Why Use a Trust?

The purpose of a TRUST is to REPOSITION assets from the Grantor to a Trustee using a trust document as a contract to protect, hold, and manage those assets for the benefit of the beneficiaries. For personal wealth, the following are qualified assets that can be REPOSITIONED without any dollar limitations: your personal residence, your vacation spot, investments (stocks, bonds, art, collectibles) your life insurance policy, your automobiles, business(es), corporate stock, LLC shares, Subchapter S stock, general partnership interests in limited partnerships. ALL your valuable assets. For Business purposes, qualified assets may be contributions to a retirement plan, compensation plans, investments, and company stock in bankruptcy, as well as other types of assets. Below are a few reasons people or businesses will form a trust

  • Wills and estate planning: Conventional wills typically leave assets to the deceased's spouse (if any), and then to the children equally. If the children are under some age mentioned in the will, many parents us a trust to manage the assets until the contingency age is reached. The executor of the will is sometimes named as the trustee, and the children are the beneficiaries. The trustee powers are to assist the beneficiaries during their beneficiary period
  • Privacy: The terms of a person’s “Will” are usually public, while the terms of a trust are normally private.
  • Tax planning: In some cases, the tax consequences drive the reasoning and decisions for forming a trust.  In some cases, once the taxes are paid for moving assets into a trust, there will not future taxes required unless the trust is dissolved.
  • Spendthrift protection: Parents regularly use trusts to protect beneficiaries, in some cases prevent one's children against their own inability to handle money.
  • Philanthropy or Charities: In most cases, charities must take the form of trusts or corporations, to move wealth and donations to that entity.
  • Pension plans: Pension plans or qualified retirement or benefit plans are typically set up as a trust, with the employer (or board of directors) as settlor, and the employees and their dependents as beneficiaries.
  • Complex Corporate Structures: In complex business arrangements, such as mutual funds or insurance companies, sometimes use trusts as their ownership structure.
  • Bankruptcy or Debtors in Possession: Trusts allow beneficiaries to protect assets from creditors until such time the trustee settles all claims.
  • Co-Ownership: Property or assets owned by more than one person is facilitated by a trust. In particular, ownership of a matrimonial home is commonly owned by a trust with both partners as beneficiaries and one, or both, owning the legal title as trustee.