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What Is a Beneficiary? Here’s Everything To Know. | Entrepreneur
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Naming a beneficiary is an essential step in estate planning that allows individuals to determine how their assets will be distributed in the event of their death.
By understanding the different types of beneficiaries and the importance of naming them, individuals can ensure that their assets are passed on to loved ones or causes that matter to them.
Read on for everything you need to know about beneficiaries.
What is a beneficiary?
A beneficiary is a person or entity legally designated to receive the benefits or proceeds of a trust, will, insurance policy or retirement account.
The specific rights and responsibilities of a beneficiary will depend on the type of instrument, which can include:
- A trust: Trusts are legal arrangements where grantors transfer property to trustees, managed for the beneficiary’s benefit. The trustee is legally obligated to manage the property and distribute the income to the beneficiary per the trust agreement terms.
- An insurance policy: The beneficiary may be a person, like a spouse or a child, or an entity, like a charity or living trust. The death benefit is paid out tax-free to the designated beneficiary and can be used to cover expenses such as funeral costs, outstanding debts or financial security.
- A will or estate: The person who writes the will, the testator, can specify who the beneficiaries will be and how much each will receive. If the testator dies with no will, the property will be distributed per the laws of the state where they lived.
- A retirement account: An IRA or 401(k) account will provide the beneficiary with the remaining account balance in the event of the account holder’s death.
- A bank account: Financial accounts, such as savings accounts, checking accounts and certificates of deposit, can be held in payable on death (POD) or transfer on death (TOD) designation. This allows individuals to name beneficiaries who will receive the funds in the account in the event of their death without going through probate court.
- Investment accounts: Investment accounts, like brokerage accounts, can be held in TOD designation. This allows individuals to name beneficiaries who will receive the assets in the account in the event of their death without going through probate court.
- Real estate: Real estate can be held in joint tenancy with the right of survivorship designation, which allows the surviving joint tenant to inherit the property in the event of the death of the other joint tenant.
Related: What Is a Trust Fund and How Do They Work?
In addition to that, different types of beneficiaries include:
- Primary beneficiary: The primary beneficiary is the person or organization receiving the benefits first. If the primary beneficiary dies before the owner, the secondary beneficiary will receive the benefits.
- Secondary beneficiary: The secondary beneficiary is the person or organization receiving the benefits if the primary beneficiary dies before the asset owner.
- Contingent beneficiary: The contingent beneficiary is the person or organization that will receive the benefits if the primary and secondary beneficiaries die.
- Per stirpes beneficiary: The per stirpes designation is a way to specify how the benefits will be distributed if the primary beneficiary dies before the asset owner. With a per stirpes designation, the benefits will be distributed to the descendants of the primary beneficiary.
- Per capita beneficiary: The per capita designation specifies how the benefits will get distributed if the primary beneficiary dies before the asset owner. With a per capita designation, the benefits will be distributed equally among the descendants of the primary.
- Totten trust beneficiary: A Totten trust is a type of savings account used to pass on small amounts of money to a named beneficiary after the account holder dies.
- Charitable beneficiary: A charitable beneficiary is a nonprofit organization that will receive the benefits of the asset after the owner dies.
- Special needs beneficiary: A special needs beneficiary is a person with a disability who will receive the benefits of the asset after the owner dies. The benefits may provide financial support while preserving the individual’s eligibility for government benefits.
- Business entities: Business entities, such as partnerships and corporations, can be named as beneficiaries. This can be useful for individuals who own a business and want to ensure its continuation after death.
Related: 4 Lessons on Succession Planning for Entrepreneurs
What if a person does not name a beneficiary?
If an individual fails to name a beneficiary, their asset distribution will be determined by the laws of the state where they live.
This means that the assets will be distributed according to the state’s laws, which typically prioritize family members such as the spouse, children and other close relatives. If the individual has no relatives, their assets may be distributed to the state. Failing to name a beneficiary can also result in a loss of certain benefits and protections.
For example, if an individual has a retirement account but does not name a beneficiary, the assets may not be eligible for a tax-free rollover to the surviving spouse.
Related: Everything You Need to Know About a Retirement Plan
What are 5 reasons people assign beneficiaries?
1. Estate planning
Estate planning involves making arrangements for the distribution of property after death. By designating beneficiaries for their assets, individuals can ensure that their property is distributed according to their wishes, avoid probate and minimize estate taxes.
