Five Questions to Ask When You Think About Trusts

Here are some of the basic things to be considered regarding every trust:

  • What are the purposes of the trust? Purposes may include:

Professional investment management, financial protection upon incapacity, charitable giving, asset protection, special needs, tax minimization, financial independence, avoiding probate, controlling asset usage for beneficiaries in order to encourage positive behavior.

  • Who will be the beneficiaries of the trust? Things to consider about a beneficiary:

You can be the beneficiary of your trust.

For other beneficiaries, consider health status, special needs or disability, personality, relationship to others in the family, age and resources, personal financial situation.

  • How long will the trust last?

A trust may last for your lifetime, for a beneficiary’s lifetime, or for the lives of a group of beneficiaries. Some trusts are perpetual.

  • What kinds of assets will be held in the trust?

Not all assets are as easy to administer as financial instruments or cash. There could be commercial property, vacation property, royalties, equity in a closely held business—any property may be place in a trust. How these assets will be managed (or liquidated, if need be) should be considered at the onset of the trust in order to ensure compliance with the grantor’s wishes.

  • Who should I choose as trustee?

There are some circumstances in which a trusted individual, even a family member, may be appropriate as trustee. For example, managing a shorter duration trust that holds uncomplicated assets may not be too difficult for someone to take on as an extra job. Larger trusts with longer expected durations will benefit from employing a corporate fiduciary, such as us. This is doubly true for trusts that have beneficiaries whose interests may at times clash, because fiduciary judgment will come into play.

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