Manage your Wealth Wisely

What is a trust?

• You’re familiar with how you already own property – an account may be in your name alone or in joint name with a spouse. Your home may be held in “joint tenants with rights of survivorship”. A trust is simply a form of property ownership, not unlike the ones you already know.
• What distinguishes a trust is that legal “ownership” of the property is the name of trustee, whose only interest in the property is the responsibility to manage it for the trust’s beneficiaries – the people whom you wish to benefit.
• Think of a trust as an empty box. You create the box and then fill it with assets – commonly such investment assets as mutual funds, stocks and bonds. Because you’ve created the box, you get to determine how the assets inside of it will be made available to your beneficiaries – when, how much, and under what conditions.

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Who are the beneficiaries?

• Many people create trusts to provide for their immediate family members. Perhaps you’re concerned that your spouse has no experience or interest in managing money and would need assistance. Your children might still be quite young and you know that any assets they might receive would have to be managed for their benefit.
• Depending upon relevant state law, you might wish to create a trust for your own benefit, designating a trustee to be responsible for investing and managing its assets, making distributions to you as you direct.
• Your beneficiaries don’t need to be too young, too old, or financially irresponsible for a trust to make sense as part of your overall plan. Maybe they simply don’t have the time or inclination to manage assets for themselves. Or perhaps you want to make sure that the property you’ve set aside for their benefit will be there for them, and not subject to their creditors.
• If you’d like to include one or more charities as part of your plan, trusts can be designed to provide a benefit to your favorite causes.

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What types of trusts are there?

• You can create a trust to come into effect during your lifetime (inter vivos or living) or upon your death (testamentary).
• A trust created during your lifetime can be either revocable or irrevocable. A revocable trust can be changed at any time – you may remove the property you place in the trust, change its terms or terminate it all together. An irrevocable trust may not be amended or changed in any way once you’ve set it up and any property you’ve placed in it is no longer yours.
• Either trust can be structured to provide for property management and distribution after your death.
• Trusts used for tax planning are generally irrevocable. If you own a life insurance policy, you might want to consider using an Irrevocable Life Insurance Trust (ILIT) as the owner and beneficiary of your policies to provide maximum estate tax protection and long term asset management for the proceeds.
• It’s possible to reduce federal estate tax through the use of a bypass or credit shelter trust, which will allow assets in the estate of the first spouse to die to “bypass” the surviving spouse’s estate, even though the survivor may receive distributions from the trust.
• If you’d like to ensure that future generations are provided for, a generation skipping trust can create a platform to provide financial stability for years to come.

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Who should be the trustee?

• There are almost as many types of trusts as there are members with individual family needs and expectations. The one thing they all have in common is the need for a trustee to manage and distribute the trust’s assets in accordance with their directions.
• Your trustee is responsible for seeing that the wishes you express in your trust are carried out – and is also responsible to your beneficiaries for proper asset management. Trusts require extensive recordkeeping and tax reporting – also the responsibility of your trustee.

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What will Trust Services cost?

Trust Administration Fees:

• 0.20% per annum in addition to Investment Management Fees

Irrevocable Life Insurance Trusts:

• $1,000 per year (during lifetime of insured)