Do High Net Worth Individuals Need an Estate Planner to Set Up a Trust?
As a high net worth individual, you've worked hard to build and preserve your wealth. But have you taken the necessary steps to protect your assets and provide for your loved ones after you're gone? One powerful tool in estate planning is establishing a trust. But do you need an estate planner to set up a trust? Let's explore the benefits, pros, and cons of working with an estate planning professional.
‍
What is a Trust and Why is it Important for High Net Worth Estate Planning?
A trust is a legal arrangement where a trustee holds and manages assets for the benefit of designated beneficiaries. Trusts can be revocable (changeable) or irrevocable (permanent). They are commonly used in estate planning to:
- Avoid probate and maintain privacy
- Minimize estate taxesÂ
- Protect assets from creditors and lawsuits
- Provide for minor children or family members with special needs
- Specify how and when beneficiaries receive assets
- Facilitate charitable giving
For high net worth individuals and families, trusts offer enhanced control, flexibility, and protection compared to a simple will. Trusts can be customized to meet unique family dynamics, financial situations, and legacy goals.
‍
Benefits of Working with an Estate Planner to Establish a Trust
While it's possible to create a basic trust using online tools or software, high net worth individuals often have complex financial situations that benefit from professional guidance. An experienced estate planning attorney can provide valuable insight and ensure your trust is properly structured, funded, and maintained.
Some key benefits of hiring an estate planner include:
‍
1. Navigating Complex Estate Planning Laws and Tax Strategies
Estate planning attorneys have in-depth knowledge of federal and state laws governing trusts, estate taxes, gift taxes, and inheritance taxes. They can help you take advantage of tax mitigation strategies, such as irrevocable life insurance trusts (ILITs), grantor retained annuity trusts (GRATs), qualified personal residence trusts (QPRTs), and charitable remainder trusts (CRTs)[1][2].
‍
2. Customizing Your Trust to Meet Your Unique Needs
Cookie-cutter trust templates rarely suffice for high net worth individuals who may have a diverse array of assets, complex family situations, and multiple properties or business interests. An estate planner can tailor your trust to address issues like:
- Providing for blended families or children from prior marriages
- Protecting assets for beneficiaries with spending issues or addiction problems Â
- Planning for international assets and beneficiaries
- Succession planning for closely held businesses
- Leaving a lasting charitable legacy[3]
‍
3. Ensuring Your Trust is Properly Funded and Maintained
Creating a trust agreement is only the first step. For your trust to be effective, you must transfer assets into it through a process called funding. Additionally, your trust should be reviewed and updated periodically to reflect changes in your life circumstances, financial situation, or tax laws. An estate planner can help you:
- Coordinate trust funding with financial institutions and advisors
- Update beneficiary designations on retirement accounts and life insurance policies
- Modify or decant irrevocable trusts when necessary Â
- Advise trustees on their fiduciary duties and best practices[4]
‍
4. Minimizing the Risk of Disputes and Litigation
Poorly drafted, unfunded, or outdated trusts can lead to unintended consequences, disputes among beneficiaries, and even costly litigation. Working with an experienced estate planning attorney can help mitigate these risks by:
- Ensuring your trust agreement is clear, specific, and legally valid
- Addressing potential challenges from heirs or creditors
- Preserving evidence of your intent and capacity to avoid claims of undue influence or lack of capacity
-Facilitating communication and resolving conflicts among beneficiaries and trustees[5]
‍
Pros and Cons of Hiring an Estate Planner vs. DIY Trust Creation
So, do you need an estate planner to set up a trust? The answer depends on your unique circumstances, but for most high net worth individuals and families, working with an experienced professional offers significant advantages. However, there are also potential drawbacks to consider.
‍
Pros of Hiring an Estate Planner:
1. Expertise and Experience: Estate planning attorneys have specialized knowledge and years of experience creating trusts for high net worth clients. They can provide valuable insights and strategies that you may not find in generic online resources[6].
2. Customization and Flexibility: An estate planner can tailor your trust to meet your specific needs, goals, and family dynamics. They can also help you navigate complex situations, such as owning a business, having international assets, or providing for a child with special needs[7].
