Choose an account to continue to login.

What You Gain with A Living Trust

(A guide to one of the most valuable financial planning tools available today.)

The freedom and security of a Revocable Living Trust.

It sounds almost too good to be true: an arrangement that provides investment supervision, standby protection and tax savings all at once.

But it is true, and it’s why the living trust is one of the most valuable financial planning tools available today. This brochure will serve as your guide, as you and your professional advisor discuss the many advantages a living trust offers.

How exactly does a Living Trust work?

Very simply, a living trust is a separate legal entity, much like a corporation, which holds and manages assets for the benefit of others.

It is called a living trust because once created, it takes effect immediately, while you are alive – and it can be changed as you want during your lifetime. It is different from a testamentary trust, which is created by a will and takes effect after death.

Like other types of trusts, a living trust is an agreement under which a "trustee," who is appointed by the person who creates the trust, manages certain assets on behalf of the beneficiary or beneficiaries named in it. The beneficiary can be yourself or anyone else you name.

During your lifetime, as your goals and objectives change, you can modify the terms of a living trust, change beneficiaries or terminate the arrangement entirely. At your death, the trust can be terminated or it can continue for your beneficiaries.

While many people are attracted to the kind of administrative help a living trust provides, some of its other benefits are far more significant. A trust can be designed to suit your needs and provide you with a number of important advantages.

Living Trust Advantages

  • 1. Experienced investment management
    You can stay late at the office, spend more time with your children, or go on a vacation, and still be assured that your trustee is on the job. No longer will clerical matters be overlooked or important opportunities missed just because you lacked the time. And with facilities that few individuals possess, your trustee can design a highly successful investment program to suit your circumstances.
  • 2. Affordable services
    Living trusts involve only a modest cost – a cost which is more than offset by investment benefits, lower probate expenses and tax savings. Moreover, fees related to income on taxable securities can be deductible in some cases – subject to a floor of 2% of adjusted gross income.
  • 3. Guarding your interests
    Should you become seriously ill or otherwise incapable of handling your own personal finances, your trustee can be authorized to pay medical bills, rent, utilities, taxes and so forth. There need never be any question as to the availability of your assets to be used for your benefit in an emergency. You can concentrate on getting well without worrying that someone inexperienced – or no one at all – is guarding your interests.
  • 4. Lower estate settlement costs
    Although generally subject to taxation, the assets in your trust are not themselves subject to probate procedures. This holds down the usual estate settlement costs considerably.
  • 5. Avoids delays in distribution
    Again, because trust property is not subject to probate procedures, the disposition of trust property will not be prolonged by the usual delays involved in estate settlement. As a result, the flow of income from the trust to your beneficiaries can continue with minimal interruption.
  • 6. Assures privacy
    Your will is a public document, and at probate its contents, including the names of your beneficiaries and how much they will receive, will become public information. Such publicity can be avoided by a revocable living trust, because your trust is a private agreement.
  • 7. Avoids disputes
    Bequests under a will are, on occasion, challenged by relatives who are disappointed because they received less than they had anticipated. Dispositions under a revocable living trust, however, are more difficult to challenge. Claims such as mental incompetence or undue influence can be defeated where a person has established and observed the operation of a trust during his or her own lifetime.
  • 8. Lets you observe your estate plan in action
    The living trust provides you with a rare opportunity to test your estate plan. Through your own personal experience, you can measure the abilities of your trustee to provide important trust and investment services to your family in the future.
  • 9. Establishes a cornerstone of financial security for your family
    The living trust that you and your financial advisor design now can be continued after your death for the benefit of your family. Continuation of the trust would provide your family with 1) experienced management; 2) payment of benefits with little or no interruption; and 3) none of the cost or delay of probate.

Finally, your living trust can be used to coordinate other assets. Life insurance proceeds or retirement benefits can be paid into the trust. Assets can be “poured over” from your will to the trust. Your trust can be the cornerstone upon which your family’s security can be built.

Who Can Living Trusts Help Most?

The need for a trust may seem to be something far off and distant, something you’ll only need at a much later date. Yet a living trust offers numerous benefits to many people right now, including:

  • Those who want to enjoy what they have earned or inherited, and who dislike being involved in the day-to-day problems of managing capital.
  • People who travel widely for pleasure or business, and, as a result, find it difficult to manage their financial affairs.
  • Forward-looking individuals seeking the satisfaction of knowing they have created a program for the future benefit of their family or their favorite charity.
  • Professionals and business executives with heavy career responsibilities.
  • Widows, orphans, and others with special needs and little experience in financial management.
  • Those seeking impartial and trustworthy advice from an objective, knowledgeable source.

Those with concerns about their health or future ability to manage their financial affairs, and who therefore are looking for knowledgeable experienced help and guidance.

Grandfather and young grandson playing soccer