Image shows an illustration of a family. Image reads: Trusts and Estate Planning.
Estate planning is one of the most important components of passing down wealth from generation to generation. A trust may help efficiently manage your wealth transfer and help protect your assets.
Image reads: Attitudes on wealth planning.
The good news: According to Spectrem Group’s 2016 research paper “2016 Personal Trust Update,” people feel confident in understanding what’s at stake in estate planning.
75% understand the complexities of transferring their wealth to beneficiaries.
75% are comfortable talking to their family about their estate plan.
64: On a scale of 1 to 100, people rate themselves fairly knowledgeable about the benefits of trusts.
Image reads: Ownership of wills and trusts.
Many affluent households have established a will, but few have established a trust — something that would be prudent for these households to consider.
Bar graph shows that 68% mass affluent households with a net worth of $100,000 to $1 million have a will, while 13% have a trust; 84% of millionaire households with a net worth of $1 million to $5 million have a will, while 25% have a trust; 92% of ultra-high net worth households with a net worth of $5 million to $25 million have a will, while 44% have a trust; and 58% of $25 million+ households have a trust.
Image reads: Mistakes people make in their trusts.
As these four common mistakes show, an effective wealth transfer plan requires more than simply establishing a trust.
- Not funding the trust once it’s created.
- Not considering a “pour over” will to transfer any additional assets into a revocable living trust at the grantor’s death.
- Neglecting to check beneficiary designations for assets that don’t pass through the trust, like 401(k) plans or insurance policies.
- Failing to adjust terms of the trust as your life changes.
Image reads: Potential advantages of a corporate trustee.
Depending on your unique situation, there may be advantages to using an objective corporate trustee to administer your trust.
- Regulation and oversight
- Availability of specialty services
- Continuity across multiple generations
- Investment management expertise
Sources: Spectrem Group, “Money in Motion” and “2016 Personal Trust Update.”
Image reads: Looking for more guidance on estate planning or the creation of a trust? A Wells Fargo Advisors Financial Advisor can coordinate with your personal legal and tax professionals to help you develop holistic wealth planning strategies.