Trust Services
What is a Trust?
A trust is simply your instructions for the management of all or part of your property. An attorney who represents you and has specific expertise in the area of estate planning should write your trust. The trust document describes:
- How you want your assets managed, and eventually dispersed?
- Who you want to benefit now and in the future?
- Who you want responsible for carrying out these instructions?
Trusts can provide a measure of comfort knowing that you have a plan in place to help provide for the safe and accountable management of family assets and to direct their use in accordance with your wishes, goals and objectives. Trusts are used to ensure the proper management of your assets at all three stages of your life:
- During your active lifetime, placing assets in a trust allows you freedom to continue managing your assets or to devote time to other priorities. A trust created and funded during your life is generally called a “living” or “revocable” trust.
- In the event you are incapacitated, a trust can ensure that your needs are met and that your finances are kept in good order for your benefit.
- Upon your death, a trust becomes “irrevocable,” and your assets are managed and distributed by your trustee, in accordance with your instructions throughout the trust’s existence.
- An estate planning attorney may recommend creating an irrevocable trust during your lifetime, in addition to a revocable trust. This may provide creditor protection, controlled giving to family members or estate tax minimization.
Trusts also provide protection for family members who may be unaccustomed to dealing with financial matters. They can offer protection of assets in case of divorce or other litigation. Trusts can assure that funding is available for specific needs, such as education, health care or charitable interests. Trusts provide a framework in which money is managed in a predictable fashion, by persons you choose, according to standards you set. Trusts create guidelines for current and future distributions that reflect your wishes. Trusts may also have substantial tax benefits and provide an expedient method to transfer assets.
A revocable or living trust is a trust that you can change or cancel during your lifetime. You control a revocable trust and the trust's earnings are consolidated into your income tax returns. You may continue to manage the assets, or your financial advisor will handle management of your assets under your supervision, and upon your disability. A revocable trust can also be used to transfer assets at death, similar to a will, yet without the formal, court-supervised process of probate, where it opens your estate to public scrutiny. Once you pass away, your wishes are final, and thus the trust becomes irrevocable.
A charitable remainder trust is an irrevocable trust with both income and remainder interests. Income is paid to designated beneficiaries for a term or lifetime. The remainder interest is paid to qualified organizations as specified in the trust document when the trust terminates.
In a charitable lead trust, the trust pays a fixed percentage of assets to a qualified charity for either a set number of years or for the life or lives of the individuals. When the amount of the trust has ended, the remaining assets are distributed to the donor or heirs as noted in the terms of the trust.
Special needs trusts are often established by the parents or relatives of a disabled child, with funds to be used to pay for supplemental or living expenses of the disabled person not paid by other sources. Special needs trusts can also be set up with the disabled person's own funds, again to provide for supplemental medical or living expenses.
An irrevocable trust is a trust that cannot be changed or cancelled at any time. This trust is a separate legal entity and its own taxpayer. The terms of many irrevocable trusts, however, allow tremendous flexibility. While many irrevocable trusts come into being at death, irrevocable trusts set up before death are often used to hold life insurance policies, gifts of assets to be available to beneficiaries at a future time, or funds for future charitable contributions. To achieve beneficial tax results, many irrevocable trusts are written to follow patterns based on the rules in the Internal Revenue Code. The structure most suited to your needs can best be determined with the help of financial, legal and tax advisors who specialize in this field.
Agency relationships can be set up for any of the above account where the fiduciary or fiduciaries designate an agent to undertake one or more of the responsibilities for the account.
A private foundation is a charitable organization created and funded by a donor as a trust or a non-profit organization, which is designed to achieve one or more specific charitable functions.
Guardianships are established to protect and handle the assets of minors.
The Private Trust Company can provide comprehensive trustee and financial services for high net worth families.
Rabbi trusts are set up by corporations to support non-qualified, deferred compensation plans.
An irrevocable life insurance trust (ILIT) is typically used to shelter an insurance death benefit from estate taxes and may provide liquidity to pay estate taxes and settlement costs. A trust is created, and then the trust purchases and owns a life insurance policy. Upon death, the insurance proceeds are paid out in accordance with the terms of the trust.
For additional information about The Private Trust Company and how our office can be of service to your family or organization, please call Donald Boucher at 480-722-0202.
The Private Trust Company can often take over revocable and irrevocable trusts in which another bank or trust company is presently serving as trustee.
The Private Trust Company may be named as trustee or successor trustee in new revocable or irrevocable trusts. Or, you may amend your trust document to name The Private Trust Company as successor trustee for an existing trust. Your estate planning attorney can assist you in naming The Private Trust Company as trustee or successor trustee.
LPL Financial Planners offer access to trust services through The Private Trust Company N.A., an affiliate of LPL Financial.
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