Trusts: A Flexible, Multipurpose Planning Tool

StrategIQ® Financial Group, LLC |
Categories
Finance
Trust Services

To consult with a StrategIQ® Advisor, click here!

Do you need a trust? Before you say "no," take some time to learn more about some of the things a trust can do for you. A trust is simply a legal arrangement under which you transfer assets to a trustee's care. The trustee then holds and manages those assets for the benefit of one or more beneficiaries. Essentially, a trust is a multipurpose planning instrument that delivers a surprisingly wide range of benefits.

Manage Assets

Managing assets requires time and patience. You may not have the time or the interest to stay on top of your investments. You may also worry about your ability to manage your assets effectively if you were to become ill or disabled. A trust can remove these concerns by ensuring that your assets are managed in ways that will preserve them for you and your loved ones.

Protect Your Assets

Lawsuits are a fact of modern life. Placing assets in trust for your child instead of giving them to your child outright can be an effective way to help protect them for the younger generation.

Facilitate Charitable Gifts

A charitable remainder trust allows you to give assets to a charity of your choice without giving up the income from those assets during your life. A charitable lead trust pays income to a charity and then returns the trust's remaining assets to an individual beneficiary when the trust ends. Both types of trusts offer tax advantages.

Protect the Interests of a Minor

A trust can manage assets held for the benefit of a child or grandchild. And, if you are concerned about a child's ability to handle large sums of money or other types of property, you can stagger distributions throughout adulthood. For example, a trust can arrange to have a beneficiary receive one third of the gift at age 25, one third at age 30, and the balance at age 35.

Provide for Special Needs Individuals

A trust can ensure that a special needs child or another relative with special needs will benefit after your death. Choosing a reliable trustee gives you peace of mind that your trust will be managed as you intended.

Now or Later

A trust that you establish to take effect during your lifetime is known as a living trust. A living trust can be revocable (a trust which can be altered, amended, or even terminated -- with all trust property returned to the grantor -- at any time) or irrevocable (a trust that cannot be changed). As grantor, you generally can make changes to a revocable trust but not to an irrevocable trust. 

A testamentary trust is a trust that you set up in your will. It comes into existence and becomes irrevocable at the time of your death.

But I Already Have a Will...

There are three related things that can't be handled through a will: Making a lifetime gift, setting up a living trust, and providing a decision-maker if you become temporarily or permanently disabled. All these would occur during your lifetime when your will has no effect. Your professional advisor can help you with them at any time.

A gift of assets during your lifetime can reduce the value of your estate and, therefore, your estate taxes. But there are possible gift taxes to consider as well. Giving a substantial amount requires professional guidance to assure you receive the maximum tax benefit.

A living trust is a very flexible way of arranging your assets that can provide continuous investment care if you are incapacitated, plus other advantages. You also can give someone you trust a power of attorney to manage your affairs if you are disabled.

What a Trust Can Do for You

A trust can be designed to serve a variety of purposes. It can provide for you and your loved ones, ensure a lifetime income for your spouse, pass assets to children or other heirs after your spouse's death, support disabled or elderly dependents, distribute assets in stages to beneficiaries, authorize discretionary distributions based on need, provide a charitable legacy, and so on. A trust may be established for any number of uses. Among the more significant: A trust may be created as a "pourover" vehicle for your estate assets, designed to hold and manage your property for the benefit of your heirs after your death.

  • A trust may be created as a receptacle for the life insurance proceeds to be collected upon your death.
  • A trust may be created for the professional management of your investments, such as stocks and bonds, real estate, etc., during your lifetime.
  • A trust may be created as a means of providing for your child's education or for the care of a handicapped dependent.
  • A trust may be created for use in conjunction with your retirement planning.
  • A trust may be created as protection against the mismanagement or non-management of your assets in the event you become temporarily or permanently unable to manage them yourself.
  • A trust may be created as a tax-savings device.

Types of Trusts

Put simply, there is no such thing as a standard trust. Instead, every trust is tailor-made to fit the financial needs and goals of the grantor. Trusts thus come in several varieties. For instance, a trust may be testamentary or living. Furthermore, a living trust may be either a revocable trust or an irrevocable trust.

In addition, a trust may be created for any number of beneficiaries (including the grantor himself) and may provide for just about any method of trust property distribution that the grantor desires. In sum, a trust is an extremely flexible financing-planning tool, and, as such, can be set up to meet your individual objectives, whatever they may be.

THIS INFORMATION WAS PREPARED BY NATIONAL ADVISORS TRUST COMPANY (“NATC”). STRATEGIQ® FINANCIAL GROUP, LLC (“STRATEGIQ®”) IS PUBLISHING THIS INFORMATION FOR GENERAL INFORMATIONAL PURPOSES ONLY. STRATEGIQ® MAKES NO CLAIMS, PROMISES, OR GUARANTEES ABOUT THE ACCURACY, COMPLETENESS, OR ADEQUACY OF THIS INFORMATION, AND EXPRESSLY DISCLAIMS LIABILITY FOR ERRORS OR OMISSIONS IN THIS INFORMATION. THIS INFORMATION DOES NOT CONSTITUTE, AND SHALL NOT BEEN RELIED UPON AS, LEGAL, TAX, ACCOUNTING, FINANCIAL, INVESTMENT OR OTHER PROFESSIONAL ADVICE TO ANY PERSON, AND MAY NOT NECESSARILY REFLECT THE MOST CURRENT STATUS OR DEVELOPMENT. STRATEGIQ® SERVES AS A TRUST REPRESENTATIVE OFFICE OF NATC UNDER THE NAME STRATEGIC FINANCIAL GROUP PRIVATE TRUST SERVICES, BUT STRATEGIQ® AND NATC ARE SEPARATE AND INDEPENDENT FROM EACH OTHER. STRATEGIQ® IS A SMALL (LESS THAN A 1%) SHAREHOLDER OF NATIONAL ADVISORS HOLDINGS, INC., THE PARENT COMPANY OF NATC. INVESTMENT ADVISORY SERVICES ARE OFFERED BY STRATEGIQ® FINANCIAL GROUP, LLC, AN INVESTMENT ADVISER (RIA) REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION (SEC).