Uncertainty is now, and has always been, perhaps the most trusted companion in the financial world.
Establishing a trust is a powerful and practical step toward aligning your financial affairs with your goals and priorities. A trust enables you to determine when and how your heirs receive their inheritance, and can help assure that children with special needs are provided for. A trust can orient your finances toward philanthropic causes that reflect your priorities, as well.
Markets are fickle. Prices confound. Political regimes come and go and with them the regulatory superstructures that guide and determine how we manage our assets and plan for the future. Emerging into the uncertain landscape of the new administration, we can point to the certainty that President Trump is determined to keep his campaign promises. And among those oaths, we would highlight his promise to repeal Estate, Gift and Generation-Skipping taxes.
The likelihood of achieving this goal in Congress is being debated at present. Many feel that a repeal of the Estate tax will be coupled with a change in the income tax cost basis rules and due to Senate rules the repeal may not be permanent. Others feel that even if the Estate tax is repealed, it is more likely that the Gift tax will remain with the possibility of a lower exemption to avoid income tax shifting techniques. Setting aside specific regulatory changes, we can point to a roster of nontax related benefits to incorporating a trust in your estate plan.
- Incapacity. Using a trust to provide protection in the event of your (or your spouse’s) incapacity can be beneficial. A successor trustee can step in and protect and manage your assets. If the trust is not yet funded, there should be a Power of Attorney ready to be exercised to fund the trust.
- Asset protection. Your trust can contain provisions to protect assets passing to your children from creditors or claims in divorce proceedings.
- Distribution. Provisions can be drafted to guide the trustee in exercising discretion in distributing assets to avoid removing the disincentive to a child to be gainfully employed or to complete his or her education.
- Special needs. Your trust can ensure that help can be provided without disqualifying the child from receiving governmental benefits.
- Philanthropy. Charitable Lead Trusts and Charitable Remainder Trusts can give you an effective vehicle to accomplish your philanthropic goals.
- Maintenance. Your trust can articulate how the family residence should be maintained [and possibly sold] to accommodate the needs of the surviving spouse.
- Re-attachments. Your trust can address issues that may arise if the surviving spouse remarries.
Working with a team of advisors that can include your attorney, accountant and Wealth Management professionals, can create the means to grow and protect wealth across generations.