Tomato Plants and Trusts By Caroline Wetzel, CFP®
vacation. While they were away we could eat ripened tomatoes, and when they returned my husband and I could keep one of the plants. This agreement is a very simplifi ed example of how some trusts work. The following is an introduction to trusts and how clients use them, as well as an explanation for the tomato plants and trusts analogy from my perspective as a Private Wealth Advisor.
A
Introduction to Trusts: A Financial Planner’s View
As a Certifi ed Financial PlannerTM , I
describe trusts as assets with instructions. Typically, trusts are fi duciary arrangements involving three parties:
1. Grantor: individual who contributes assets to the trust.
2. Trustee: legal owner of the trust; person responsible for managing the assets.
3. Benefi ciary: person who gains access to, or benefi ts from, the trust’s assets.
In the tomato plant example, my friends
were the grantors and my husband and I were the trustees, responsible for caring for the plants. While our friends traveled, my husband and I were the benefi ciaries of the plants because we ate the tasty grape tomatoes. When our friends returned, my husband and I continued to be benefi ciaries of the tomato plant that we were given, and my neighbors resumed being benefi ciaries of the plants that they reclaimed.
Trust and estate attorneys generally set up trusts for clients seeking certain benefi ts, including:
CROMWELL, CT GET LICENSED
DISCOVER YOUR FUTURE
1-866-CORTIVA
Hands-On Training NationallyAccredited Day&EveningClasses
Holistic Curriculum CreativeProjects CareerPlacement
Massage Therapy Esthetics Training
ENROLL NOW
WWW.CORTIVA.EDU www.NaturalNutmeg.com 29 , CDFA® , AWMA®
few years ago, some friends asked my family to take care of their tomato plants while they went on
• Minimizing taxes: grantors seeking to reduce income or estate taxes.
• Controlling wealth: grantors control when and to whom assets from the trust are distributed.
• Retaining privacy: in the event of death, trust assets may pass to the benefi ciary outside of probate.
• Protecting legacy: carefully struc- tured trusts may help protect the assets from benefi ciaries’ creditors or from benefi ciaries themselves.
There are many types of trusts; some spouses set up trusts to provide benefi ts when one partner predeceases the other. Other grantors set up Irrevocable Life Insur- ance Trusts (ILITs) to be benefi ciaries of life insurance policy proceeds. Charitably inclined grantors may set up Charitable Lead Trusts, Charitable Remainder Trusts, or Grantor Retained Annuity Trusts. Whether a trust makes sense for you depends on your unique needs and situation.
Trusts Equal Goals and Control
Daily, clients and I talk about what is im- portant to them and how they can use their fi nances to experience peace of mind over time, as life inevitably changes. We discuss the estate plans they have in place, the titling on their various fi nancial accounts, and how they expect the assets they have worked so hard to build over the course of their lives will be transferred in the future.
When different life circumstances prompt clients to ask about trusts, I like to ask two questions to guide our conversation:
• What goal are you trying to achieve?
• How much control do you want to retain around the assets you put into the trust?
What Goal Are You Trying to Achieve?
Clients owning large estates seeking to minimize taxes often set up trusts. Today, each person has an estate and gift tax ex- emption of $11.58 million ($23.16 million
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44
