assets contained within your trust. These are governed by the Trust deed and its associated memorandum of wishes.

Conclusion: The crucial role of an estate and asset protection plan

Changing your will to leave your assets to your Trust is a smart move that can keep your loved ones safe in the future.

To gain a deeper understanding of these options, we encourage you to delve into our comprehensive free guide: Your estate and asset protection plan - crafting a personalised plan to protect your legacy by clicking the link here or below. You can also read our website page: Your estate and asset protection plan - crafting a personalised plan to protect your legacy  Together, we can create a legacy that stands the test of time.

Watch our You tube video

Stay tuned for our next blog. If you have more questions or want to talk about it more, just let us know. We're here to help and make sure that your estate plan will achieve your goals for you and your family.

reception@rossholmes.co.nz  Tel: +64 9 4150099 extn 0