Trusts
Trusts can be beneficial to most
individuals, even to those with
estates of modest value.
A trust can be a powerful and
flexible financial planning tool.
A trust is a legal entity that holds
property designated by you, the grantor,
for the benefit of you or your beneficiaries.
The trust agreement names a trustee to
manage the specified property according
to your instructions. The trustee can be
either an individual, an institution,
such as a bank or trust company, or a
combination of the above as co-trustees.
Trusts can serve a number of purposes.
- Ensure that at your death your property is
transferred according to your wishes and in a
confidential manner (unlike a will which is
probated and becomes a matter of public record).
- Provide for your family’s well-being
after your death.
- Allow you to have some control over
how your assets are used by your heirs
after your death.
- Manage your affairs if you are disabled.
- Reduce or eliminate probate time and/or expense.
- Reduce or eliminate federal estate taxes.
Generally, any property of value can be
placed in a trust, for example, cash,
stocks, bonds, life insurance policies
or proceeds, bank accounts, certificates
of deposit, income from a business or
investment, real estate, benefits from
a retirement fund, jewelry or fine art.
Who Should Use A Trust?
Answer the following questions to determine
if a trust could help you.
- Do you want to ensure that your assets
are protected and managed according to
your wishes should you become incapacitated?
- Would you like to leave your entire
estate to your spouse but make bequests
to other beneficiaries after your spouse’s death?
- Is the total value of your estate now,
or its projected value at your death more
than the current maximum exclusion amount,
for example, $2.0 million for 2007 and
2008 and $3.5 million in 2009? This generally
includes any life insurance proceeds payable
if you are the insured and you own the policy,
unless the trust owns the policy.
- If you are remarried, do you want to
provide for your current spouse as well as
for children from your prior marriage?
- Are you concerned that your beneficiaries
will be unable to manage their inheritance
or that they may spend it unwisely?
If you answered “Yes” to any of
these questions, you may be a candidate
for a trust. With professional
guidance from tax and legal experts,
you may wish to examine how a
trust might be utilized in your
estate plan.
Topics covered in this section are:
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Basic Money Management
Basic Money Management
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