As has been noted often, the wealthy want their heirs to have enough to be able to do anything, but not so much that they don’t have to do something. Now more than ever, a family fortune is something to be protected and nurtured.
What is the answer? How can wealth be conserved and deployed on a long-term basis for the benefit of heirs? Trusts could be the answer for many families.
Trust planning comes immediately to mind when planning for a surviving spouse or an heir who is a minor. With a trust, one gets professional investment management guided by fiduciary principles. But what about when the children are fully grown, established in their careers and financially mature, in their 30s or even 40s? Even then, trust-based planning will be an excellent idea for many families.
Trust advantages
Among the key benefits that can be built into a trust-based wealth management plan:
We specialize in trusteeship and estate settlement and are advocates for trust-based wealth management planning. If you would like a second opinion about your estate planning or have questions about how trusts work and whether a trust might be right for you, reach out to us for guidance.
Trusts for children
| Support trust | For an adult child who needs a permanent source of financial support, with the trust principal protected from the claims of creditors, a support trust may provide a solution. The beneficiary’s interest is limited to just so much of the income as is needed for his or her support, education and maintenance. |
| Discretionary trust | The trustee has sole discretion over what to do with the income and principal, just as the grantor does before the trust is created. The beneficiary has no interest in the trust that can be pledged or transferred. When there are multiple beneficiaries, the trustee may weigh the needs of each in deciding how much trust income to distribute or reinvest, when to make principal distributions, and who should receive them. The trust document often will include guidelines on such matters. |
| Gifts-to-minors trust | For young children, contributions of up to $19,000 per year to this sort of trust will avoid gift taxes. Assets may be used for any purpose, including education funding, and will be counted as the child’s assets for financial aid purposes. The assets of a gifts-to-minors trust must be made fully available to the child when he or she reaches age 21. However, the child may be given the option of leaving the assets in further trust. |
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Securities and Insurance products are NOT deposits of Heartland Bank, are NOT FDIC insured, are NOT guaranteed by or obligations of the bank, are NOT insured by any government agency, and are subject to potential fluctuation in return and possible loss of principal.
Legal, Investment and Tax Notice: This information is not intended to be and should not be treated as legal advice or tax advice. Readers should under no circumstances rely upon this information as a substitute for their own research or for obtaining specific legal or tax advice from their own counsel.