3. Peace of Mind: Knowing your trust is properly structured, funded, and maintained can provide peace of mind that your wishes will be carried out and your loved ones will be protected. An estate planner can also serve as a trusted advisor and resource for your family members and trustees[8].
‍
Cons of Hiring an Estate Planner:
1. Cost: Working with an estate planning attorney can be expensive, with fees ranging from a few thousand to tens of thousands of dollars depending on the complexity of your situation. However, the cost of not having a properly structured trust can be much higher in terms of taxes, legal fees, and family conflict[9].
2. Time and Effort: Creating a comprehensive estate plan with a trust involves gathering financial information, making difficult decisions, and meeting with your attorney multiple times. This process can be time-consuming and emotionally draining, but it is a necessary investment in your family's future[10]
3. Finding the Right Fit: Not all estate planners are created equal. It's important to find an attorney who has experience working with high net worth clients, understands your unique needs, and communicates clearly. You may need to interview multiple professionals before finding the right fit.
‍
Pros of DIY Trust Creation:
1. Lower Upfront Cost: Online trust creation services and software can be less expensive than hiring an attorney, with some options costing a few hundred dollars. However, these generic templates may not adequately address the complex needs of high net worth individuals and families[11].
2. Convenience: Creating a basic trust online can be faster and more convenient than scheduling multiple meetings with an attorney. However, the time you save upfront may be lost later if your DIY trust is incomplete, outdated, or invalid[12].
‍
Cons of DIY Trust Creation:
1. Lack of Customization: Online trust templates are one-size-fits-all and may not address your unique family dynamics, financial situation, or legacy goals. Attempting to customize a generic trust agreement without legal guidance can lead to errors and unintended consequences[13].
2. Incomplete or Outdated Information: Laws governing trusts and estates vary by state and change over time. Online resources may not be up-to-date or comprehensive enough to ensure your trust is valid and effective[14].
3. No Ongoing Support: Creating a trust is not a one-time event. Your trust needs to be properly funded, maintained, and updated over time. Online trust services rarely offer ongoing support or guidance for trustees and beneficiaries.
‍
The Verdict: High Net Worth Individuals Benefit from Professional Estate Planning
For most high net worth individuals and families, working with an experienced estate planning attorney is the best way to ensure your trust is properly structured, funded, and maintained. While DIY trust creation may be tempting for its lower upfront cost and convenience, the potential risks and drawbacks often outweigh the benefits.
An estate planner can provide valuable guidance, customization, and peace of mind that generic online templates simply cannot match. They can help you navigate complex laws and tax strategies, address unique family dynamics and financial situations, and ensure your wishes are carried out as intended.
Of course, not everyone needs a complex trust or professional estate planning services. If you have a small, simple estate and straightforward wishes, a basic will or DIY trust may suffice. But if you have significant assets, complex family dynamics, or specific legacy goals, working with an estate planner is a wise investment in your family's future.
‍
How to Find the Right Estate Planner for Your High Net Worth Trust
If you've decided to work with an estate planning attorney to create your trust, how do you find the right professional for your needs? Here are some tips:
1. Look for Experience: Choose an attorney who has experience working with high net worth clients and creating complex trusts. Ask about their credentials, specializations, and years of practice.
2. Get Referrals: Ask your financial advisor, accountant, or other trusted professionals for referrals to estate planning attorneys they have worked with successfully. You can also ask friends or family members who have created trusts for their recommendations.
3. Consider Compatibility: Estate planning involves discussing sensitive topics and making difficult decisions. Choose an attorney who communicates clearly, listens to your concerns, and makes you feel comfortable.
4. Understand the Fees: Estate planning fees can vary widely depending on the attorney's experience, location, and the complexity of your situation. Ask about the fee structure upfront and get a written estimate before engaging their services.
5. Review Their Technology: In today's digital age, your estate planner should use secure technology to store and share documents, communicate with clients, and facilitate remote meetings. Ask about their technology setup and how they protect client confidentiality[15].
‍
The Bottom Line: Protect Your Legacy with Professional Estate Planning
Creating a trust is a powerful way to protect your assets, provide for your loved ones, and leave a lasting legacy. While it's possible to create a basic trust using online tools or software, high net worth individuals and families often benefit from working with an experienced estate planning attorney.
