• 21
  • February
    2012

The untimely death of pop star Whitney Houston is serving as a stark reminder of the need for high net worth individuals to use trusts as part of their estate planning strategy.

Houston's will reportedly left the bulk of her estate to her 18 year-old daughter, Bobbi Kristina Brown. Although the size of the singer's estate has not yet been disclosed, it is expected to be quite substantial.

Experts are hoping that Houston had the foresight to put her daughter's share of the estate into a trust.

Benefits of a Trust

Trusts have a number of advantages. Most notably, they allow beneficiaries of an estate to receive payments over time. A will, on the other hand, can only provide for one-time lump sum payments. Trusts can also help minimize estate tax liabilities.

At the very least, individuals should consider making revocable living trusts an integral part of their estate plan. Revocable living trusts, or RLTs, give trust creators a measure of control over how their assets will be handled after they die. In addition, the trust assets - if properly managed - will continue to grow over time, ensuring that wealth can be passed down from generation to generation.

RLTs also provide high net worth individuals with needed privacy. Unlike wills, trusts usually avoid the public disclosure inherent in the probate process.

Most experts recommend that individuals create several different trusts funded by the estate's assets. It is also often a good idea to purchase life insurance and use the proceeds to fund a trust.

When it comes to estate planning, every person's needs are unique. Talk to a Florida estate planning attorney who can help you understand your options.

Source: Investment News, "Whitney Houston: Estate Planning Lesson in a Sad, Untimely Death," Liz Skinner, Feb. 19, 2012.