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Should You Consider a Trust?

Should You Consider a Trust?

By definition, estate planning is a process designed to help manage and preserve assets while you’re alive, and to conserve and control their distribution after death in accordance with your goals and objectives. But what estate planning means to you specifically depends on who you are. Your age, health, wealth, lifestyle, life stage, goals, and other factors determine your particular estate planning needs. A trust may be the right choice for you.

What is a Trust?

A trust is a legal relationship in which legal ownership of the property is separate and distinct from the beneficial ownership of the property. The trustee holds the assets or property (also called the trust corpus or trust principal) for the benefit of another person or group of persons (the beneficiary or beneficiaries). 

Since the trust is for the benefit of the beneficiaries and not the trustee, the trustee has a legal obligation to act for the benefit of the beneficiaries in following the language of the trust document. The trustee is a fiduciary, and this is a fiduciary obligation.

Who Creates a Trust?

The trust is created by a person or persons who transfer property or assets of some type to the trustee. The trust document usually contains the following components.

  • Management of assets during life
  • Name of trustee and successor trustee
  • Disposal of assets at death
  • Powers and instructions to trustee

Why Create a Trust?

In its simplest form, a trust is a means to distribute your assets to the individuals and entities to whom you wish. It differs from a will (which is also a mechanism to transfer assets at death) in that a trust can be established to hold and manage assets as well as to provide for the care of the grantor and his or her family during life.

Trusts, depending on if revocable or irrevocable, may provide an excellent solution to many problems one faces or may face. A trust may provide a means of protection against the many issues related to disability and incompetency sometimes experienced as one gets older. 

Here are some things a trust may achieve.

  • A trust may provide a means of protection against the dire consequences of a failed marriage, an insolvent business, etc.
  • A trust, properly drafted and utilized, may reduce income tax and may reduce estate taxes.
  • A trust is a means to provide for children and successive generations until they are old enough and mature enough to handle these assets and responsibilities on their own.
  • A trust may provide professional investment management for the assets held in the trust.
  • A trust may be the means by which the grantor specifically details how certain assets are to be held and used to promote a certain legacy or certain charitable intent.

Regardless of the specific goal of the grantor, there is usually an array of reasons for which one may set up a trust. These range from wanting to be able to control one’s property during one’s lifetime and ensuring that assets are available to take care of oneself and one’s family (especially in the event of illness or disability) to wanting to benefit certain individuals and/or institutions in a particular way or to further a particular cause all while assuring that these goals are attained with minimal professional fees and court costs. Think of these suggestions as simply a point in the right direction, and then seek professional advice to implement the right plan for you.

(c) SVA Financial Group

All information herein has been prepared solely for informational purposes only and opinions are subject to change. Past performance is not indicative of future results and all investments involve the risk of loss of principle. For information on how these general principles apply to your situation, consult an investment professional.

 

Article Topic Specialist: Ray Schenk

Ray is a Wealth Manager with SVA Wealth Management, LLC and a Trust Officer with SVA Trust Company, LLC.

With over 25 years of experience in the financial industry, Ray provides personalized comprehensive financial planning and investment management services. He has extensive knowledge of financial and estate planning, as well as investment and risk management. Ray is passionate about educating and advising his clients to help them achieve and maintain their financial goals.

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