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Trust Administration Tips: Benefits of Setting Up a Trust

Tuesday, March 4, 2014



A trust fund is a significant part of your estate plan when you want to give money to your minor kids. It ensures that the money you want to leave to your children handled by a trustee, is set aside and made available to to them as they reach a certain age. Most of the time, trust funds are time consuming, and complex to set up and manage. It can also cost you money, so you must have a very good reason to want to set up a trust.

Below are some benefits and purposes for using trust funds:

AVOIDING TAXES:
Irrevocable life insurance trust is one common tax-saving trusts. Upon your death, all profit from your life insurance policy is added back into your estate, which usually turns an estate that's not subject to federal taxes into an estate that's required to write a check to the IRS office.

But an irrevocable life insurance trust safeguards life insurance death benefit revenue from estate taxes. After you have set up your trust, you still have life insurance, and the beneficiary or beneficiaries still get the proceeds from your insurance policy when you die. But for now, estate taxes may not be a an issue.

AVOIDING PROBATE:
By keeping your properties out of your probate estate, you can avoid many of the issues on lack of privacy, costs, and hassles associated to probate.

PROTECTING YOUR ESTATE (and the estate of the beneficiary or beneficiaries:
One of the main purposes of trust funds is to protect your estate even after it becomes part of someone else's property.

For example, you are planning to leave a huge sum of money to your only child, but you're concerned that before you can say, "marry a good guy at age 25," she'll have spent the money.

In such situation, you can use a trust to parcel out the money to your daughter as you see fit. The trust fund can give her a little amount annually for a specific span of time; and then a final amount at a certain age when you think he or she will be mature enough to protect the money as if she had actually earned it.

You have the option to add conditions on how the amount in the trust is dispersed, such as your daughter gets a little part of the money when she graduates from college and gets a good job, for example, or when she meets the criteria you establish when you set up the trust.

PROVIDING FUNDS FOR EDUCATIONAL PURPOSES:
A trust can make money available to the members of your immediate family, relatives, even to non-relatives, such as friends or employees, for educational purposes, like living expenses and tuition.

BENEFITING INSTITUTIONS AND CHARITIES:
You can donate money to charitable organisations by setting up some type of charitable trust that may, for example, yearly give a specific amount of money to the charity institution while you're still alive and give a bigger amount of money upon your death.

To get reputable trust administration services Perth, visit Estate Administration Services by clicking on the the provided link.

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