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Trusts have become the superheroes of estate
planning. They can slice away at taxes, avoid
the probate system and give you more control
over your estate.
Sounds great! If only trusts
could save the day for everyone... but all trusts
are not alike. A trust can be created for any
purpose that is not illegal or which is not
against public policy, limited only by the imagination
of lawyers. There are no technical rules restricting
the creation of trusts. The duties of the trustee
are such as the creator of the trust may choose
to impose; the interests of the beneficiaries
are such as he or she may choose to confer upon
them.
When deciding whether an asset should be transferred
outright or transferred in trust, there are
some significant factors to consider:
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Beneficiary's capacity
to prudently manage the property
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Beneficiary's current
legal capacity and probability of becoming
incapacitated at some time
Beneficiary's propensity to be unreasonably
influenced by others
-
Beneficiary's probability
of divorce
-
Beneficiary's probability
of being charged in paternity/maternity
suit
-
Beneficiary's probability
of facing large claims of creditors, including
the government for unpaid taxes
-
Beneficiary's probability
of needing to expend corpus
-
Relative additional
costs of creating and administering a trust
-
What benefits a trust
can or may provide
-
Entitlement or eligibility
to receive income or other periodic payments
-
Entitlement to make
or participate with others in making investment
decisions
-
Entitlement to control
the distribution of trust assets to others
(lifetime or at death) including payments
to descendants, spouse and charity
-
Specific and well-known
asset management vehicle
-
Protection from claims
of creditors (depending upon trust terms,
the settlor's interest in and control over
the trust and governing law), including
governmental claims
-
Elimination or reduction
in taxation
-
Income taxes
-
Wealth transfer taxes
-
Protection from foolish/unwise
dissipation of wealth
Be certain that this terrific
tool is used properly for your situation and
estate plan. So do it right! We recommend that
you get assistance from an estate planning attorney
familiar with trusts and your individual situation.
For more information, please contact the professionals
at North Central Trust Company by calling
1-800-658-9474.
The
articles and opinions in this publication are
for general information only and are not intended
to provide specific advice or recommendations
for any individual.
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