Multiple generations will inherit a staggering amount of assets in the coming decades. As a multigenerational wave of wealth transfers from Baby Boomers and the Silent Generation reaches the next generations, estate owners, estate planning attorneys, and market leaders anticipate the nuances of transferring wealth to Generation X, millennials, and Gen Z. In a press release, Cerulli Associates projected the multigenerational transfer of wealth to heirs through 2045 will total up to $72.6 trillion in assets. That same press release noted that Baby Boomers will account for 60% of all transfers, totaling around $53 trillion in assets. 

The Great Wealth Transfer introduces new questions and considerations for estate plans and planning, including taxes, distributions, and the investing habits of “digital native” generations, like Millennials and Gen Z. A Merrill article found that 75% of millennials and Gen Z investors aren’t confident in the return on traditional stock and bond investments. They are more likely to consider new, extreme investment options, which may affect an estate owner’s wishes. We’ll explore family trusts in estate planning and their role in multigenerational wealth transfers for affluent Las Vegas residents. 

What Is a Family Trust?

A Family Trust is a legal document in which a grantor appoints a trustee to manage and administer the Trust and any named beneficiaries. This type of Trust allows for the management and protection of assets, ranging from bank accounts to real estate, and makes sure that these assets are used for the benefit of family members.

Purpose of a Family Trust

The primary purpose of a trust is to provide for loved ones, protect assets from creditors, avoid probate, minimize estate taxes. The grantor creates the Trust outlining how the assets are managed and administered by the trustee and stipulates any conditions when distributing the funds to beneficiaries.

Types of Family Trusts

• Living Trust: A living trust is either revocable or irrevocable and holds your assets while you are alive. This legal document provides your wishes and instructions on who, when, and how beneficiaries receive the assets after you pass away. 
• Revocable Trust: The revocable type of family trust can be updated or dissolved at any time. You have the flexibility to make changes to the Trust. 
• Irrevocable Trust: The irrevocable Trust isn’t canceled or changed easily. Once the grantor funds it, they lose access and control. The Trust owns the assets, making it a great option to protect them. 
• Special Needs Trust: Created to provide for a family member with special needs without disqualifying them from government benefits.
• Marital Trust: A Marital Trust documents the automatic transfer of assets to the surviving spouse if the other spouse dies. The funds are transferred to any beneficiaries if the second spouse passes away. Read about preserving wealth in our blog, Strategies to Build and Preserve Generational Wealth in Nevada.

Benefits of a Family Trust in Nevada for Multigenerational Wealth Transfers

• Asset Protection: Transferring asset ownership to a Trust protects assets from creditors and legal judgments and preserves them for future generations. 
• Tax Advantages: Can help minimize estate and gift taxes.
• Control over Assets: You are the Trustee of your Trust and can buy or sell assets to build wealth. Including CDs, insurance, real estate, investments, jewelry, art, and other assets empowers protection and management in one place. Establishing distribution conditions allows you to control when and how beneficiaries receive funds, such as age requirements or extra protection for heirs with special needs. 
• Avoiding Probate: Helps avoid probate and control over your assets if you become incapacitated. The probate process can take months and increase costs. 
• Peace of Mind: A Family Trust assures your wishes are fulfilled, is less vulnerable to litigation, and prevents the unintentional disinheriting of an heir. 

Conclusion

With trillions of dollars passing from generation to generation, estate owners will approach estate planning in new ways. Family trusts are an estate plan staple designed to protect assets, minimize taxes, maintain control, and establish when and how assets are distributed. Establishing a family trust can be a crucial step in protecting your assets and ensuring the financial well-being of your family.  Request a consultation with our experienced Las Vegas estate planning team lead by founding Attorney S. Craig Stone II. Explore your options and create a plan tailored to your needs.

Key Takeaways

• Family trusts offer asset protection, tax advantages and control over the distribution of assets.
• Different types of family trusts cater to various needs, including living trusts, irrevocable trusts and special needs trusts.
• The choice between a revocable and irrevocable trust depends on your specific goals and the level of control you wish to maintain.
• Working with an estate planning attorney in Nevada is essential in establishing a trust that meets your family’s unique needs.