Revocable Trust

Just like school subjects get more complex as you age; so too, does managing your finances. Sure, you may have established a standard will and healthcare directive early in your financial life. Those, however, may not address the more complex needs you have as you age and accumulate wealth. One tactic oft employed is to use a trust.
Unfortunately, many people think this tactic is frighteningly complex. It is not. Just like you eventually learn that 1+ 2 = 3 has the same complexity as x + y = 3; it is less scary than it seems. To that end, let’s keep going with the numbers and go through 10 reasons to establish one.

10. Protection from creditors:

Through the use of “spendthrift provisions” in an irrevocable trust, a trust can effectively protect heirs from a variety of bad situations. This could include general creditors and divorces. There are also special trusts that can be employed specifically as asset protection trusts.

9. Consolidate assets:

By placing the titling of investment assets of various types in trust, one can realize increased simplicity in managing and ultimately settling an estate.

8. Achieve charitable goals:

Philanthropic and Charitable Remainder Trusts are useful to distribute dollars to a combination to charitable organizations and non-charitable beneficiaries. These can be more useful than ever for planning charitable giving in the current post-TCJA era.

7. Provide for special situations:

Special situations may arise and are also an important part of meeting individuals’ wealth management needs. It has been rumored that Oprah Winfrey has a $30 million-dollar trust set up to take care of her dogs.

6. Protect loved ones with special needs:

Special Needs Trusts sometimes referred to as supplemental needs trusts are valuable tools to provide for individuals who do not have the capacity to manage their own affairs and also qualify for certain Federal and State medical and other benefits.

5. Avoiding probate:

Avoiding probate costs are a common objective of using one. The costs of settling probate assets have reduced over the years due to simplification of the laws and the procedures by the states but it can still be a significant issue. Often, people create Revocable Living Trusts for these purposes, especially if owned property is in multiple states, thus avoiding multiple probate proceedings.

4. Keep your business your business:

According to experts like Andy Defrancesco, Privacy is a key benefit of assets owned in trust(s). Since there is no probate or other proceeding to transfer an estate in trust the size of and the assets within a trust are private and not subject to public scrutiny and/or comment.

3. Preserve generational wealth:

Assisting multiple generations is another feature of well-crafted trusts. The likelihood that each person in a family, especially over more than one generation, will have the skills to manage significant wealth is small. Professional expertise in financial issues by a trust officer and investment professionals can provide valuable assistance in preserving and maximizing wealth.

2. Structure estate taxes:

Estate tax savings are common objective in the drafting documents to maximize the amount of resources that will go to the ones that we want to benefit rather than the government via taxes.

1. Peace of mind:

we regard this as the ultimate reason for creating a trust. Providing for the people, issues and causes we care about in the most cost-efficient and effective way possible is the ultimate goal of a trust.

People often misunderstand trusts. Don’t assume the creation of a trust automatically infers the mentioned benefits. Often this is not the case. When you review the estate plan that exists within your overall wealth management strategy, ask your professionals which of the above  benefits your trust provides.

*Author’s note – this is an update of an article originally published by White Oaks on Nov. 12, 2007*

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.

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