One of the most important financial decisions you’ll make is how your assets will be passed down. Should you set up a trust? Or is simply naming beneficiaries on your accounts enough? The answer depends on your goals, your estate’s complexity, and the type of legacy you want to leave. At MB Wealth Advisors, we help families in North Carolina choose the right structure for protecting wealth, simplifying estate transitions, and minimizing stress on loved ones.
What Happens When You Just Name Beneficiaries?
Designating beneficiaries on accounts like life insurance, IRAs, 401(k)s, and bank accounts allows those assets to transfer directly to your chosen heirs—without going through probate. It’s a simple and often effective way to pass down assets quickly and privately.
Pros:
- Fast transfer of assets
- No court involvement or legal fees
- Simple to update through your account provider
Cons:
- No control over how or when funds are used after your death
- Not ideal for minor children or heirs with special needs
- Can be messy if beneficiaries predecease you or if designations conflict with your will
While beneficiary designations are important, they often work best as part of a broader estate plan—not a replacement for one. Learn more about our estate planning approach here.
When a Trust Makes More Sense
A trust is a legal arrangement that holds your assets and distributes them according to your instructions. Unlike a will, a trust can go into effect during your lifetime and allows for much more customization and control.
Key Benefits of a Trust:
- Control how and when heirs receive money (e.g., age-based distributions)
- Protect assets from creditors, divorces, or lawsuits
- Avoid probate entirely and maintain privacy
- Appoint a trustee to manage assets for minors or incapacitated individuals
Trusts are especially valuable for families with significant assets, blended families, real estate in multiple states, or special needs dependents. If you want to go beyond a simple transfer and provide long-term protection, a trust may be your best option.
Common Types of Trusts
- Revocable Living Trust: Flexible, allows you to maintain control during your life
- Irrevocable Trust: Offers stronger asset protection and tax benefits
- Testamentary Trust: Created via your will and activated upon your death
- Special Needs Trust: Designed to care for dependents without jeopardizing government benefits
What About Retirement Accounts?
IRAs and 401(k)s have special rules. Naming a trust as a beneficiary is possible, but must be done carefully to avoid accelerated taxation. Often, individuals name both primary and contingent beneficiaries (e.g., spouse, then children) and may use trusts for non-retirement assets instead.
We walk clients through retirement account distribution strategies that preserve tax advantages and reflect your wishes. See our rollover and IRA planning services for more.
How to Decide What’s Right for You
Your estate plan should reflect your goals, family dynamics, and asset types. In many cases, a hybrid approach is ideal—naming beneficiaries for certain accounts while using a trust for others.
Ask yourself:
- Do I want to control how my heirs use their inheritance?
- Do I want to avoid probate and maintain privacy?
- Do I have minor children, or heirs with disabilities or financial challenges?
- Do I want to reduce taxes or shield assets from legal threats?
Let’s Customize a Plan That Works for Your Family
At MB Wealth Advisors, we partner with your attorney to build a strategy that aligns with your goals and protects your legacy. Whether you need to update beneficiaries, create a trust, or integrate both, we’ll guide you through it all—step by step.
Call (704) 584-9363 or schedule a free consultation at mbwealthadvisors.com/contact/#connect.
