This article will cover succession planning by combining a beneficiary trust with a will and testament. It will ensure that your children are financially supported in the unfortunate event of death.
Typically estates upon death are paid out as one big lump sum of cash as a split percentage for example 50% to the spouse and 25% 25% to each child. If for example the estate was $1,000,000 this would mean access to a large lump sum of cash. More indepth will and tesitments may have access restrictions up until a certain age (say 18 or 21) however this can be prohibitive if the key family member passes away while the children are young as access may be restricted for some years. Another problem this can cause is that your inheritance is spent far to quickly if your successors are not adept at financial planning ,or are not accustomed to handling large sums of cash at once and the money is now “burning a hole in their pockets”.
Solition: If you wanted to say allocate USD $15,000 a year towards education (up until age 18) and also $12,000 per annum for accommodation up until age 21, then having a distribution from a beneficiary trust executed via a will and testiment could be a good solution. If the account was capital redemption this would allow the funds to remain invested for the period and still grow, ensuring longevity for your children.
One of the key concerns that a beneficiary trust can solve is to ensure the long term financial planning for your children is being taken care of.
A beneficiary trust is a very powerful and secure tool that millions of people set up to not only support their own retirement while they are alive, but ensure that their assets are correctly handled in the most unfortunate of events, death.
I always advise that these be used in conjunction with a final will and testament to ensure that you are correctly protected.
This video will cover the structure and also a case study.
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