Trusts
A trust can be a smart way to manage your money and belongings to ensure they are handled according to your wishes during your lifetime and after you pass away.
Trusts can provide security for your loved ones, protect your assets, and make the process of distributing your estate easier and more private. They also allow you to address specific goals, such as saving on taxes, supporting a charity, or helping family members who need extra care.
As financial advisors, we cannot personally act as a Trustee for our clients. However, we can assist with the assessment, creation, and long-term asset management within a trust in partnership with The Private Trust Company (PTC), an affiliate of LPL Financial.
What is a Trust?
At its core, a trust is a legal arrangement where a person, called the grantor, transfers assets to a trustee. The trustee is responsible for managing those assets for the benefit of the trust’s beneficiaries. The rules and instructions for how the trust operates are outlined in a document called a trust agreement. This agreement acts as a roadmap for the trustee, ensuring that your intentions are carried out.
You may already have a revocable or irrevocable trust that is managed by an individual trustee, bank trust department or brokerage trust company. In most cases, those trusts can be moved to another trustee. Our partnership with PTC allows you the services of a professional fiduciary and the benefit of working through your Prosperion advisor who knows the important, unique needs of your family.
Types of Trusts
There are two main types of trusts: revocable and irrevocable.
A revocable trust, also called a living trust, can be changed or canceled while the grantor is alive. This type of trust allows the grantor to stay in control of their assets and provides flexibility if their needs or wishes change. A living trust can also help avoid the probate process, which is the court-supervised method of settling a person’s estate. Probate can be time-consuming, expensive, and public, so many people prefer to use a living trust to streamline the process.
An irrevocable trust, on the other hand, cannot be changed once it is created. These trusts are often used for specific purposes, like protecting assets from creditors, lowering estate taxes, or making gifts to family members in a controlled way. While less flexible, irrevocable trusts can provide strong protection and benefits in certain situations.
The Benefits of a Trust
A trust offers many advantages, making it a popular choice for estate planning. One major benefit is privacy. Unlike a will, which goes through probate and becomes part of the public record, a trust keeps your financial affairs private. Trusts also ensure that your assets are managed and distributed exactly as you want, even if you are unable to make decisions due to illness or incapacity.
Trusts are particularly helpful for protecting family members who may not have experience managing money. For example, they can provide for minor children or set up long-term care for loved ones with disabilities through special needs trusts. Trusts can also specify how funds should be used, such as for education, healthcare, or other important expenses.
Another key benefit is avoiding family disputes. By clearly outlining your wishes in a trust document, you reduce the chances of misunderstandings or conflicts among your beneficiaries. Trusts can also protect your assets from legal challenges, such as divorce or creditor claims.
Tax advantages are another reason to consider a trust. Certain types of trusts are designed to minimize estate taxes or take advantage of other tax benefits. Charitable trusts, for instance, can allow you to support causes you care about while also reducing your tax burden.
The Role of a Trustee
The trustee plays a critical role in ensuring the success of a trust. A trustee manages the trust’s assets,handles investments, and distributes funds to beneficiaries according to the trust’s terms. This requires a combination of financial knowledge, legal expertise, and a commitment to following the grantor’s wishes.
While family members can serve as trustees, it’s often a demanding role that requires time, skill, and the ability to make tough decisions. For this reason, many people choose to work with a professional trustee, such as The Private Trust Company (PTC). Professional trustees bring objectivity, experience, and reliability to the role, helping to ensure that the trust is managed properly and efficiently.
PTC, an LPL Financial Affiliate, specializes in trust administration, offering a wide range of services to meet clients’ needs. They handle everything from recordkeeping and tax compliance to coordinating with your financial advisors. This partnership allows you to maintain your existing relationship with your Prosperion advisor while benefiting from the expertise of a dedicated trustee.
Choosing the Right Trust for Your Goals
The type of trust you choose depends on your goals and personal circumstances. Creating a trust involves working with professionals, including an estate planning attorney and a financial advisor. Together, they will help you determine the best type of trust for your situation, draft the necessary documents, and ensure the trust is set up correctly.
Planning for the Future
Trusts are not just for wealthy individuals. They are a practical solution for anyone who wants to ensure their assets are handled responsibly, their loved ones are cared for, and their financial goals are met. Whether you’re looking to protect your family, support a charity, or simplify the transfer of your estate, a trust can provide a clear and effective plan.
However, a trust may not always be the best solution for accomplishing your goals. That’s where a conversation with financial and legal advisors can help. We can help you understand your options and guide you through the process of creating a trust that meets your needs. If a trust makes sense for your situation, The Private Trust Company is available to work with your attorney and provide expert support.
Taking the time to set up a trust today can save your loved ones time, money, and stress in the future. It’s a thoughtful way to protect what matters most and leave a lasting legacy for those you care about.
If you’d like to learn more or have a conversation about creating or managing a trust, please contact us.
