Trusts — Do I Need One?

The word trust may conjure up ideas of “trust fund babies” or ultra-wealthy individuals.  This image couldn’t be further from the truth.   As financial professionals, we are seeing more of the baby boom generation creating these vehicles to pass on their wealth to the next generation.

So, what exactly is a trust?  Trusts are a necessary instrument with estate planning for all income levels and generations past and future.   A trust is what you (who can be referred to as the grantor or settler) create to hold your assets, i.e. investments and property, until you pass.  A trust can provide for your beneficiaries in a multitude of ways, and is administered by a trustee.  A trustee can be you during your lifetime,  a professional with financial knowledge, a family member, or a corporate trustee.  Each type of trustee has its pluses and minuses.  While an individual trustee may have an emotional connection with you or the trust beneficiaries, it can be a huge responsibility with a steep learning curve.  A corporate trustee might be less personal, but can provide trust administration experience,  investment management experience and the ability to communicate in an unbiased way with the beneficiaries.    Trusts can also provide for charitable giving, perpetual giving and allows for your “estate” or “assets” to be distributed out as you wish, instead of disturbing the family dynamics in deciding who gets what.  Trusts also allow for the management of finances in case you become disabled or otherwise unable to handle them, or to provide for young children, individuals with disabilities or  loved ones who simply can’t manage their money on their own.  Trusts also avoid the costly and lengthy public process of probate court, and keep your affairs private at your passing.

So the question remains, do you need a trust?  The answer is not easy, but it is worth a phone call to a local estate planning attorney.  Each individual has different levels of wealth, and different intentions at their passing. A complimentary meeting is offered by most estate planning attorneys to determine what level of estate planning you need.

Diane E. Guimond
Wealth Advisor!