Estate Planning & Trusts

Youíve worked hard to build a sound financial future for yourself and family, but now itís time to consider management and protection of your wealth for current and future generations.  Preserving and allocating assets for future generations is not only a serious matter, but also one that requires planning and professional assistance.  Taxation from estate and gift taxes can take up to 60% of the estateís value.  Appreciated assets, retirement plan funds, and certain other investments might also face income taxation upon your death.

Estate and income taxes must generally be paid in cash within nine months of oneís passing, which can cause a drastic reduction of assets and present a great need for liquidity.   Such needs are made even more complex in the always changing market environment that exists today.  Successful estate planning requires taxation and legal knowledge, along with educated investment management as well. 

For some, estate planning is something we know is necessary, but put it off indefinitely.  If you have succeeded in accumulating the wealth you need, then it only makes sense to assure that it is properly managed and distributed for your family.  If you do not do so, it might cost you and your heirs a significant portion of your savings. 

Understanding Trusts

Why Create a Trust?

A personal trust conveys your wishes for your wealth in a written record.  It should reflect your goals and the circumstances of your life.  A trust can:

  • Give expert oversight to your finances
  • Minimize taxation costs
  • Determine how and when assets are distributed to your heirs

With a trust, no matter what your goals are, you have the flexibility to make long-lasting decisions that will benefit your heirs.  You can even meet the special needs of specific family members or set aside funds for special purposes.  

Your Financial Objectives

The goal of a trust should be to accomplish your personal goals, which may include:

  • Asset consolidation

Using a trust, you can consolidate ownership in a variety of assets that can simplify your financial life.  This ensures that there is no interruption in the management of your financial affairs if you are ever unwilling or unable to manage your finances.  The chosen trustee maintains responsibility for all administrative duties and investment of assets. 

  • Professional Asset Management

The fiduciary responsibility of a trust lies with the designated trustee who oversees the safekeeping and investment management of trust assets.  You can appoint this trustee to handle these responsibilities while you are alive, or you can have a trustee take on these responsibilities upon your death. This decision may be more important if your beneficiaries are minors, mentally incapacitated, or not financially sophisticated enough to hand the investments. 

  • Tax Planning

With the right trust strategy, you may be able to reduce gift, estate, income, or generation skipping transfer taxes. 

  • Control

A trust agreement can specify how assets are invested and disburse, providing you with a great deal of control, especially when compared with giving gifts.  Your instructions dictate how the account is run and will be followed while you are alive and after your death.  Control is particularly important for distributing assets to minors, those who are financially unsophisticated, and those with special needs.  

  • Probate Avoidance

The probate process entails resolving claims on an estate and distributing the property.  Assets that are placed in trust during your lifetime can often avoid the probate process, which often reduces costs avoids other complications.  The legal title to the assets does not change after your death, so there is no need to transfer ownership through probate proceedings. Trust assets are generally distributed to your heirs quickly and without interruption in the management of the assets.  It also increases your privacy, as a typical Last Will and Testament becomes part of the public record during the probate process. The contents of a living trust, however, generally remain confidential. The creating of the trust during your lifetime provides evidence of your wishes, which makes it more difficult to challenge than a traditional will.

Selecting a Trustee

In a constantly changing world, a trust is designed to weather the changes.  While it is difficult to anticipate the financial changes that will occur within your lifetime, it is impossible to see beyond your life when your trust is likely to be most important. 

One of the most important decisions in creating a trust is appointing a trustee, who basically will control the trust.  When creating a trust, it is important to weigh the advantages of using an individual versus a corporate trustee for your estate.  The most important issues are:

  • The nature of the trust being established
  • The expected time interval of the trust
  • The type, variety, and complexity of the assets donated to the trust
  • The needs of the beneficiaries

It is very important that, in the end, the creator of the trust is comfortable with the chosen trustee.  The creator must be confident that the trustee understands and can realize the trustís goals no matter how circumstances change.  

The chosen trustee is not necessarily a single person.  The creator of a trust might instead appoint both an individual and corporate trustee, known as co-trustees.  In such a situation, the corporate trustee carries out administrative and asset management tasks that it does best, and allows the individual trustee to offer helpful insight into family matters. 

Whoever you choose to be your trustee, he or she will be responsible for collecting and investing the assets in the trust according to the guidelines you state in the trust document.  Because of how long this responsibility can last and that it involves protecting your wealth, choosing the trustee is one of the most important financial decisions you can ever make.  The wealth you place in your trust should provide many benefits for your family, but it can only do this if it is invested properly. 

In most cases, family members or friends will have your best interests in mind and manage the account accordingly.  However, circumstances can change and cause it to be a challenge for these individuals to maintain their objectivity. 

For example, if you name your son the trustee of a trust that you leave for your spouse, he might invest more aggressively than one would like because he sees the trust as his due to the fact that it will pass to him upon your spouseís death.  His goals might be for long term growth while disregarding the fact that for your spouse, the investments should be very conservative in order to provide income.  A variety of such conflicts of interest can occur, even with very trustworthy people, and you should choose your trustee accordingly.

Additional concerns about using an individual include whether the chosen trustee will have the inclination or time to serve.   A trusteeís duties can be a large burden for many people.  If the trustís duration is too great, an individual trustee may die and possibly be replaced by a court appointed trustee.  It should also be mentioned that beneficiaries or an individual co-trustee can be given the authority to remove a trustee and switch to a corporate trustee. 

A corporate trustee has one major obligation, to operate within the bounds of the law and act in accordance with the Grantorís wishes as expressed in the trust document.  Conflicts of interest and emotional issues are nearly non-existent for a co-trustee. 

Advantages of a Corporate Trustee

  • Financial strength
  • Greater stability and continuity
  • No conflicts of interest
  • An impartial viewpoint
  • Experience dealing with family wealth issues
  • Sophisticated financial knowledge
  • Professional Investment Management
  • Effective tax management strategies
  • Absolute compliance with federal/state regulators

Asset Management

Whatever your desires or needs are, a trust can be created to accommodate your wishes and desires.  Your BestVest representative has all the resources needed to help you develop and plan your personalized estate and trust plan. 

Possibly the most important component of estate planning is the management of financial assets.  For any investor, achieving financial success can be difficult and challenging. With the expertise, time, and resources required to manage an investment portfolio, many investors now demand a different approach and utilize the expertise of highly skilled, professional investment managers. 

BestVestís representatives are committed to understanding and meeting your personal needs.  We try to meet your personal goals by creating appropriate personalized investment solutions.  Our commitment is to do whatever we can to formulate a strategy that is specifically aimed at meeting all of your long term investment goals.  Our commitment is to leverage all of our resources to formulate a prudent, carefully crafted strategy aimed at meeting your specific long-term investment goals.

Benefits for you

  • Broad diversification 
  • Personalized service provided in a confidential atmosphere
  • Access to experienced money managers
  • Experienced, professional portfolio management selected to meet the specific investment goals of your trust
  • Continuous tracking of your portfolio by multiple independent organizations

Whatever your trust is intended to produce, BestVest Investments can create and manage a strategy that is responsive to your unique needs.