April 28, 2008 / White Oaks Wealth Advisors

Trusts In A Wealth Management Plan

Should you have a trust in your wealth management plan? Maybe! The term trusts can seem very complicated and confusing to many. Fortunately there are many wealth management strategies that make use of trusts to meet the various objectives. We will have a series of posts on the various types of trusts and the wealth advisory issues they address. So rather than use trust definitions I will instead identify the situations that trusts can solve and then link to a source to define the type of trust that may be appropriate. This is the first of our “trust series”.

Parents with young children are often concerned with how their wealth will be used if one or both parents die. First to mind when in this situation is providing funds for support for the children when they are under the age of majority and can’t make their own financial decisions. Money for support, education etc. can be provided via a Testamentary Trust created in your will. Through the trust language you can instruct the trustee the particulars relative to your money values. Decisions like how much for college. Should the trustees pay all of the costs for tuition and room and board? Or is a percentage of these costs more appropriate? How about a little fun money too? These are all value decisions that can be incorporated into a trust document and instructions to trustees.

Other decisions may involve providing funds for the purchase of a home, starting a business or other values based judgments that you would make if presented with those opportunities to help your children today. It is not uncommon for families to have individual members that have or are currently facing personal challenges. Lifestyle issues with drug abuse, bad relationships and decision making are more common than most people think. In those instances there is incentive trust language that can be included to set some guidelines in place to encourage specific actions or behaviors before trust funds are released. Many consider incentive trust provisions as protecting the individual from their own actions and serve as a motivation for a productive lifestyle. These provisions can allow the wealth resources to be used as a tool for betterment than a weapon of self destruction.

It’s important to remember that these are TESTAMENTARY TRUSTS and they have no effect during your lifetime. We strongly recommend the use of a capable and qualified attorney when drafting a trust document of any type. Use of the proper terms and construction of trust documents is a serious undertaking and needs to be considered with your entire wealth management team, including wealth advisors, tax professionals and legal counsel.

For more information, please read more posts from of our series on trusts using the link below.

Top 10 Reasons to Establish a Trust
Revocable Trusts in a Wealth Management Plan
Irrevocable Trusts in a Wealth Management Plan
Charitable Giving using Trusts in a Wealth Management Plan
Special Needs Trusts
Passing Real Estate on to the Next Generation with Trusts

The foregoing content reflects the opinions of White Oaks Wealth Advisors and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation.

Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns.

Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.

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Investment advisory services provided by White Oaks Wealth Advisors, Inc. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. All information or ideas provided should be discussed in detail with an advisor, accountant or legal counsel prior to implementation. Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.