A guide to our trust services

The basics of a trust arrangement are not hard to follow:

1. You, the grantor, or donor, transfer money and/or property to the care of a trustee.

2. The trustee takes legal title to the money or property but receives none of the privileges or benefits of ownership.

3. The trustee is required to invest, manage, and distribute the trust assets for the beneficiaries whom you name, according to your instructions. You and your attorney spell out those instructions in a formal trust agreement—or, if you’re leaving your assets in what’s known as a testamentary trust, in your Last Will and Testament.

A trust can do almost anything that you want it to. Perhaps that’s what makes trusts so mystifying to most people. There’s no such thing as a “typical trust.”

Living trust. A revocable living trust provides asset management and financial protection in case of disability of the grantor (and the grantor’s spouse, if there is one). This may be the easiest way to “try out” trust service, to see how it may work for you and your family. If it doesn’t work out, the arrangement may simply be cancelled at any time.

Everyday trusts

Several types of irrevocable trusts have become routine elements of the wealth management arsenal.

Gifts-to-minors trusts. Set aside funds for heirs that they will receive when they become adults. These trusts have typically been used to take advantage of the annual exclusion from the federal gift tax.

Marital trust. Provides lifetime financial security for a surviving spouse. For most families, this trust’s marital deduction from estate taxes is no longer needed. Rather, such a trust is useful because it provides the surviving spouse with a lifetime of professional investment management.

QTIP trust. For blended families, a Qualified Terminable Interest Property Trust will provide a life income for a surviving spouse and an inheritance for others at the survivor’s death (typically children of an earlier marriage).

Family trust. As recently as a decade ago, a “credit shelter trust” might have been used in order to maximize the amount a family could shield from federal and state death taxes. With the enlarged federal exemption, most families no longer need such protection. Hence, these trusts have been renamed “family trusts,” and provide for flexible management and distribution of family wealth over time.

Testamentary trust for heirs. Provide an inheritance in an irrevocable trust, adding an element of creditor protection, as well as expert asset management for the bequest. With such a trust, a windfall may be transformed into a lifelong source of financial security.

Special needs trust. With proper planning (qualified legal guidance is a must), a trust can provide extra support and some of life’s comforts without disqualifying a disabled person from receiving government assistance.

Advanced applications

When taxes are on the line, we go to the more complex types of trusts.

QDOTs. Anything that a married person leaves directly to his or her spouse will qualify for the estate-tax marital deduction—unless that spouse is not a U.S. citizen. In that event, a special marital trust (the Qualified Domestic Trust) is required to preserve the marital deduction.

Charitable remainder trusts. Life income may be provided to a private beneficiary, either in the form of an annuity or a unitrust interest. A qualified charity receives the trust property when the trust ends. Income, estate, and gift tax deductions are available.

Charitable lead trusts. Flip the roles in a charitable remainder trust, so that the charity receives an income for a term of years, and the assets revert back to the family when the term expires. Similar tax savings are possible.

GRITs. A grantor-retained income trust may be used to apply leverage to the federal gift tax exemption, for families with larger amounts of wealth.

Dynasty trusts. To avoid the federal generation-skipping transfer tax, a dynasty trust may be used for multi-generational protection from transfer taxes. Many states have modified or abolished the rules against private perpetual trusts.

Work with the right trustee 

The most important factor affecting the success of any trust arrangement is the choice of trustee to implement the plan. This is a core part of our business. We are a “corporate fiduciary.” That phrase means that we are a business organization that is permitted, under the law, to serve as trustee and administer investment programs for individuals, families, businesses, and endowments.

For this service we are compensated by reasonable annual fees, tied to the market value of the funds in our care. Our operations are subject to a variety of internal and external audits and oversight.

Most importantly, we enthusiastically accept and operate under a code of fiduciary responsibility. That means we must, by law, put the interests of our customers ahead of our own.

For more information about how trusts may help you to make the most of what you own, please schedule a free consultation with one of our officers.

Our Trust Management Team