An estate planner can provide valuable guidance, customization, and peace of mind to ensure your trust is properly structured, funded, and maintained. They can help you navigate complex laws and tax strategies, address unique family dynamics and financial situations, and minimize the risk of disputes or litigation.
Of course, working with an estate planner involves an investment of time, effort, and money. But for most high net worth individuals, the benefits of professional guidance far outweigh the potential risks and drawbacks of DIY trust creation.
If you're considering creating a trust as part of your estate plan, take the time to find an experienced attorney who understands your unique needs and goals. With the right professional guidance, you can create a comprehensive estate plan that protects your assets, provides for your loved ones, and ensures your legacy lives on for generations to come.
Meet
Alex Austin
Hello there 👋🏼 I’m Alex Austin a CERTIFIED FINANCIAL PLANNER™ at Savvy, specializing in financial planning. I like to consider myself to be the GPS in a client’s financial life so they can reach their financial and retirement destination with the most efficient and optimal route.Â
References
[4] [The Pros and Cons of Trusts](https://wileslawfirm.com/blog/the-pros-and-cons-of-trusts/)
[9] [The Ultimate 2024 Estate Planning Guide](https://guardianlit.com/estate-planning-guide/)
[14] [70 Best Estate Planning Blogs and Websites](https://legal.feedspot.com/estate_planning_blogs/)
Material prepared herein has been created for informational purposes only and should not be considered investment advice or a recommendation. Information was obtained from sources believed to be reliable but was not verified for accuracy. It is important to note that federal tax laws under the Internal Revenue Code (IRC) of the United States are subject to change, therefore it is the responsibility of taxpayers to verify their taxation obligations.
Savvy Wealth Inc. is a technology company. Savvy Advisors, Inc. is an SEC registered investment advisor. For purposes of this article, Savvy Wealth and Savvy Advisors together are referred to as “Savvy”. All advisory services are offered through Savvy Advisors, while technology is offered through Savvy Wealth. The views and opinions expressed herein are those of the speakers and authors and do not necessarily reflect the views or positions of Savvy Advisors.
Do High Net Worth Individuals Need an Estate Planner to Set Up a Trust?
As a high net worth individual, you've worked hard to build and preserve your wealth. But have you taken the necessary steps to protect your assets and provide for your loved ones after you're gone? One powerful tool in estate planning is establishing a trust. But do you need an estate planner to set up a trust? Let's explore the benefits, pros, and cons of working with an estate planning professional.
‍
What is a Trust and Why is it Important for High Net Worth Estate Planning?
A trust is a legal arrangement where a trustee holds and manages assets for the benefit of designated beneficiaries. Trusts can be revocable (changeable) or irrevocable (permanent). They are commonly used in estate planning to:
- Avoid probate and maintain privacy
- Minimize estate taxesÂ
- Protect assets from creditors and lawsuits
- Provide for minor children or family members with special needs
- Specify how and when beneficiaries receive assets
- Facilitate charitable giving
For high net worth individuals and families, trusts offer enhanced control, flexibility, and protection compared to a simple will. Trusts can be customized to meet unique family dynamics, financial situations, and legacy goals.
‍
Benefits of Working with an Estate Planner to Establish a Trust
While it's possible to create a basic trust using online tools or software, high net worth individuals often have complex financial situations that benefit from professional guidance. An experienced estate planning attorney can provide valuable insight and ensure your trust is properly structured, funded, and maintained.
Some key benefits of hiring an estate planner include:
‍
1. Navigating Complex Estate Planning Laws and Tax Strategies
Estate planning attorneys have in-depth knowledge of federal and state laws governing trusts, estate taxes, gift taxes, and inheritance taxes. They can help you take advantage of tax mitigation strategies, such as irrevocable life insurance trusts (ILITs), grantor retained annuity trusts (GRATs), qualified personal residence trusts (QPRTs), and charitable remainder trusts (CRTs)[1][2].
