Trusts

Trusts are a special form of ownership designed to transfer ownership to another party, but allowing the grantor to retain control of the assets. The owner of the assets, the grantor, transfers assets to the trust and appoints a trustee, which can be himself/herself, a spouse, a friend, a business associate, or a financial institution, to manage the trust. The income and remainder (what’s left at the end of the trust’s term) are reserved for the benefit of the beneficiaries.

Reasons for establishing a trust


To allow for tax planning.

To create a multigenerational legacy for your family.

To transfer property to your beneficiaries with specific payout provisions based upon your objectives and your criteria.

To protect the assets that you pass on to your children from their creditors or from a divorce.

To transfer the management of assets to a third party if the grantor should become incapacitated.

To transfer assets more quickly to your beneficiaries.

To protect the grantor’s and inheritors’ privacy.

To avoid probate.

Trust Options

1. A “Credit Shelter Trust” allows for tax planning advantages for a married couple. In 2011 and 2012, a couple can shelter $5,000,000 each from estate tax. However, in 2013, the estate tax returns to 2001 levels. From 2013 and on, with proper planning, and with the correct titling of assets, a “Credit Shelter Trust” will allow a couple to shelter a total of $2,000,000 which can then pass to their beneficiaries estate tax free. Without proper planning, correct titling of assets, funding, and the use of a “Credit Shelter Trust”, a married couple could easily lose a $1,000,000 tax break given by the government and saddle their beneficiaries with a 55% estate tax on a large portion of the estate.

2. A “Spendthrift Trust” can safeguard your beneficiaries from themselves if they have unwise and wasteful spending habits.

3. A “Special Needs Trust” can protect an inheritance for a disabled child to be used for enhancing that child’s life rather than paying back the government for benefits received.

4. A "Discretionary Trust" can provide for Health, Educastion, Maintenance and Support for your children and yet protect them from their creditors and from a spouse in a divorce situation.

5. An “ILIT” (an Irrevocable Life Insurance Trust) uses life insurance policies to pass large sums of money to beneficiaries income tax and estate tax free.

6. A “Charitable Remainder Trust” is a creative way to provide a lasting legacy in your name and receive income from the trust for life or for a specified number of years. Upon expiration of the term, the remainder of the trust goes to your favorite charity.

The benefits to you are: Annual income for you, a spouse or someone you designate; an immediate tax deduction at the time the trust is created; no immediate capital gains tax on the transfer of appreciated assets and estate tax savings when these assets are removed from your taxable estate.

7. A "Charitable Lead Trust” minimizes estate taxes on assets you intend to leave to your children or grandchildren, particularly when those assets are expected to appreciate.

After transferring your assets, the charitable lead trust provides fixed amount payments to your favorite charity for a specific term of years or for your lifetime. Thereafter, the trust's principal passes on to your heirs or beneficiaries. Additional appreciation of assets is not subject to estate taxes for the term of the trust.

Trusts allow for a great deal of flexibility and creativity. They are the ultimate planning tool in Estate Planning.


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