Probate is a court-supervised process used to settle a deceased person’s estate, which can be time-consuming and expensive. Minimizing estate taxes can help to ensure that more of the deceased person’s property gets passed on to their beneficiaries rather than being lost to taxes.
Related: Why is Estate Planning More Important Now Than Ever Before?
2. Insurance planning
Insurance planning involves making arrangements to provide financial protection for loved ones in the event of their death. By designating beneficiaries of insurance coverage, individuals can ensure that their loved ones receive the policy’s death benefit promptly.
The death benefit can cover expenses like funeral costs or outstanding debts or provide financial security for the beneficiary.
Related: Busy Parents: Sign up for Life Insurance with This Speedy Provider
3. Retirement planning
Retirement planning involves making arrangements for financial security upon retirement. By designating beneficiaries of retirement accounts, individuals can ensure that loved ones receive the remaining balance of the account after their death.
The remaining balance of the account can be used to provide financial security for the beneficiary, like helping to pay for living expenses or education costs.
Related: What Is a Pension? Types, Benefits and More
4. Charitable giving
By designating a charitable organization as a beneficiary, individuals can make a lasting impact and support a cause they care about.
5. Special needs planning
Special needs planning involves making arrangements for the financial security of a family member with special needs.
By designating a person with special needs as the beneficiary of their assets, individuals can provide for their beneficiary while still preserving their eligibility for government benefits.
Related: Why Business Executives with Disabilities Must Take Back Control of Their Health Care Now
What should you consider when naming a beneficiary?
- Purpose: Is it to provide for a loved one, support a charitable organization or fulfill a specific need or obligation? Knowing the purpose can help guide the decision-making process.
- Estate planning goals: Consider the individual’s estate planning goals, such as tax planning, creditor protection or avoiding probate, as these goals may impact the choice of beneficiary.
- Age and health: Consider the age and health of the potential beneficiaries, as younger beneficiaries may need the assets for a more extended period. In comparison, older beneficiaries may have more immediate needs.
- Family dynamics: It is essential to consider who may need the assets the most and who would be the best caregiver for any minor children.
- Trustworthiness: Will the beneficiaries be responsible for the assets and use them as intended?
- Flexibility: Can the designation be changed in the future if circumstances change?
Related: Annuity Options for Retirement Savings – No Fuss, No Jargon, No Gimmicks
How do you name a beneficiary?
The beneficiary naming process varies depending on the type of asset considered, but it typically involves a step-by-step process similar to this:
- Review the terms and conditions: Before naming a designated beneficiary, it is crucial to understand the asset’s terms and conditions with a financial advisor’s help. For example, the process for naming life insurance beneficiaries will differ from the process for naming a beneficiary for a retirement account.
- Identify potential beneficiaries: Once you have reviewed the terms and conditions, identify potential beneficiaries like family members, friends or charitable organizations.
- Choose the appropriate form of beneficiary designation: The appropriate form of beneficiary designation will depend on the type of asset. For example, life insurance companies typically require a written designation on the life insurance policy, while retirement accounts may allow for an electronic designation.
- Complete and sign the beneficiary designation form: Once you have chosen the appropriate form of beneficiary designation, you will need to complete and sign the form. This may involve providing legal documents, like Social Security Number and birth certificate, for your designated beneficiaries.
- Submit the completed form to the appropriate party: The completed form should be submitted to the relevant party, such as the insurance company or retirement plan administrator.
- Review and update your beneficiary designations regularly: It is essential to review and update your beneficiary designations regularly to ensure they are current and reflect your current wishes. Major life events, such as the birth of a child, the death of a spouse or a spouse becoming an ex-spouse, may require you to update your beneficiary designations.
What do you need to know about beneficiaries?
Beneficiaries play a crucial role in the distribution of assets after an individual’s death. When naming a beneficiary, it is vital to consider the different types of beneficiaries, the specific circumstances and the individual’s goals.
By understanding the importance of naming beneficiaries, individuals can ensure that their assets are passed on to their loved ones and the causes that matter most to them.
If you’re looking for additional information on personal finance, estate planning and more, visit Entrepreneur.com.
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401(k) balances rise, despite economic and market challenges | CNN Business
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CNN
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Despite higher prices, endless talk of a possible recession and falling markets, 401(k) participants managed to keep their savings rates relatively steady in the fourth quarter of last year, helping to stabilize their nest eggs and increase their overall average balances.
That’s according to new data from Fidelity Investments, one of the largest providers of workplace retirement plans, which combined represent $2.8 trillion in assets on its platform.
