Is a trust right for you?

What is a trust?
Why would I set up a trust?
Is it difficult to set up a trust?
If I create a trust, may I keep control?
Who makes the investment decisions?
Are trust services expensive?
Must I be wealthy to set up a trust?
Can a trust be used to reduce taxes?
Who should I name as my trustee?
How can I learn more about trusts?

 

What is a trust?

A trust is a legal structure set up to transfer assets advantageously to beneficiaries (often a spouse, children, grandchildren or a charity). To establish it, you provide instructions to a financial institution in a Trust Agreement prepared by an attorney. The assets you transfer to the trust are managed and distributed by a trustee in accordance with the trust agreement.


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Why would I set up a trust?

Trusts offer flexible financial management that isn't possible with other sorts of investment accounts. A trust can be an excellent means of financial protection for:

 

  • Yourself and your spouse, through sound investment management today and in the event of future incapacity.
  • Family members and other heirs, who may eventually share an important financial resource.
  • Charities that will fulfill the donor's philanthropic intentions.

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Is it difficult to set up a trust?

No. To engage First Financial as your trustee, you take two steps. First, you provide the money and/or securities that you wish to place in trust. Second, you give us your written instructions in the form of a Trust Agreement. The agreement, drawn up by your attorney, is signed by you (as the creator of the trust) and by us (as the trustee). That's all there is to it.

 

Trusts of this type are often called living trusts, to distinguish them from testamentary trusts (those established under the terms of a will). Living trusts created for the purpose of personal asset management are also known as revocable trusts. That's because the person who creates the trust may cancel or revoke it.

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If I create a trust, may I keep control?

Certainly. Trust clients may keep control in three ways:

 

  • First, the trust agreement specifies that the client may make withdrawals (or additions) at any time.
  • Second, the client reserves the right to cancel the trust.
  • Third, the client reserves the right to give us new or different instructions by amending the trust agreement.

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Who makes the investment decisions?

You may, if you wish. However, most of our clients look to us for objective, unbiased portfolio supervision because they lack the time or specialized knowledge to do all of the necessary investment homework themselves. You may delegate as much or as little investment responsibility as you wish. After all, it's your trust.

Ultimately, our goal as trustee is to provide reasonably consistent returns over the years. We emphasize careful asset allocation, the selection of quality investments and constant vigilance.

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Are trust services expensive?

Our fees are competitive with investment management fees charged by investment advisory firms or by mutual funds, but in our case, they also include custodianship of securities, record-keeping and other conveniences.

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Must I be wealthy to set up a trust?

If you think of millions of dollars when you hear the word "trust," you may be pleasantly surprised when you learn more. Today's trust institutions have developed ways to handle even relatively small trusts efficiently. In any case, we don't think in terms of fixed minimums. Instead we ask ourselves, "Is a trust the best way to meet our client's financial management needs?" To find out whether a trust is right for you, a First Financial Trust Officer would be happy to meet with you.

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Can a trust be used to reduce taxes?

When properly structured, testamentary trusts (those established under the terms of a will) can reduce or eliminate federal estate tax. A living trust, however, has no inherent tax-saving features.

 

That said, you can arrange for your living trust to survive you and become irrevocable, thus sheltering part of the trust's assets from later tax at a spouse's death. If you and your spouse have a large or growing estate, this kind of planning may offer a tax-saving opportunity.

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Who should I name as my trustee?

We believe you should look for experience first. Look for an individual-or a financial organization such as First Financial Wealth Management - with financial strength, as well as professional investment capabilities.

 

Above all, your trustee should participate in the financial markets every day and consider the trusteeship as a full-time job. That describes First Financial perfectly.

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How can I learn more about trusts?

That's easy-our trust and investment professionals will be glad to assemble further information for you, analyze your investment requirements and answer your questions. Call us at 800-606-0100.

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