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5 Reasons You Might Need to Open a Trust Account

Posted by Seton McAndrews | CFP®, Vice President Investments
May 6, 2014

In order to control how your assets are passed along to your family, charities, or other entities of your choice, you can often simply make your intentions very clear in your last will and testament.

But other situations are more complex and require additional planning. This is when opening a trust account can help. Here are 5 reasons you might need a trust.

1) You Want to Protect Your Assets From Creditors

You can accomplish this by setting up an irrevocable trust. Under this arrangement, you relinquish control of your assets to the trust, such that you no longer legally own the assets nor can you control how they’re distributed. It’s a trade-off.

Pros: A future creditor cannot satisfy judgment on assets in an irrevocable trust.1

Cons: You give up control.

2) You Want Control of How Your Assets Are Distributed

For those who want to leave their estate to heirs, but don’t want the assets distributed all at once. For example, you may want to stipulate that your heirs receive the assets in three parts or upon certain conditions being met, like reaching a certain age or graduating from college.

Pros: You have peace of mind knowing exactly how your assets will be distributed.

Cons: You may have to update the language of the trust from time to time if your wishes change, or if something happens to your named heirs.

3) You Want to Leave Assets to a Minor

You might want a minor to benefit from the assets, but they are too young to control the accounts themselves. You can assign a trustee to oversee management and distribution of the assets as you determine.

Pros: You can pay for education or other needs of young people in your family.

Cons: You have to find a trustee you can trust to carry out your wishes.

4) You Have a Family Member with Special Needs

You have a disabled relative for whom you’d like to provide.

Pros: You won’t disqualify him or her from Medicaid or other government assistance.2

Cons: You have to find a trustee you can trust to carry out your wishes.

5) Your Estate is Worth More than $5 Million

Under current tax law, the estate tax exemption is $5.34 million, meaning you can pass along that much to your heirs without triggering a 40% federal tax.3 Anything above that requires additional planning to minimize the impact of those tax laws.

Pros: You can use a trust to potentially avoid or reduce some of those taxes.

Cons: You’ll likely need the advice of an estate planning attorney and a tax professional, which can be expensive.

Need Help Determining Whether or Not You Need a Trust?

Give one of our Wealth Managers a call today at 1-800-541-7774 to get started or open a trust account.

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Seton M. McAndrews Certified Financial Planner
By Seton M. McAndrews, CFP

Seton is a CERTIFIED FINANCIAL PLANNERTM professional and Vice President of Investments at WrapManager, Inc.


1 EstatePlanning.com

2 CNN Money

3 BrankRate.com

Estate Planning Trust Accounts