The Power of Trusts

Posted on: May 26th, 2011
Estate planning is all about helping our clients achieve what they really want. What do our clients want? They have many common goals.

Control. They want control over their assets and health care decisions.

Protection. They want to be protected from the risks of life, including lawsuits, disability, and the cost of long-term care.

Financial Security. They want financial security for themselves and their children and grandchildren. They want their surviving spouse to be protected from taxes. They may want to know that their hard-earned assets will not pass to a new spouse.

Protection and Security for Their Children and Grandchildren. Our clients seek educational and financial security for their family. They seek to provide them with asset protection from immaturity, divorce, and lawsuits.  They want their family members to live successful lives that include a work ethic, integrity, faith, and appreciation and respect for family members.

How do we help our clients achieve these goals? Our clients’ needs are timeless and go beyond the desire to avoid estate taxes and probate. Consider the following ideas for helping our clients:

Use a team approach. A team of advisors, together addressing the client’s needs, can provide more comprehensive, thoughtful solutions. A team approach can help the client see recommended financial products (life insurance, annuities, trusts, long-term care insurance, etc.) as a part of the total planning solution and not merely product being pushed by a salesman.

Use the $5 million gift tax exemption now. For a brief period of time, Congress has opened the door for transfer of wealth in ways that will not trigger negative gift, estate, and generation skipping transfer tax consequences. Create a legitimate sense of urgency with your clients to make current gifts, transferring appreciation of wealth to future generations, using ILITs, GRATs, IDGTs, LLCs, and other tools.

Encourage clients to leave assets in trust. Good trust planning can benefit your clients, and your clients’ children and grandchildren. Assets kept in trust are protected from predators, creditors, irresponsibility, immaturity, divorce, etc.

Good trust planning can benefit the advisor team, as well. The advisors can build a relationship with the next generation and assets can be kept under professional management for a much longer period.

Be creative with IRA and other tax-qualified planning. Use techniques that maximize stretch out, while providing divorce and lawsuit protection, and utilizing life insurance. “Average” sized estates and IRAs can benefit from such techniques.

Use trusts to help clients leave a legacy and convey their true family wealth. Encourage clients to include in their trust their motivations for planning. Have them explain the discretionary guidelines. Help them create a true legacy.

A quality trust-based estate plan can help us provide the planning our clients really want, going beyond the desire to avoid taxes and probate. Such quality planning is very beneficial for the client and the professional team of advisors.

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