Structure your trust with flexibility for maximum benefit

In addition to making efficient asset distributions, trusts are often established as a tax-saving strategy. In recent years, the federal estate tax exemption has fluctuated dramatically; before 2010, it was set at $1 million. The 2017 Federal estate tax exemption is $5.49 million for individuals and $10.98 million for married couples.

A higher federal tax exemption usually leads people to question whether a trust is really a useful estate planning instrument. What you should know is that trusts are beneficial for more than just avoiding unfavorable estate tax consequences.

A trust can be drafted to provide income for family members’ daily living expenses in addition to providing benefit to future generations. If the trust assets are sufficiently significant, interest and dividends from the trust assets may be a source of significant income.

The trust principal can remain untouched in the trust for future generations or it can be sold and reinvested for greater short or long term growth. Your individual goals for establishing a trust will dictate how the trust principal will be managed over time.

To provide the maximum benefit, a Trust should be structured with the flexibility to distribute assets over time.  As the Grantor, you can stipulate specific ages at which beneficiaries might receive their assets, either in a lump sum or in proportional shares over time.

A Trust for a minor child can be established to pay necessary expenses over time, for educational needs, clothing or anything else you deem necessary or desired.  The Trustee is given specific authority to distribute trust assets under the guidelines provided by you as the Grantor.  A Grantor can specify what expenses can and cannot be paid from the Trust.

Alternatively, a Grantor can designate ages at which the Trust assets may be distributed to the beneficiary. A beneficiary could receive 10 percent of the Trust assets each year until he or she reaches a certain age, at which time he or she could receive the balance of the Trust assets.  The payments can be distributed in a number of ways, or the assets can be left in Trust to the beneficiary so as to insulate assets from creditor claims.

If you’d like to learn more about how we can help you with your estate planning, please contact us for your initial consultation at one of our conveniently located offices in Fort Pierce, Stuart, Port St. Lucie, Vero Beach, and Okeechobee.