“Fortunately, the data show that retirement savers understand the importance of saving for the long-term, despite market shift. We are encouraged to see people look past the current volatility and continue to make smart choices for their future,” said Kevin Barry, president of Workplace Investing at Fidelity.
By that Barry means the average 401(k) savings rate (including both employee contributions and employer matches) held roughly steady at 13.7%, down from the 13.8% in the third quarter and 13.9% in the second quarter.
Among generations in the workforce, Baby Boomers had the highest savings rate as a percent of their income (16.5%). The youngest cohort – Gen Z workers – saved 10.2%.
A third of participants actually increased their contribution rate over the last year, according to Fidelity. But the average rate among this group is still very low – at just 2.6%.
The average 401(k) balance in Fidelity-administered plans, meanwhile, rose 7% from the third quarter, to $103,900. That said, thanks to poor performances in both stocks and bonds last year, the average is still 23% below the $135,600 recorded at the end of 2021.
In terms of 401(k) loans, the percent of active plan participants with outstanding ones remained at 16.7%. That’s down from 17% a year earlier and 21% from five years ago, Fidelity said.
The average outstanding loan amount was $10,200. Among different age groups, Gen Xers had the highest average, followed by Baby Boomers. And even though they are just getting started in their careers and haven’t had a lot of time to amass savings, 3.2% of Gen Z workers also had outstanding 401(k) loans, but their average amount ($3,000) was the lowest among all age groups.
Hardship withdrawals from 401(k)s – money taken when a participant is under financial stress of some kind (e.g., to prevent eviction, pay for funeral expenses or to cover a near-term tuition bill) – stood at 2.4% for the year, up from 1.9% in 2021. The average amount taken out was $2,200. Unlike a 401(k) loan, a hardship withdrawal does not need to be paid back, and will be taxed. Plus, in some instances it may be subject to a 10% penalty if you’re under 59-1/2.
The new retirement law, Secure 2.0, includes a provision that will make it easier and less costly for 401(k) participants to take money out of their account for emergency needs up to $1,000 in a year.
Apart from its workplace retirement plans, Fidelity reported a 10.2% annual increase in the number of IRAs on its platform, noting that 61% of the IRA contributions made in the fourth quarter of last year went into Roth IRAs.
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Op-ed: Financials may get more love amid sustained higher interest rates
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Credit card providers are benefitting from post-pandemic travel and increasing card usage in general, with balances way up in recent months.
Valentinrussanov | E+ | Getty Images
Financial stocks were so out of favor for most of 2022 that perhaps their tickers should have been appended with a Nathaniel Hawthorne-esque “U” — for “unloved.” Yet after some decent gains so far this year, the sector could draw suitors aplenty as 2023 progresses.
The present allure of financial stocks, stemming from low valuations and high levels of capital, is especially strong as higher interest rates are making lending money more profitable.
As of mid-February, the Financial Select Sector SPDR ETF had recovered about half its 2022 losses. Amid this comeback, robust earnings have kept the sector’s price-earnings ratios low, as reflected by XLF’s P/E of 14.5 in mid-February.
Buckets are out at the banks
Low share prices are the norm
Despite gains this year, share prices of this sector are still quite low, considering good earnings and a long history of corporate performance.
One reason for the low prices is fear of recession. But even if the most widely anticipated recession ever actually becomes reality, assuming that the short-and-shallow camp turns out to be right, financial sector earnings could easily prove more resilient than normally expected in a downturn.
Also tamping down prices is long-term market perception, said Christopher Davis, portfolio manager and chairman of Davis Advisors in New York. Several months ago, he made the case that financials tend to be mispriced because they’re “widely misunderstood,” adding the sector was (and still is, in my opinion) “primed for long-term revaluation.”
Revaluation could be in the offing, as indicated by shifts in the sector’s technical indicators, especially those for diversified financial companies and insurance companies, following growth in the latter this year. As of late February, Invesco KBW Property & Casualty Insurance ETF was up more than 14% over the preceding six months. After taking big hits from Hurricane Ian last year, insurance companies are getting more respect from analysts now that they are on firmer footing in fairer weather.
A close haircut for regional banks
Regional banks, which took a close haircut early last year after hitting a five-year peak in January, are also recovering. The bellwether ETF for this group, SPDR Regional Banking, was up nearly 9% year to date as of mid-February. Many regional banks have recently been buying back shares to support a floor on prices and give shareholders more total return without getting locked into dividend increases.
