According to the study, high net worth individuals (HNWI) are three and a half times more likely to hold assets in a Will or Trust than are wealthy investors with less than US$1 million.
A will allows investors to designate the inheritor of personal possessions, such as their furniture and other home accoutrements, and also appoints a guardian to look after young children in case of an untimely death. In a trust, the title of property is transferred to a trustee sparing the survivors lengthy and expensive court proceedings.
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The study shows that only 12% of mass affluent investors (those with a net worth of US$100,000 to US$1 million) have established trusts. A vast majority (95%) serve as their own trustee as compared to 5% who have a corporate trustee.
When engaging a corporate trustee, most investors use the services of a bank trust department. Half of mass affluent investors use a bank, 30% a brokerage trust and the remaining 20% go with an attorney, the report said.
Having a will is favored by 72% of mass affluent investors, while their older and wealthier counterparts are even more likely to have a will, the report says.
The study also adds that 30% of the HNWIs with a net worth of US$1 million to US$5 million have established a trust, with 90% serving as their own trustee.
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By GlobalDataAmong HNWIs with a net worth of US$5 million to US$25 million, 45% have a trust and a remarkable 89% serve as their own trustee.
Among the wealthiest of these individuals, those with US$15 million to US$25 million, 96% use an independent trust company, 65% use an attorney and 35% depend on a private bank.
The study shows that there is a high degree of correlation between wealth and the usage of a will: 94% of HNWIs in the US$15 million to US$25 million band have a will.
