Revocable Trusts: The Swiss Army Knife Of Financial Planning

Trusts are one of the most versatile items of the financial planning toolkit. But, they are not just for rich people. With the new higher estate tax exemptions avoiding or reducing estate tax is not a concern for most of us. But, there is so much more trusts can do to solve critical problems for most families.

Trusts are a key building block of a proper estate plan. But, today, let’s just explore the simplest type of trust and the benefits that you might enjoy during your lifetime.

What is a trust?

First let’s examine what trusts are. We have had trusts for almost 1000 years since the English knights rode off to the Crusades and left their property in the hands of trusted individuals to manage during their absence. And key concepts go back another thousand years. Beginning in the 12th century a large body of English common law evolved all of which was later adopted by the colonies when they declared independence.

Trusts are a unique concept evolved from English common law. Countries based on civil law don’t have them and have struggled to provide alternative vehicles with comparable utility.

Lawyers love to explain that trusts are not entities like persons or corporations. That’s a distinction without meaning for most of us. Who cares? The less said about that the better.

There are three parties to a trust: The owner of some property (settler or grantor) turns it over to a trusted person or organization (trustee) under a trust arrangement to hold and manage for the benefit of a person or persons (beneficiaries).  Normally a written trust document (the trust) sets out the terms of the arrangement.

Trusts can hold many different kinds of assets including but not limited to stocks, bonds, homes and other real estate, business interests, and art work.

By | 2019-02-21T14:48:58+00:00 February 21st, 2019|Blog|

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