Meanwhile, credit card providers are benefitting from post-pandemic travel and increasing card usage in general, with balances way up in recent months. Also positive are prospects for exchanges and data providers, a sector category whose earnings in recent years have grown twice as fast as those of the S&P 500.
Here are some attractive financial stocks with strong growth prospects and fundamental metrics signaling low downside risk:
- Truist Financial: Formed in 2019 by a merger of equals — regional banks BB&T Corp. and SunTrust — Truist is now the nation’s seventh-largest bank, with a capitalized ratio nearly twice what’s required by regulators. Truist’s dividend has more than doubled in the last 10 years. Post-merger kinks typically dampen companies’ share price growth, so Truist’s recent underperformance relative to KRE was expected. And Truist’s growth could exceed peers’ because it operates in rapidly growing regions — primarily, the mid-Atlantic and Southeast.
- East West Bancorp: This is a fast-growing, full-service commercial bank with locations in the U.S., serving the Asian-American community, and in China. Shares were up nearly 19% year to date as of mid-February. This growth is expected to accelerate from China’s reopening from Covid lockdowns. CFRA has this bank as a strong buy, forecasting 2023 growth of 17% to 19%, in part because net interest income currently makes up 89% of its revenue, versus 73% for peers. Also, the bank has “no exposure to mortgage banking or capital markets, which have been severely impacted by rising rates and economic uncertainty,” CFRA states, citing balance sheet momentum, a discounted valuation and the advantage of a Chinese population in the U.S. that’s growing faster than the whole.
- FactSet Research Systems: FactSet is the star of the sector’s data-provider segment. It’s an interesting, attractive play with recurring revenues of 98%, largely because financial firm customers rely so heavily on FDS’s data. You can see it cited on brokerage platforms and analyst reports. FDS’s software, data and analytics supports the workflow of both buy-side and sell-side clients. Customers include asset managers, bankers, wealth managers, asset owners, hedge funds, corporate users, and private equity and venture capital professionals. The company has an excellent track record of maneuvering through tough economic times, evidenced by its top-line sales growth for 42 consecutive years and annual dividend raises for the last 23 years. The difficulties of changing data providers amount to an economic moat that’s daunting to competitors.
- American Express: This is the right business at the right time, with business travel improving, China reopening and consumer spending among the affluent strong. Revenue growth went from a 10-year stretch of 2% annually to 25% in 2022, with 17% growth forecast for this year. Connecting better with millennials and Generation Z customers than its peers, American Express is acquiring new cardholders at an increasing rate. Analysts expect earnings to rocket up 30% over the next two years, while those of competitors appear likely to shrink. And because of well-heeled customers, this company has less credit risk than its peers.
- Chubb: Chubb is the world’s largest publicly traded property and casualty insurer, operating in 54 countries but with 60% of its revenue from North America. CB has a market-leading position in industrial, commercial and mid-market traditional and specialty property-casualty coverage. It is also a leader in high net worth personal-insurance coverage, a category unlikely to feel pain from an economic downturn. Chubb has high-quality underwriting, but shares are trading at a discount to peers with lower-quality underwriting. Higher premiums, a 98.4% customer-retention rate and higher interest rates should all contribute to strong earnings growth, and shares are widely viewed as significantly undervalued.
The current, higher rates aren’t going down anytime soon. This sector is currently positioned for sustained earnings strength and likely price growth throughout this year and into 2024.
— By Dave Sheaff Gilreath, CFP, partner and chief investment officer of Sheaff Brock Investment Advisors LLC and Innovative Portfolios LLC.
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What Is a Living Trust? Here’s Everything to Know. | Entrepreneur
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Opening a living trust is an essential option in estate planning. By understanding the different types of living trusts and the opportunities they provide, you may be inspired to open one. Read on for everything you need to know about living trusts.
What is a living trust?
A living trust is a type of trust created and funded while the grantor is alive.
The primary purposes of a living trust are:
- To manage and distribute assets and trust property to named beneficiaries without probate court involvement.
- To provide a smooth transfer of assets to named beneficiaries in the event of the grantor’s incapacity.
- To provide financial stability to family members through assets.
Related: What Is a Trust Fund and How Do They Work?
What types of living trusts are available?
There are several types of living trusts, each with unique features and benefits. However, the two main types of living trusts are revocable living trusts and irrevocable living trusts. Read below for more information.
