Unlocking Estate Planning: Wills vs. Trusts Explained

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Estate planning is a critical component of securing your family’s future, and understanding the distinctions between wills and trusts is essential in making informed decisions. In the latest episode of “Better Financial Health in 15 Minutes or Less,” Stacey Hyde delves into the intricacies of these estate planning tools, providing clarity on their unique features and benefits. A will and a revocable living trust serve different purposes, and knowing when to use each can be your golden ticket to a smooth asset transition.

A will is a legal document that comes into effect after you pass away. It outlines how your assets will be distributed, but it doesn’t cover everything. Joint accounts and beneficiary-designated assets like IRAs and life insurance are not subject to a will. These assets bypass the probate process and are transferred directly to the designated beneficiaries or surviving joint account holders. This aspect can lead to unintended disinheritance if not carefully managed. On the other hand, a revocable living trust can offer more comprehensive control over asset distribution, including real estate, personal belongings, and after-tax investment accounts, while also maintaining privacy by avoiding probate.

One of the often-overlooked advantages of revocable living trusts is their ability to bypass the public probate process. Probate can be a lengthy and public affair, where the details of your estate become accessible to the public. A revocable living trust allows your assets to be distributed privately, maintaining discretion and protecting your heirs from unwanted scrutiny. Additionally, if you own property across multiple states, a revocable living trust can help you avoid ancillary probate, simplifying asset management and reducing legal complexities for your family.

Financial institutions often prefer working with trustees over relying on powers of attorney due to concerns about fraud. With a revocable living trust, you can appoint a successor trustee who can seamlessly take over asset management if you become unable to do so. This flexibility and ease of transition make trusts a valuable tool, especially for those who anticipate needing assistance with managing their affairs in the future. By setting up a trust, you provide clear instructions for your financial institutions, ensuring your wishes are followed without additional legal hurdles.

However, a revocable living trust is not necessary for everyone. If the majority of your assets are held in joint accounts or IRAs, and your estate is relatively simple, a will might suffice. The decision to establish a trust should consider factors such as the complexity of your estate, the need for privacy, and any specific family circumstances, like caring for a special needs child. Trusts can be tailored to accommodate these unique situations, ensuring that governmental benefits are preserved and your estate plan aligns with your goals.

Ultimately, the choice between a will and a trust should be guided by your individual needs and objectives. Consulting with a legal professional is crucial to developing an estate plan that best serves your family’s interests. While this episode of “Better Financial Health in 15 Minutes or Less” provides essential information, personalized legal advice will ensure your estate plan is robust and comprehensive. Understanding the nuances of wills and trusts empowers you to make informed decisions, securing your legacy and providing peace of mind for you and your loved ones.

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Our approach is to discover a client’s goals, determine the personal financial plan that is needed, and aid the client in reaching those goals. Our success is measured by how well our clients achieve their goals.
Hank has had a distinguished career in the financial services industry, including more than 40 years in the financial planning and securities fields. From 1985 to 2013, Hank provided fee-only financial planning services through his firm, Lifetime Planning, Inc. Hank merged his practice with Stacey’s in 2014. In addition, Hank is a member of both the local and the national chapters of the Financial Planning Association (FPA).
Hank received his bachelor’s degree in business administration from the University of Mississippi, where he also lettered in football. He received his initial securities training at Merrill Lynch. He was a financial planning consultant for the Memphis office of Ernst & Young and financial planner at Morgan Keegan & Company, Inc. from 1982 through 1984. In April 1984, Hank completed his CERTIFIED FINANCIAL PLANNER™ professional requirements with the College for Financial Planning in Denver, Colorado.
In addition to his financial planning practice, Hank has enjoyed serving on the boards of Presbyterian Day School, Second Presbyterian Church, University of Mississippi, and the Christian Community Foundation. Hank served as the chief financial officer of the Christian Community Foundation from its inception in October 1998 until October 2000. Hank enjoys reading, hunting, and attending baseball and college football games.
Clay serves Envision Financial Planning’s clients as the investment officer and portfolio manager. His duties include overseeing the firm’s investment process and money management strategies with a strong focus on “goals-based” investment planning.
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Clay is a native Memphian and a graduate of the University of Mississippi. He began his career working for a regional broker/dealer specializing in fixed-income securities, and prior to joining Envision, Clay was an investment research analyst and portfolio manager for a private wealth management firm in Memphis. Clay currently holds his FINRA Series 66 securities registration and obtained his CERTIFIED FINANCIAL PLANNER™ designation in 2021.
In his free time, Clay enjoys playing golf, exercising, reading, and cooking with friends and family. He and his wife, Margot, have two boys named Callan and Wiley.