Estate Planning: Trusts, Wills, and POAs
For over 30 years, The Cornerstone Financial Group has had the privilege of assisting families in navigating the complexities of estate planning. While it’s a topic many prefer to avoid, ensuring that your estate is properly structured is essential for a smooth wealth transfer and the long-term preservation of generational wealth. Just last month, we guided three clients through the estate settlement process, underscoring the critical importance of proper planning in securing a financial legacy for future generations.
In this post, we’ll cover three fundamental estate planning documents that can help facilitate a seamless transition of assets and protect generational wealth.
Essential Estate Planning Documents
Will
A last will and testament outlines your wishes regarding the distribution of your property after death. It specifies who will inherit your assets, who will care for your children, and other crucial directives. A well-crafted will ensures that your wealth is passed down according to your intentions, reinforcing responsible inheritance and financial stability for your heirs.
While there are various types of wills, the most reliable way to ensure your wishes are carried out is by consulting with an accredited estate planning attorney. It’s important to note that a will does not avoid probate—in fact, if your assets exceed $100,000 (in Illinois) and are directed by a will, probate is required(1,2). This is a costly and time-consuming legal process that can diminish the wealth passed to the next generation. (For more information on probate click here.)
Trust
A trust is a more complex legal entity that holds and manages your assets, offering several advantages over a will. Assets placed in a trust avoid probate, allowing for a smoother and more private transition of wealth. Additionally, trusts offer flexibility in managing how and when your beneficiaries receive their inheritance, which is crucial for preserving generational wealth and ensuring that heirs receive financial support in a responsible manner. There are many more benefits of trusts that are not in the purview of this post. For more information on Trusts please call our office or Click Here.
If your estate exceeds the small estate exemption threshold of $100,000, it’s highly recommended that you consult with an estate planning attorney or financial advisor to determine whether a trust is right for you. Trusts can help mitigate estate taxes, protect assets from creditors, and ensure that wealth is preserved across multiple generations.
Power of Attorney (POA)
A Power of Attorney (POA) grants another person the legal authority to act on your behalf. Many estate planning attorneys recommend a Springing POA, which only takes effect if you become incapacitated as determined by a court.
There are two primary types of POAs:
- Medical POA: Authorizes someone to make healthcare decisions for you if you are unable to do so. Choose someone who understands your medical preferences and values.
- Financial POA: Grants authority to manage your finances. This should be a trusted individual with financial acumen who can ensure your assets are handled according to your wishes. Having a Financial POA is an essential safeguard in maintaining generational wealth, as it ensures that your assets continue to be managed prudently even in unforeseen circumstances.
Which Documents Do You Need?
There is no one-size-fits-all estate plan. The right documents for you depend on your financial situation, family dynamics, and long-term goals. However, everyone should have at least a basic estate plan in place to protect their family’s financial future.
- If you have a smaller estate, a will and proper account titling may be sufficient.
- If you have a larger estate or complex needs, a trust can offer significant benefits in preserving generational wealth and minimizing tax burdens.
- Regardless of estate size, having both a medical and financial POA is highly advisable to ensure your affairs are managed appropriately in case of an emergency.
Final Thoughts
Estate planning is about more than just distributing assets—it’s about protecting and growing generational wealth, ensuring financial security for your heirs, and creating a lasting legacy. Working with a team of experts—including financial advisors, estate planning attorneys, and tax specialists—is encouraged to ensure your estate plan aligns with your long-term financial goals and family legacy planning.
This post is for informational purposes only and should not be considered financial or legal advice. If you haven’t yet established an estate plan, now is the time to consult with a qualified professional to ensure your wishes are carried out effectively and your loved ones are protected for generations to come.
Endnotes:
- Using a small estate affidavit. Using a small estate affidavit | Illinois Legal Aid Online. (n.d.). https://www.illinoislegalaid.org/legal-information/using-small-estate-affidavit
- Using a small estate affidavit. (n.d.-a). https://www.mchenrycircuitclerk.org/wp-content/uploads/2024/05/Small-Estate-Affidavit-Tri-fold-Brochure.pdf
- Hicks, P. (2023, March 10). What is a last will & testament? purpose & types. Trust & Will. https://trustandwill.com/learn/what-is-a-will?srsltid=AfmBOoqCI2PTC4y-XPJDjgDaqlXeiCqhnZzLb04398AsN6dHS7emml3-
OneAscent Financial Services, LLC (“OAFS”), d/b/a The Cornerstone Financial Group, is a registered investment adviser with the United States Securities and Exchange Commission. OAFS does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by OAFS or any unaffiliated third party. OAFS is neither an attorney nor accountant, and no portion of the presented content should be interpreted as legal, accounting, or tax advice. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly