There is a reason that it’s called a trust.
Trust is something we give to another person. We trust people with our lives, with our fortunes. We trust our spouses with our hearts. We trust babysitters with our children. We trust banks with our money.
In estate planning, we trust others to manage our assets for us and protect them from people with less than honorable motives.
What is a Trust and Trust Administration?
As with trusting people, or banks, the simplest way to describe a trust is it is a legal agreement to hold property for another person. The person setting up the trust is called a grantor (think of it as a person who “grants” trust), and the assets inside the trust are managed by one or more trustees (the person or persons to whom trust is granted).
Why Should You Set Up A Trust?
When you have a house or investment or retirement account and you put them in a trust, you are “trusting” that asset to be managed well by another person, not by you.
That can often be a big step. But there are some tax benefits to doing so, as all assets in a trust are separated from the rest of the estate, which lowers the value of the estate by the value of the assets in the trust. This lessens the estate-tax burden and assigns more estate to beneficiaries and heirs.
Administering a Trust
Just like most trust relationships, trusting a trust to trustees can be a difficult proposition. Managing and administering a trust is not a job that can be taken lightly and just handed off to some family member. Just as you would take due diligence to find a good babysitter to care for your children, you should also take due diligence and find a person to trust with your assets.
Not only does our firm have estate-planning professionals who can build an estate plan and create various trusts for your estate, but we also have professionals who can serve that all-imporant role of trust administrator.
A trust administrator manages and administers the trust, including providing advice about the assets to go into the trust or what should be taken out, as well as helping develop beneficiaries and plan for future management after you (the grantor) passes away.
Much of the work of an administrator happens after the grantor is dead; while alive the administrator is more in an advisory role, helping provide advice and guidance about the trust to create as much wealth with as little tax implication as possible.
Types of Trusts Administration
Our experienced trust administrators have the expertise to handle any number of trusts that can be created for your estate, based on its size and your needs and expectations. We have the ability to create these trusts, as well as manage them for you so we will know your needs and wishes from beginning to end, making for a seamless transition of your assets from your estate to your heirs.
Some types of trusts that we create and administer include:
- Trusts for minors: If you have young children, you can set up a trust that will hold assets which they can access once they reach a designated age or life achievement (e.g. age 21, upon getting married, or after earning a college degree).
- Special needs trusts: Many special needs people receive government benefits to help them through life. Getting an inheritance would suspend or eliminate those benefits until the inheritance was spent. A special needs trust protects the benefits while allowing the beneficiary to still get money it needs for therapy, treatment or basic living.
- Marital trusts: This can be set up to one of two reasons, or both: tax purposes and property protection. Putting property in this type of trust ensures that the spouse gets the property after the grantor passes away. This isn’t always necessary but can be in extraordinary circumstances, such as a spouse with grown children from a previous marriage and the house is in the parent’s name but not the spouse. A trust, in this case, would help pass the house to the spouse instead of the children upon death.
- Life insurance trusts: If you have a large estate, proceeds from a life insurance policy does not go tax-free to the beneficiary. Placing that policy in a life-insurance trust exempts the proceeds from estate taxes, so the beneficiary gets more of the money.
- Living trusts: Living trusts can work in conjunction with a will, in helping you secure proper transference of your assets according to your wishes, with the added benefit of mitigating estate-tax implications.