By Catherine M. Krokus
The idea of trusts conjures up images of dusty ledgers filled with obscure figures. John D. Rockefeller had trusts; Bill Gates has trusts; but not the man on the street.
In fact, most consumers–and many financial professionals–regard trusts as too complicated and intimidating.
This misconception is unfortunate, because millions of Americans could and should be thinking about personal trust services. So should independent financial advisors, because personal trust services are an excellent way to strengthen relationships with clients and fortify their practices.
The idea that trusts are only for the rich is about as outdated as those dusty ledger books.
Today, clients with approximately $250,000 or more in financial assets may be able to take advantage of the benefits personal trusts offer to protect the assets theyve worked so hard to accumulate over the years.
For instance, life insurance policies that are purchased in an irrevocable life insurance trust will pass the wealth to the next generation free of estate taxes. Clients with charitable intent, but a need for current income, should look into a charitable remainder trust or charitable gift annuities. Both options will avoid capital gains and estate taxes, and often will boost the clients income.
Trust services will also ensure that the clients assets will be managed and distributed after death according to his or her wishes. This benefit is substantial in view of the trillions in assets that will transfer to heirs over the next 50-plus years.
For example, clients are increasingly concerned that the legacy they wish to leave their children might become contested in a divorce. By placing the assets in trust for the ultimate benefit of their children, the makers of the trust can be assured that their wealth does not pass to their childrens ex-spouses.
Finally, families today are dispersed around the United States and around the world more than any previous generation. Elderly parents are often able to manage daily living on their own or with nursing assistance. In many cases, however, they need additional assistance with routine financial matters.
If the children or other heirs live miles away, it may be difficult for them to fill this role. In these instances, a trust company acting as either trustee or agent can pay routine bills and maintain all financial records for the assets held in trust.
