Trusts can be a key element in financial planning for today and tomorrow
What is the sign of a good decision?®
It’s being confident in your current and future financial plans and knowing if a trust is right for you.
What is a trust?
A Trust is created by a legal document (Trust Agreement) that enables the Trust to own property for the benefit of a third party. A Trust is a versatile instrument. You create it during your lifetime to hold property and assets. After your death, the Trust can distribute the assets to beneficiaries, or hold and invest the assets for a set number of years or lifetime(s). It can distribute income generated by the investments to your beneficiaries, as dictated by the Trust.
How does a trust differ from a Will?
Unlike a Will, a trust does not have to go through probate, often a time-consuming legal process, which may have tax implications and is part of public record. When you have a trust, your assets go to your designated beneficiaries in a tax-advantaged and confidential manner. Furthermore, with a trust, you can choose to have your assets distributed to your beneficiaries over time. However, with a Will, assets are usually disbursed as a one-time event. A trust can also provide asset management, estate planning consultation and tax services, such as investment oversight, financial reporting, asset disbursements and bill payment, which can provide great peace of mind to families as the trust Grantor, or person establishing the trust, ages.
What kinds of trusts are there?
There are different types of trusts to meet a variety of objectives. Trusts are very flexible, and designed to address the Grantor’s personal wishes. The Grantor can use trusts as a key element in a comprehensive estate and wealth transfer plan, or direct how their legacy will be managed and distributed after death.
Let’s talk about trusts
Trusts can be created to accomplish specific goals. For example, if you have a child or grandchild with special needs, you can set up a Special Needs Trust to ensure that they’re properly cared for during their lifetime. For your philanthropic goals, you can establish a Charitable Remainder Trust and leave some or part of your estate to your favorite charity or institution. Combinations of trusts can help address the needs of multiple families and generations.
How do I know if a trust is right for me?
Trusts are for people who want to maintain control over how their estate is managed, preserved and distributed, those who want access to professional investment management advice and services, or seek specific expertise. For example, anyone with a Special Needs family member who wants to provide funds for care while continuing to qualify for state and federal aid or people interested in making and administering gifts to a favorite charity or school can benefit from a trust. If you want to consolidate multiple investment accounts, a more tax-advantaged way to manage and transfer your assets, or want more control over the distribution of assets over time, establishing a trust could be a smart financial decision.
A trust can offer more than tax benefits. It gives you complete control over the accumulation and distribution of your assets. If the trust owns life insurance, access to cash values can supplement retirement needs. A trust can also help you manage finances and pay bills if you travel frequently or become incapacitated. This is a much valued service and ensures that your bills are being paid on time and that your assets are organized. Establishing and funding a trust while you are living can help streamline the probate process and reduce many costs associated with your estate settlement.
Ask your advisor how to use trusts to accumulate and protect assets for your financial welfare and the benefit of the people and places you value most.