‍
2. Customizing Your Trust to Meet Your Unique Needs
Cookie-cutter trust templates rarely suffice for high net worth individuals who may have a diverse array of assets, complex family situations, and multiple properties or business interests. An estate planner can tailor your trust to address issues like:
- Providing for blended families or children from prior marriages
- Protecting assets for beneficiaries with spending issues or addiction problems Â
- Planning for international assets and beneficiaries
- Succession planning for closely held businesses
- Leaving a lasting charitable legacy[3]
‍
3. Ensuring Your Trust is Properly Funded and Maintained
Creating a trust agreement is only the first step. For your trust to be effective, you must transfer assets into it through a process called funding. Additionally, your trust should be reviewed and updated periodically to reflect changes in your life circumstances, financial situation, or tax laws. An estate planner can help you:
- Coordinate trust funding with financial institutions and advisors
- Update beneficiary designations on retirement accounts and life insurance policies
- Modify or decant irrevocable trusts when necessary Â
- Advise trustees on their fiduciary duties and best practices[4]
‍
4. Minimizing the Risk of Disputes and Litigation
Poorly drafted, unfunded, or outdated trusts can lead to unintended consequences, disputes among beneficiaries, and even costly litigation. Working with an experienced estate planning attorney can help mitigate these risks by:
- Ensuring your trust agreement is clear, specific, and legally valid
- Addressing potential challenges from heirs or creditors
- Preserving evidence of your intent and capacity to avoid claims of undue influence or lack of capacity
-Facilitating communication and resolving conflicts among beneficiaries and trustees[5]
‍
Pros and Cons of Hiring an Estate Planner vs. DIY Trust Creation
So, do you need an estate planner to set up a trust? The answer depends on your unique circumstances, but for most high net worth individuals and families, working with an experienced professional offers significant advantages. However, there are also potential drawbacks to consider.
‍
Pros of Hiring an Estate Planner:
1. Expertise and Experience: Estate planning attorneys have specialized knowledge and years of experience creating trusts for high net worth clients. They can provide valuable insights and strategies that you may not find in generic online resources[6].
2. Customization and Flexibility: An estate planner can tailor your trust to meet your specific needs, goals, and family dynamics. They can also help you navigate complex situations, such as owning a business, having international assets, or providing for a child with special needs[7].
3. Peace of Mind: Knowing your trust is properly structured, funded, and maintained can provide peace of mind that your wishes will be carried out and your loved ones will be protected. An estate planner can also serve as a trusted advisor and resource for your family members and trustees[8].
‍
Cons of Hiring an Estate Planner:
1. Cost: Working with an estate planning attorney can be expensive, with fees ranging from a few thousand to tens of thousands of dollars depending on the complexity of your situation. However, the cost of not having a properly structured trust can be much higher in terms of taxes, legal fees, and family conflict[9].
2. Time and Effort: Creating a comprehensive estate plan with a trust involves gathering financial information, making difficult decisions, and meeting with your attorney multiple times. This process can be time-consuming and emotionally draining, but it is a necessary investment in your family's future[10]
3. Finding the Right Fit: Not all estate planners are created equal. It's important to find an attorney who has experience working with high net worth clients, understands your unique needs, and communicates clearly. You may need to interview multiple professionals before finding the right fit.
‍
Pros of DIY Trust Creation:
1. Lower Upfront Cost: Online trust creation services and software can be less expensive than hiring an attorney, with some options costing a few hundred dollars. However, these generic templates may not adequately address the complex needs of high net worth individuals and families[11].
2. Convenience: Creating a basic trust online can be faster and more convenient than scheduling multiple meetings with an attorney. However, the time you save upfront may be lost later if your DIY trust is incomplete, outdated, or invalid[12].
‍
Cons of DIY Trust Creation:
1. Lack of Customization: Online trust templates are one-size-fits-all and may not address your unique family dynamics, financial situation, or legacy goals. Attempting to customize a generic trust agreement without legal guidance can lead to errors and unintended consequences[13].
2. Incomplete or Outdated Information: Laws governing trusts and estates vary by state and change over time. Online resources may not be up-to-date or comprehensive enough to ensure your trust is valid and effective[14].
3. No Ongoing Support: Creating a trust is not a one-time event. Your trust needs to be properly funded, maintained, and updated over time. Online trust services rarely offer ongoing support or guidance for trustees and beneficiaries.
