Advise Financial

What to do with your investments in wartime?
4 de March de 2022
The financial fear of running out of money in retirement
5 Claves cómo un Trust en USA protege el dinero de tu familia latina
18 de March de 2022
What to do with your investments in wartime?
4 de March de 2022
The financial fear of running out of money in retirement
5 Claves cómo un Trust en USA protege el dinero de tu familia latina
18 de March de 2022

5 Keys how a Trust in the USA protects your Latino family’s money

In our Latin culture, even thinking that something bad could happen and that tomorrow you will not be here is considered bad luck or something that we should avoid, a trust is the solution.

But after living through the pandemic, we realize how fragile our lives are, the lack of planning in most families and how your loved ones will be the most affected if you were to be absent.

Many families are totally unaware that upon death in the United States, all a person’s assets are frozen until a judge determines who owns their assets.

This is a process called Probate, which can last from 6 months to 18 months if the case is simple. Which means that we are not talking about the fortune of a Billionaire but rather about people like you or like me, time when your loved ones:

• They will not have access to your money, not even to pay for clinic or funeral expenses.

• You will have to pay attorneys’ fees and court costs throughout that period.

So since I’m sure you don’t want your hard-earned money left to lawyers and the courts, there are two ways you can do better estate planning.

Credits: Magisto

By the way, if you are one of those who says: “In my case I only have debts and my house” and you think you have been saved from this process… No, remember that the judge is going to appoint a person who will oversee liquidating your assets (including anything you own).

They also pay their debts and taxes. And if after paying everyone involved in the process there is anything left, that is what will be distributed among your heirs.

One of the easiest ways to optimize this process and not spend so much money on lawyers would be to have a Will, but for every 2 Americans we see that only one has one.

According to a Callup report if we go to the group of Latinos, less than 30% have a will.

The testament: it is the tool that allows the judge to determine to which person each of the assets corresponds, optimize the time during the Probate and thus pay less in attorneys’ fees and legal expenses.

Again in our culture, many people will point out that in addition to being bad luck, wills are exclusively for people with great wealth, when we have seen that it really is bad luck to leave so much money to lawyers and not to your family.

Now that we have learned some basic facts about what happens to your assets at death, some people wonder: Is there a way to avoid probate? and it is there where the figure of the Trust or Fideicomiso appears.

What is a Trust or Fideicomiso?

There are really many ways to explain what a trust is, many of them are complex, so I prefer to tell you a brief story about the origin of the trust, with which I am sure you will understand it much better:

For this we must go back to the Medieval period where the great landowners or feudal lords had their castles, lands and wealth, and the Crusades or Holy War began to be waged where the Catholic Church promoted these campaigns to recover the so-called holy land in the The East and the feudal knights embarked on these crusades as a way to cleanse their sins.

Credits: Magisto

Now, the following problem arose if the feudal lord was going to fight this battle:

  • Who could he trust to leave his castles and goods to take care of while they were at these battles? and
  • What would happen if he, rather, were to die in combat and not return?
  • How would his family be and who will watch over them?

So what do we normally do when we have a problem:

We called a friend and indeed that is how the feudal lords did it, they appointed a person they trusted to take care of their assets following certain instructions and in case of death they would deliver the assets, the fruit of these or both to their loved ones.

The trust is born from the word trust

With which the Trust is born, which comes precisely from that word trust and in the case of Spanish it comes from the word fiducia that also means the same thing: trust.

Like many things, trusts have evolved and are no longer tools used exclusively by the ultra-rich or feudal lords, and there are online platforms that allow you to create a Trust for relatively low costs.

Credits: Magisto

Of course there are flavors for all tastes and there will be families or individuals who will need much more complex and sophisticated structures according to their level of assets.

Being one of the main benefits of a Trust or Fideicomiso that allows you to distribute assets without having to go through the tedious, long and expensive process that I already told you about called Probate.

So the next logical question would be: and what could a Trust or Trust be used for?

For which we are going to give you 5 keys or traditional uses of a Trust or trust, making it very clear that the different uses that you can give to a Trust are practically infinite since you can do everything that is not illegal.

Credits: Magisto

First case: The family member who generated the wealth

In all families it happens that there is a person who is good with business or making money, being recognized by all the others as the leader of that family when it comes to managing money and usually these people end up managing everything related to the family finances, being practically the only ones who have the control and knowledge to do so.

Credits: Magisto

How the trust helps Latino families

Being the main problem for these families what will happen if this person passes away tomorrow, will their children, husband, or wife, can manage that money or assets when they never had?

This is where a Trust can protect them, allowing this person to clearly stipulate how their assets will be managed so that the legacy that was generated with so much work for the benefit of the family is maintained.

Second case: Families with special children

If you are currently stressed thinking about what could happen to your children if tomorrow were to be absent…

Imagine what a family with special children can feel, where they know that more specialized attention is required and they want to have a way of always being present, even if it is financially.

Once again, a Trust will function as the administrator of these assets to gradually deliver the money necessary for the payments required by this special child.

Of course, until the duration of the capital or assets that were put in the trust. These amounts being used to pay for treatments, schools, food, etc.

Third case: For life policies

He imagines that, overnight, his family receives a large amount of money because of his death because he is covered by a life policy.

Normally the families that receive such large amounts do not know how to manage them and problems begin; that they are going to classify as a priority where they should invest that money and how to use it so that it benefits all members of the family.

Fourth case: Family member at risk of a disease

One of the great virtues of the Trust is that it allows us to plan of time. For example, people who are suffering from a disease or who have had a heart attack or stroke.

They can leave in writing how they want their assets to be managed in case something happens in the future, having the peace of mind that their family will be fine.

Fifth case: For everything you can think of

Truly, the figure of the Trust is so versatile that we see people who open them to pay for their children’s studies.

Others have made trusts to leave their legacy to their pet. This is totally true.

Gunther VI: World’s Richest German Shepherd

There is the case of a German shepherd named Gunther VI who has been listed as the richest dog in the world, since he is a beneficiary of a Trust and one of his acquisitions has been a mansion that previously belonged to the singer Madonna.

So as we can see, a Trust is a super powerful tool, where imagination is the limit.

Therefore, we suggest talking more about it with your Financial Planner (CERTIFIED FINANCIAL PLANNER™) to learn how a Trust can protect your Latino family’s money.

Alonso Rodríguez Segarra
Alonso Rodríguez Segarra
Founder & CEO Advise Financial Alonso Rodriguez Segarra is a “CERTIFIED FINANCIAL PLANNER™” named by Investopedia among the Top 100 Financial Advisors in the USA  with more than 20 years of experience. His specialty is helping those people who want to plan for their retirement or optimize their retirement, with Hourly Financial Planning always looking for the best for his clients, under fiduciary criteria.


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