income

Top 10 reasons for setting up a trust.

In a recent article, Attorney Stephan R. Leimberg points out the top ten reasons why people
create a trust:
1. You feel your beneficiary is unwilling or unable to invest, manage, or handle the
responsibility of a large, immediate, outright gift. Families with minor, handicapped, or
merely financially or emotionally immature children or grandchildren should consider trusts.
2. You would like to postpone full transfer of ownership until your beneficiary is in a
position to handle the property or income properly, or until you (or someone you name) are
ready or able to part with it. For example, you may personally want to keep the income from a
trust for a given number of years – or for your life – and then at the end of the term or at your
death have the principle remaining go to one or more selected individuals or to a charity (a
charitable remainder trust).
3. You want to spread the financial security of property among a number of individuals but
the asset you have in mind (for instance, an apartment house or life insurance policy does not
lead itself to fragmentation.
4. You have particular dispositive plans in mind and control is essential. For example, you
want to prevent your beneficiary (e.g. a son or daughter) from disposing of, or losing the
family business or home to persons outside the family (e.g. through divorce or bankruptcy)

5. You would like to protect the assets from the claims of your own creditors.
6. You want to treat your children or grandchildren equally – yet you own some
property which may appreciate and some property which may fall in value. By placing
both types of property in trust and giving all your children equal shares of that trust,
you can equalize both benefits as well as the risks among them.
7. You want to avoid the mysterious and uncertain (and sometimes costly) process of
probate.
8. You want to reduce the probability of a will contest or an “election” by a spouse to
take a state-mandated portion of your estate (roughly 1/3) regardless of what your will
provides. (This is called a surviving spouse’s “right of election”.)
9. You would like all the details of your finances kept as private as legally possible.
10. You would like to relieve yourself of the burden of investing and managing
property and would like to protect yourself in the event of a physical, emotional, or
mental incapacity. (You may want a “step-up trust”, a trust that steps up and takes
over when you don’t want to or can’t manage property.
In summary, there are many options to think about when setting up a trust. For more
information please contact my office today!