‍
The Verdict: High Net Worth Individuals Benefit from Professional Estate Planning
For most high net worth individuals and families, working with an experienced estate planning attorney is the best way to ensure your trust is properly structured, funded, and maintained. While DIY trust creation may be tempting for its lower upfront cost and convenience, the potential risks and drawbacks often outweigh the benefits.
An estate planner can provide valuable guidance, customization, and peace of mind that generic online templates simply cannot match. They can help you navigate complex laws and tax strategies, address unique family dynamics and financial situations, and ensure your wishes are carried out as intended.
Of course, not everyone needs a complex trust or professional estate planning services. If you have a small, simple estate and straightforward wishes, a basic will or DIY trust may suffice. But if you have significant assets, complex family dynamics, or specific legacy goals, working with an estate planner is a wise investment in your family's future.
‍
How to Find the Right Estate Planner for Your High Net Worth Trust
If you've decided to work with an estate planning attorney to create your trust, how do you find the right professional for your needs? Here are some tips:
1. Look for Experience: Choose an attorney who has experience working with high net worth clients and creating complex trusts. Ask about their credentials, specializations, and years of practice.
2. Get Referrals: Ask your financial advisor, accountant, or other trusted professionals for referrals to estate planning attorneys they have worked with successfully. You can also ask friends or family members who have created trusts for their recommendations.
3. Consider Compatibility: Estate planning involves discussing sensitive topics and making difficult decisions. Choose an attorney who communicates clearly, listens to your concerns, and makes you feel comfortable.
4. Understand the Fees: Estate planning fees can vary widely depending on the attorney's experience, location, and the complexity of your situation. Ask about the fee structure upfront and get a written estimate before engaging their services.
5. Review Their Technology: In today's digital age, your estate planner should use secure technology to store and share documents, communicate with clients, and facilitate remote meetings. Ask about their technology setup and how they protect client confidentiality[15].
‍
The Bottom Line: Protect Your Legacy with Professional Estate Planning
Creating a trust is a powerful way to protect your assets, provide for your loved ones, and leave a lasting legacy. While it's possible to create a basic trust using online tools or software, high net worth individuals and families often benefit from working with an experienced estate planning attorney.
An estate planner can provide valuable guidance, customization, and peace of mind to ensure your trust is properly structured, funded, and maintained. They can help you navigate complex laws and tax strategies, address unique family dynamics and financial situations, and minimize the risk of disputes or litigation.
Of course, working with an estate planner involves an investment of time, effort, and money. But for most high net worth individuals, the benefits of professional guidance far outweigh the potential risks and drawbacks of DIY trust creation.
If you're considering creating a trust as part of your estate plan, take the time to find an experienced attorney who understands your unique needs and goals. With the right professional guidance, you can create a comprehensive estate plan that protects your assets, provides for your loved ones, and ensures your legacy lives on for generations to come.
Meet
Alex Austin
Hello there 👋🏼 I’m Alex Austin a CERTIFIED FINANCIAL PLANNER™ at Savvy, specializing in financial planning. I like to consider myself to be the GPS in a client’s financial life so they can reach their financial and retirement destination with the most efficient and optimal route.Â
References
[4] [The Pros and Cons of Trusts](https://wileslawfirm.com/blog/the-pros-and-cons-of-trusts/)
[9] [The Ultimate 2024 Estate Planning Guide](https://guardianlit.com/estate-planning-guide/)
[14] [70 Best Estate Planning Blogs and Websites](https://legal.feedspot.com/estate_planning_blogs/)
Material prepared herein has been created for informational purposes only and should not be considered investment advice or a recommendation. Information was obtained from sources believed to be reliable but was not verified for accuracy. It is important to note that federal tax laws under the Internal Revenue Code (IRC) of the United States are subject to change, therefore it is the responsibility of taxpayers to verify their taxation obligations.
Savvy Wealth Inc. is a technology company. Savvy Advisors, Inc. is an SEC registered investment advisor. For purposes of this article, Savvy Wealth and Savvy Advisors together are referred to as “Savvy”. All advisory services are offered through Savvy Advisors, while technology is offered through Savvy Wealth. The views and opinions expressed herein are those of the speakers and authors and do not necessarily reflect the views or positions of Savvy Advisors.
