Estate Planning: Trusts

What is a trust?

Trusts are legal vehicles for managing assets solely for the benefit of a trust beneficiary, and are typically less vulnerable to legal challenges than wills. Of the over 50 trusts available, not all can or should be used to save estate taxes. The popular living trust, for example, does not reduce estate taxes.

What are different purposes of trusts?

Other purposes that trusts can serve include:

  • Managing money for an heir who is too young or financially incompetent
  • Providing continuity of management in the event of incapacity
  • Requiring an heir to meet certain standards, such as being drug free or graduating from college, in order to inherit money
  • Ensuring that a person’s assets go to theirchildren rather than the surviving spouse’s children from a previous marriage
  • Assisting a disabled child financially without disqualifying the child for government assistance
  • Reducing income taxes and providing income for the donor while leaving more benefits for the charity
  • Protecting assets from creditors
  • Reducing the cost and public exposure of probate
  • Controlling the inheritance for a troublesome heir instead of simply disinheriting the person. Disinheritance often provokes ill feelings not only toward the estate owner but also toward those who actually inherit

What is a Living Trust?

A trust is an arrangement in which one or more people manage or take care of property for someone’s benefit. A living trust is a trust that is created during your lifetime. In other words, while you are still alive, you transfer title to your property from your name to that of the trustee of the living trust. You can use the trust to gather your property under one document, so that the property is distributed efficiently after your death.

When you put your property into a trust, the trustee of the trust owns the property – you are no longer the legal owner of the transferred assets. This doesn’t mean you have no control of your property. Since you will be your trust’s initial trustee, you will still be in charge of your property. You can do whatever you want with it – you can leave it alone, take it out of the trust, or use it as you had been before the trust was created. A living trust is an easy way to organize your assets and manage them as a single unit. Most importantly, a trust allows for an efficient property distribution when you die.

How does Index Gurus help?

Index Gurus will help determine if you need a will or a trust.  Based on the size of your estate (less or more than $5.34 million), Index Gurus will suggest various methods to help manage your estate. This service is included when you sign up for a financial plan.


This material is provided exclusively by Index Gurus and is subject to applicable copyright laws.
© 2014 Index Gurus, Inc. All Rights Reserved.