Trust funds have the reputation of being a financial planning and asset protection strategy that only the super-rich take advantage of. There is a misconception that a trust fund and the protection it ensures is beyond the need and means of the average worker, business owner or investor. This is simply not true. Trust funds can and should be used by anyone looking to protect or transfer wealth to beneficiaries, no matter the dollar amount. They can help you manage your property and assets, make sure they are distributed properly upon your death and in accordance with your wishes and save your family precious time and money. Let’s take a look at the elements of a trust fund and why you should think about setting one up.
Anatomy of Trust Funds
Trust funds consists of 3 principal components, all of them people: the grantor, the trustee, and the beneficiaries.
The Grantor is the person who creates and funds the trust fund.
The Trustee is appointed by the grantor to oversee and administer the funds or assets in the trust fund. Often, the grantor and the trustee are the same person, especially in cases where a revocable living trust has been established. If the grantor is also the trustee, they also name a successor to take over the role in the event of their passing.
The trust fund beneficiaries are simply the persons to whom the assets are distributed.
A trust fund is a legal framework by which assets pass from the Grantor to the Beneficiaries via the oversight of the Trustee without interference from the probate courts.
Why set up a Trust Fund?
While there are many reasons to set up a trust fund, the most commonly cited reason is to keep assets out of probate and to reduce tax burden. They are also used to protect assets, and even whole business from mismanagement by an irresponsible beneficiary. Grandparents often establish trust funds for their grand kids to help pay for college and then distribute the remainder as start up cash for the new grads.
Another common implementation is to allow the funds from a life insurance policy to filter through a trust instead of the courts and government. In this scenario, a life insurance policy is taken out on the grantor. The life insurance and its benefits are put in the trust. When the grantor passes away, the trust fund is funded by the life insurance proceeds. This fund can then be used to create investments for the beneficiary.
Trust Fund Planning With Kalicki Collier Reno
No matter what the reason you have for setting up a trust fund, the expert law team at Kalicki Collier can help you make decisions for you and your family. With regional knowledge in estate planning in Nevada and California, the attorney’s and staff at Kalicki Collier are dedicated to helping you preserve your hard earned wealth for the future. The Reno based law team of Kalicki Collier is well known for their experience in asset protection strategies and will work to help you create a comprehensive strategy for all the circumstances that threaten your assets and legacy. Contact us today to get started.