Thoughtful planning may create a lasting legacy.
Those who have built wealth during a lifetime of hard work are rightfully concerned about how best to use that wealth for family financial security. 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, you get professional investment management guided by fiduciary principles.
For young beneficiaries, a trust can provide for education funding, and for getting a good financial start in life.
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 affluent families.
Trusts in ActionAmong the key benefits that can be built into a trust-based wealth management plan:
- Professional Investment Management — A significant securities portfolio is a wonderful thing to have, but it requires serious care and attention, especially when economic growth is weak; interest rates are low; and taxes are uncertain. How can adequate income be provided to beneficiaries without putting capital at risk? What is the best balance between stocks and bonds? How can portfolio management be made more tax efficient? These sorts of questions will be addressed by corporate fiduciaries, such as us.
- Creditor Protection — One of the most frequent questions that we hear is, “How can I keep my money and property out of the hands of my son-in-law (or, sometimes, my daughter-in-law)?” The inquiry is understandable, given the high divorce rates in this country. Our answer: Use a trust to own and manage the property, and give your heir the beneficial interest in the trust instead of the prop¬erty. A carefully designed trust plan can protect assets in divorce proceedings, as well as protect from improvident financial decisions by inexperienced beneficiaries.
- Future Flexibility — Parents typically have a fuzzy definition for treating their children “equally.” As each child is unique, his or her needs may need financial support that is out of proportion to that of siblings. By utilizing a trust for wealth management, one may give a trustee a similar level of discretion, permitting “equal treatment” on some¬thing other than gross dollar terms. The trust document may identify the goals of the trust and provide standards for measuring how well the goals are being met for each of the beneficiaries.
- Capital Foundation — A trust may provide a capital foundation that avoids successive imposition of transfer taxes, and, thus, keep more hard-earned wealth in the family.
Our Invitation to YouWe specialize in trusteeship and estate settlement. We are advocates for trust-based wealth management planning. If you would like a “second opinion” about your estate planning, if you have questions about how trusts work and whether a trust might be right for you, we’re the ones you can turn to. We’ll be happy to help.
© 2016 M.A. Co. All rights reserved.