Posted by (insurGuru©️Fortune Academy Column) in answerAmerican Life Insurance GuideOf readers about "We must needTrustBefore this question, we may want to know more,If there is no trust, how will our wealth be handled?What will determine the inheritance and distribution of our property?Can these ways of inheriting wealth meet our actual needs?
4 types of legal property inheritance methods
When we passed away unfortunately, our property, according to the law, had 4 ways to pass on:
- Probate procedure
- Statutory authorization
- Trust
- contract
Probate Procedure – Probate
When we pass away unfortunately, we have complete disposal rights and will enter the probate process.The property will be transferred in accordance with the instructions of our will; if there is no will, the property will be distributed in accordance with the law of the state's intestate deceased's estate.
Statutory authorization – Operation of Law
If the ownership of a property is jointly owned and has the right of survivorship (With Right of Survivorship, WROS),Then when one party dies, the other party will automatically get it.Therefore, this method of inheritance of property avoids the probate procedure.When we buy property and choose property rights, we will encounter it.
This method of inheritance of property rights also means that neither party can deal with the part he/she holds in a will: in the will of the deceased party, the provisions on the transfer of this property will be deemed invalid.
Trust-Trust
move toTrustProperty, the ownership no longer belongs toTrust founder.Therefore, these properties will not be redistributed when the trust creator passes away.
Regardless of whether it is a revocable trust or an irrevocable trust, the property in the trust will not enter the probate procedure, but will be processed in accordance with the terms in the trust document.At the same time, the clauses in the will are invalid for the distribution of property in the trust.
Exception: A testamentary trust created based on our will will enter the probate process.After completing this procedure, the property will enter the trust.
Contracts – Contracts
以American Life Insurance GuideExamples of areas of expertise,life insuranceAn insurance policy is a contract. According to the contract, the insurance company directly pays the claim to our designatedBeneficiary, The whole process will not enter the probate procedure.
But there is only one exception. If we designate the beneficiaries of life insurance as ourselves, then this compensation will become an inheritance and enter the probate process.
Retirement account, IRA (Individual Retirement Account) is also a contract, with specifiedBeneficiary, And will not enter the probate process.Qualified retirement plan accounts, according to the law, will be allocated to the spouse (unless the spouse waives this right).These accounts include but are not limited to: Defined Benefit Plans, Defined Contribution Plans, pension plans, profit sharing plans, 401(K) accounts, stock dividend plans, etc.
A personal bank deposit account is also a contract, and you can go to the counter to designate a beneficiary.
In addition, if you want to leave the house to your children or descendants, you can also directly designate the beneficiary through the TOD Deed document without probate.
The above are the four legal methods for inheritance of our property in the United States.After understanding these four methods, we can consider answering the question "We need a lifetime trust".
Should everyone have a trust?
No.
If there are not many assets and a young couple without children, if one of them wants to leave the assets to the spouse, there is no need for trust.
If the asset structure is simple, such as cash deposits in the bank, hoping to leave it to the beneficiaries, no trust is needed.
The asset composition is not complicated, and the estate planning content is very simple.Trust.
Finally, those who wish to supervise and manage the estate through the probate procedure of the court cannot useTrust.
(>>>Recommended reading: How to designate a beneficiary for bank cash deposits : What is a savings account trust and what are its advantages and disadvantages?）
Who needs a trust?
The composition of assets is complex, the more complex the relationship between the interests of the characters, the more necessaryLiving trust, In the event of an accident or sudden illness, a lifetime trust will show its importance.
Article summary
Through the description of the four statutory methods of property inheritance, we can understand that trust is one of the statutory methods for property transmission, but not everyone needs to use trust.The size of each family's assets, as well as the needs for inheritance, management and control of wealth are different.Trust can be used as a flexible and powerful tool to help us achieve our personalized needs and goals.After understanding the content of this article, do you think the trust applies to your family?
*The purpose of this article is to provide general legal information and financial knowledge, not to provide legal information and professional financial planning services.If you have any related legal or financial issues, please consult professional practitioners.
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