trust basics: is a trust right for your estate plan?
DESCRIPTION
A look at trusts in Portland Oregon and its importance to your estate plan.TRANSCRIPT
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TRUST BASICSIs a Trust Right for Your Estate
Plan?
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CREATING AN ESTATE PLAN
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Over half of all Americans do not have an estate plan
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LACK OF KNOWLEDGE is a common reason why
people have yet to create a plan
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Understanding more about estate planning may encourage you to
start your estate plan
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What Is a Trust?
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A separate legal entity
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• the person who creates the trustA grantor
• the individual, or company, that manages and oversees the trustA trustee
• you must designate one or more beneficiary
Beneficiaries
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A beneficiary may be a person, an organization, a charity, or even a pet
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• trust terms are created by the grantor and may include almost anything as long as the term is not illegal or impossible to fulfill
Terms
•you must transfer assets to be used to fund the trust into the trust
Funding
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Assets may be cash, stocks, property, or almost anything else of value
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Why Include a Trust?
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PROBATE AVOIDANCE1
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A properly constructed trust allows the assets held in the trust
to avoid the probate process, making them immediately
available to beneficiaries
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TAX ADVANTAGES2
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A trust can help decrease your taxable estate at the time of your death,
thereby lowering the amount of gift and estate taxes due from your estate
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CONTINUED CONTROL3
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A trust allows the grantor to create
trust terms that will, in effect, allow a certain amount of
continued control over the use of the assets
by the beneficiaries
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STAGGERING INHERITANCE4
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A large inheritance left to a young,
or financially naïve beneficiary, can be a huge mistake
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A trust allows you to stagger the gift over many years, decreasing the likelihood that the gift will be
squandered
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GUARDING ASSETS FOR MINORS5
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Gifts cannot be left to minors
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CREATING A TRUST is an excellent way to
guard the gift and grow the funds until the intended beneficiary is
old enough to legally benefit from the gift
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Types of Trust
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Testamentary
• a testamentary trust is a trust that does not become effective until your death
Inter Vivos (Living)
• an inter vivos, or living, trust becomes effective as soon as all of the formalities of creation are completed and assets are transferred into the trust to fund the trust
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Revocable
• a revocable trust is a trust that can be changed by you, the grantor, at any time and for any reason
Irrevocable
• as the name implies, an irrevocable trust is one that cannot be changed once effective
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Assets transferred into an irrevocable trust cannot be removed once
transferred and are legally no longer owned by the grantor
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Specialized Trusts
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Trusts were once used primarily by wealthy families to pass the family
wealth down to succeeding generations
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Now, even the average estate planner can make use of one of the many
specialized trusts
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ASSET PROTECTION TRUST1
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ASSET PROTECTION TRUST1
Protects assets from beneficiary who is irresponsible or naïve with money
Protects assets from creditors of the beneficiary
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SPECIAL NEEDS TRUST2
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Also referred to as a Supplemental Needs Trust
Provides additional funds to a special needs beneficiary over and above benefits from government assistance programs
Prevents gifted assets from disqualifying beneficiary from assistance programs
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CHARITABLE TRUST4
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Provides gifts to charity
Charitable lead trust gifts to charity first and then to non-charity beneficiary
Charitable remainder gifts to non-charitable beneficiary first with remaining assets to charity
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PET TRUST5
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Provides for your pet when you die
Can direct details of pet’s life
PET TRUST5
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GENERATION SKIPPING TRUST6
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GENERATION SKIPPING TRUST6
Protects assets that are exempt from the generation skipping tax
Used to transfer assets to future generations
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LEARN MORE ABOUT TRUSTS
IN PORTLAND OREGON