Revocable living trusts
A revocable living trust is a trust that can be amended or revoked by the grantor at any time during their lifetime. This type of trust provides flexibility and allows the grantor to change the trust as their circumstances change.
A revocable living trust can be a helpful estate planning tool, as it can avoid probate, provide privacy and allow for the management of assets if the grantor becomes incapacitated.
Irrevocable living trusts
An irrevocable living trust is a trust that cannot be amended or revoked once established. This type of trust is often used for tax planning or asset protection purposes.
While the grantor cannot make changes to the trust, they can still receive income from the trust and use the assets in the trust for their benefit during their lifetime.
Related: A Succession Plan Can Protect You, Your Family, and Your Employees. Here’s How.
Who are the key players in the living trust process?
There are four key players in the living trust process, which include:
- Grantor: The grantor establishes the living trust and transfers ownership of their assets to the trust. The grantor may also act as the initial trustee, retaining full control over the trust assets and making decisions about how they are managed and invested.
- Trustee: The trustee is responsible for managing and investing the trust assets and distributing them to the beneficiaries according to the terms of the trust document. The grantor may serve as the initial trustee but can also appoint a successor trustee to take over in the event of their incapacity or death.
- Beneficiaries: The beneficiaries are the individuals or organizations named in the trust document who will receive the benefits of the trust. The named beneficiaries may receive income from the trust assets or an outright distribution of the assets.
- Attorney: An attorney can be involved in the living trust process by drafting the trust document and providing legal advice to the grantor on legal and tax issues related to the trust.
Related: Gift Deed Or Will: What Is the Best Way To Pass On Your Assets To Your Beloved?
How do living trusts work?
Living trusts work by transferring ownership of assets from the grantor to the trustee or co-trustee by a process that will generally follow these steps:
- Asset transfer: The grantor transfers ownership of their assets, such as real estate, bank accounts and stocks, into the trust.
- Trust agreement: The grantor creates a living trust document, which outlines the trust terms and the trustee’s responsibilities. The trust agreement should specify the purposes for which the assets in the trust will get used and how the assets will be managed and distributed after the grantor’s death.
- Trustee: The grantor selects a trustee responsible for managing the assets in the trust. The trustee must follow the terms of the trust agreement and act in the best interests of the beneficiaries.
- Beneficiaries: The grantor selects one or more beneficiaries who will receive the assets in the trust after the grantor’s death. The trust agreement specifies when and how the assets will be distributed to the beneficiaries.
- Management of assets: During the grantor’s lifetime, the trustee manages the assets in the trust according to the terms of the trust agreement. This may involve investing the assets, paying bills and making distributions to the beneficiaries.
- Transfer of assets: After the grantor’s death, the assets in the trust are transferred to the beneficiaries without going through probate court.
Related: 5 Ways to Professionally Manage Your Financial Assets
How is a living trust different from a will?
A will is a legal document that specifies how a person’s assets will be distributed after their death and can be used to appoint a guardian for minor children. A will only takes effect after the person’s death.
In contrast, a trust is a legal arrangement in which a trustee holds and manages assets for the benefit of the trust’s beneficiaries.
With a living trust, the grantor transfers ownership of their assets to the trust while they are still alive, and the trust’s terms dictate how the assets will be distributed after the grantor’s death.
Why do people open living trusts?
There are several reasons people choose to open living trusts. Keep reading for more information on those reasons.
To avoid probate
Probate is the legal process that occurs after a person dies, during which the court oversees the distribution of the deceased person’s assets.
By establishing a living trust, the assets in the trust pass directly to the beneficiaries named in the trust document without the need for probate court.
To continue control over asset management
A living trust allows the grantor to retain control over the management and distribution of their assets during their lifetime. The grantor can act as the initial trustee, making decisions about how the assets are invested and managed, and they can change the terms of the trust at any time.
To transfer assets in the event of incapacity
In the event of the grantor’s incapacity, the successor trustee named in the trust document would take over the management of the trust and make decisions about the assets on behalf of the grantor.
This can help ensure a smooth transition of assets to the named beneficiaries and avoid needing a court-appointed guardian or conservator.
To ensure privacy
Because it provides more privacy than a will, individuals with significant assets or those who wish to keep their financial affairs private have more options and avenues to keep their information confidential instead of on the public record.
To plan for estate taxes
You can use a living trust as a tool for estate tax planning, as certain types of trusts can be structured to minimize estate federal estate tax liability.
