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Trusts Aren't Just For The Carnegies & Rockefellers

Posted by BSMG on 31 Mar 2016

Trusts are not exclusively for the ultra-affluent. They can play a vital role in outcomes-based planning for many individuals. Behind the accumulation of wealth lie personal objectives and values as unique to your clients as their fingerprints. Whether their goal is to fund a comfortable retirement, take care of children or grandchildren or make a meaningful social impact, trusts can play a valuable role in helping them to achieve those objectives.

Rockefellers

Advanced Planning: Grantor Trusts & the "Power of Substitution"

As important planning tools, trusts can offer your clients asset control, legacy protection, financial privacy, probate avoidance, and estate tax mitigation.

Control — A trust allows an individual to dictate when and to whom distributions from the trust may be made.

Legacy Protection — A trust may help protect an individual’s wealth from creditors or the spendthrift behavior of beneficiaries.

Privacy — The transfer of trust assets occurs outside the public record, maintaining the privacy of financial affairs.

Probate Savings — Assets passed by operation of a trust avoid the delays and fees associated with probating them through the court.

Estate Tax Savings — Trusts may be used to reduce future estate taxation.

Life Events Trigger The Need For Trusts

Trusts can serve a wide range of objectives. Summarized below are the more common uses of trusts:

Marital estate planning strategies to protect wealth for married couples and their children.

  1. Marital Trust — shelter assets for a surviving spouse.
  2. Credit Shelter Trust — provide income and asset control to a surviving spouse and a tax-advantaged legacy to a couple’s heirs.
  3. Spousal Limited Access Trust — shelter a couple’s estate assets while providing income for a spouse.

Family estate planning strategies for tax-efficient wealth transfer - Trusts may also be used to accomplish a variety of estate planning objectives related to family and legacy planning.

  1. QTIP Trust — establish flexibility to minimize future estate tax exposure and legacy control for couples in second marriages.
  2. Generation-Skipping Trust — maximize tax-efficient wealth transfer to grandchildren.
  3. Special Needs Trust — provide sufficient income to the beneficiary without affecting their government benefits.
Related: Wealth Transfer: Why Advisors Are Missing the Mark

Charitable planning strategies to help clients make the most of their contributions - In addition to caring for family, many individuals wish to leave a legacy for charities that align with their passion and values. Aside from a simple donation of cash or securities, individuals can use trusts to contribute to charities of their choice.

Related: Charitable Remainder Trusts & Wealth Restoration ILITs

  1. Charitable Remainder Trusts — create tax-efficient income for the benefactor and a tax-advantaged endowment.
  2. Charitable Lead Trust (CLT) — minimize current tax exposure with a gifting strategy that creates a legacy for the donor’s heirs.

A Guide to Retirement Strategies for Tax Efficiency

Topics: Asset Strategies, Estate Planning, Advanced Markets