Jeff Nowell Answers Your Questions About Trusts
Trusts are part of a complete estate plan, helping control how assets are managed and deployed at a specific point in time, usually in the event of illness or death. We asked Jeff Nowell, Senior Portfolio Manager, for his insights.
Who would you recommend should consider having a trust?
A trust can be useful for people who have concerns like:
- Ensuring assets are distributed the way a person desires
- Protecting a person, their family, and their assets in the event of incapacity
- Providing for a spouse/significant other, minor children or grandchildren, or loved ones with special needs
- Protecting an inheritance
- Protecting assets from creditors or lawsuits
- Lessen or avoid probate (a legal procedure for your estate)
- Establishing business succession planning at retirement, incapacity, and/or death
- Minimizing state inheritance/death taxes
What are the benefits of having a trust?
Trusts are designed to protect your assets so they can be used to support the people, or even the causes, you care about. Trusts are one of the most effective ways to leave a legacy that can last for generations.
How do you go about setting one up?
A person needs to hire a reputable attorney to draft a trust that is in alignment with the person’s goals and needs. It often makes sense to do this in conjunction with their personal financial planning to ensure consistency across the board. So, having your attorney and advisor collaborate is often the best approach.
What decisions will need to be considered?
Trusts are contracts that provide supervision of a grantor or donor’s assets for someone’s benefit. A grantor or donor is the person who sets up the trust and the beneficiary receives the benefit.
A key consideration is the selection of a trustee. The trustee’s responsibility is to ensure that the grantor’s intent is followed and that they look out for the best interests of the beneficiary. The grantor(s) will often be the initial trustee of a revocable (“living”) trust, but if there is a point when the trustee can no longer serve, a grantor may elect a trusted family member, attorney, or institutional trustee to serve. An institutional trustee (such as a bank trust department) is an experienced fiduciary that is required to objectively carry out the grantor’s wishes.
A trust can also be revocable (the grantor can change or terminate the trust during their lifetime) or irrevocable (the grantor is giving up control/ownership of that asset in exchange for some other benefit and the trust cannot be changed once it is in place). The type of trust will depend upon the goals of the person setting it up.
How often do you need to revisit a trust?
Once an estate plan is in place, it is a good idea to revisit it every few years to ensure its provisions remain valid and it continues to be relevant to the family and their situation.