This can help to preserve the value of the grantor’s assets for their beneficiaries and minimize the impact of estate taxes on the overall estate.
To plan for loved ones with special needs
For a beneficiary with special needs, living trusts allow for the management of assets for their benefit without affecting their eligibility for government benefits.
To avoid contest
A well-drafted living trust can help avoid contests over a grantor’s assets, as it spells out the grantor’s wishes for the distribution of their assets.
This can help reduce the likelihood of disputes among named beneficiaries and ensure that the grantor’s wishes are respected.
Related: Real Estate Management Could Be a Game-Changer for Your Income
Who can open a living trust?
Anyone with mental and financial capacity can open a living trust. There is no age requirement, although it is typically more common for older individuals to establish a living trust.
To open a living trust, you must have assets to transfer into the trust and have a clear understanding of your goals for the trust.
It is essential to consult with an attorney or a financial advisor when considering a living trust, as they can help you determine whether a living trust is appropriate for your situation and provide guidance on the legal and financial considerations involved in establishing a trust.
Related: Is Your Financial Advisor Right For You? Here’s A Simple Test To See If It’s Time To Move On.
What assets can be put in a living trust?
You can transfer most types of assets into a living trust.
Some common assets you can put into a living trust include:
- Real estate: primary residence, vacation homes, rental properties and land.
- Bank accounts: checking and savings accounts, certificates of deposit and money market accounts.
- Investment accounts: stocks, bonds, mutual funds and retirement accounts such as 401(k)s or Roth IRAs.
- Business interests: partnerships, limited liability companies and closely held corporations.
- Personal property: jewelry, art, collectibles and other valuable items.
- Life insurance policies: whole life and term life insurance policies.
- Vehicles: cars, trucks, boats and airplanes.
Related: 5 Ways Business Owners Can Use Trusts to Benefit Their Company
What are the pros and cons of a living trust?
A living trust can be a helpful estate planning tool, but it is essential to consider the pros and cons before deciding.
Pros of a living trust
- Avoids probate: A living trust can avoid probate, the court-supervised process of distributing a deceased person’s assets to their heirs. Probate can be time-consuming, expensive and public, while a living trust can help avoid these drawbacks.
- Privacy: A living trust provides privacy, as the terms of the trust and the assets in the trust are not a matter of public record.
- Assets management in incapacity: If the grantor becomes incapacitated, the assets in the trust can be managed by a successor trustee without the need for a court-appointed guardian or conservator.
- Control over the disposition of assets: The grantor can dictate how their assets will be managed via the trust’s terms after death.
- Flexibility: A revocable living trust can be amended or revoked at any time by the grantor, allowing for changes in their circumstances.
Cons of a living trust
- Cost: The cost of establishing a living trust can be substantial, including attorney fees, trustee fees and the costs of transferring assets into the trust.
- Complexity: A living trust can be a complex legal document. Working with an attorney with experience with living trusts is vital to ensure the trust is properly established and funded.
- Ongoing maintenance: A living trust requires constant maintenance, including annual tax filings, the appointment of a successor trustee and periodic reviews of the trust’s terms.
- Permanence: Once an irrevocable trust is established, it cannot be amended or revoked. This lack of flexibility can be a drawback for some people.
- Transferring assets into the trust: Transferring assets into the trust can be a time-consuming and complicated process, and it is crucial to work with an attorney to ensure that all necessary steps are taken.
Related: Why is Estate Planning More Important Now Than Ever Before?
How can you open a living trust?
Depending on goals and resources, everyone’s trust-opening process will vary slightly.
However, here is a general step-by-step process for opening a trust.
- Determine your estate planning goals.
- Consult with an estate planning attorney.
- Choose the type of living trust.
- Gather information about your assets.
- Choose a trustee.
- Transfer assets to the trust.
- Prepare the trust agreement.
- Sign the trust agreement.
- Fund the trust.
Related: The Importance of Estate Planning When Building Your Business
What do you need to know about living trusts?
A living trust is a valuable tool for estate planning, as it can benefit beneficiaries.
By transferring ownership of assets to the trust while you’re still alive, you can ensure that your assets will be distributed according to your wishes without the time and expense of the probate process.
If you think you are ready to set up a living trust, be sure to work with an estate planning attorney or financial advisor to determine the best type of trust for your needs and goals.
If you want more information about financial planning, retirement planning, investments and more, visit Entrepeneur.com.
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