What's up guys, it's Graham here!
Today's issue is a first: It's a sponsored deep-dive. I have never dedicated an entire issue to a sponsor before, but this is a topic that very few people are aware of: How to protect your assets by creating a living trust. It can have a huge impact on not just you, but your family and next generation as well. Today's sponsor GetDynasty aims to solve that problem. They can help you create a living trust in minutes from the comfort of your phone. I think their product is great and I've invested in their company myself.
Building wealth can take a lifetime. People work hard, accumulate savings, manage their investments wisely, and have a portfolio that helps them retire comfortably. But the elephant in the room is left for later. Many start thinking about how this wealth is going to be passed on to their loved ones very late in their life. I get it. It isn't an attractive topic to think about, but only 33% of people in a 2022 survey said that they had an estate plan.
And even those who do plan don't understand all the options out there.
Maybe it’s because of the popular culture or media, but a will is seen as the default option for inheritance. People aren't even aware that there's a better alternative – 75% of people chose wills, and only 18% considered a living trust. A trust is usually seen as a rich man’s option while wills cater to everyone. That just isn't true.
A trust can be started and managed by anyone, and there is no restriction on your wealth, income, or net worth to start a trust. It’s just a tool – one that could save you thousands of dollars and make the process of inheritance much easier.
The dangers of probate
Why is a trust necessary at all? Here’s where it gets a little morbid, but it’s important to understand this:
The problem with a will is that it doesn’t kick in automatically after death. Wills are resolved through a lengthy process called probate, where the court system steps in and decides how assets are to be divided. Probate can take anywhere from 9 to 18 months to resolve.
And this is in the best case scenario! In case there are legal disputes, it can take years and thousands of dollars in legal fees to resolve a will. It can even cost up to 10% of the total estate. Over $2 billion is lost by Americans in probate fees every year, on over 3 million cases.
For a mourning family, the stress of a drawn-out legal process is the last thing they need. But it doesn’t stop there – a will also doesn’t grant any immunity to the stakeholders. Creditors can claim assets included in the will, even including the residential home.
Living trusts
A living trust can solve many of these problems:
- It skips the probate process and saves you thousands of dollars.
- It can provide immunity to assets from creditors and lawsuits.
- It can ensure a smooth transfer of assets to beneficiaries, and can stand stronger in legal contests.
- As an added bonus, some types of trusts don't show up on public records, and it can give you privacy.
Most people think trusts are only for the top 1%. But anybody can create a living trust and take advantage of its benefits.
A living trust is an entity that has a trustee and beneficiaries. The trustee decides how to manage and control the assets for the benefit of the beneficiaries. If you create a living trust, it’s strongly recommended that you assign yourself as a trustee. But you can also have other trustees who manage the trust along with you.
The beneficiaries can reap the benefits of the trust while having limited control and access over the trust itself. Why is this structure advisable? Here are some situations where this makes sense:
- An experienced investor wants his beneficiaries to enjoy the returns of the portfolio, but the beneficiaries might not have investment knowledge to manage the funds themselves.
- The beneficiaries might be minors.
- The trustee might want to distribute some assets to charity.
- The trustee might be in a profession with high risk of being sued, like law, medicine, media, etc. The trust gives immunity.
Planning in advance and creating a trust can save a lot of hassle later.
It’s a shame that most Americans don’t know about the benefits that trusts offer. This is something I wish I had known when I purchased my first property. But setting up a trust and transferring a home into a trust is now much easier than it used to be, thanks to today’s sponsor GetDynasty.
GetDynasty makes the process of setting up a trust so easy that you could do it in a few spare minutes even over a computer or a phone for less than $100. The earlier you start a trust, the less assets you’ll have to retitle later on, saving you much more effort.
So if you currently own a home, are looking to buy a home, or just think about how a trust can simplify your asset management, click here and get 10% off with the code GRAHAM.
Starting a trust and titling your assets in the name of your trust is much easier if you create a living trust as early as possible.
But are trusts iron-clad? What happens if you change your mind later on?
Revocable and irrevocable trusts
Well, it depends on the type of trust you use. Revocable trusts are cheaper to set up, and the terms of the trust can be changed later by the trustees. This isn’t a problem if the trustee is a close confidante you have complete “trust” in. While revocable trusts avoid probate and make estate transfer much easier, they don’t provide any immunity against creditors.
On the other hand, irrevocable trusts cannot be modified after they are created, except under extraordinary circumstances. This type of trust is used when people want to make sure there is absolutely no deviation from their plans. Irrevocable trusts are advantageous because:
- They cannot be touched by creditors or lawsuits
- They are completely private
- The assets are not taxable under estate tax
Irrevocable trusts are useful when the trustees are completely sure of their transfer plan and want to avail the tax benefits.
GetDynasty also offers you the ability to create an irrevocable trust starting at just a few hundred dollars. So if you’re interested in exploring these options, head over to GetDynasty and use the code GRAHAM to get 10% off.
That's it for this week. I hope you enjoyed this article. Let me know your thoughts by responding to this email - I read every single comment :)
Stay safe, stay invested and I will see you next week – Graham Stephan.
DISCLAIMER: I have invested in GetDynasty. This isn't financial advice, but a recommendation to explore the possibility of safeguarding your assets through a trust.
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