It's A Matter of Trust

Bob's parents had spent a lifetime investing in stocks, saving their earnings, and living a frugal lifestyle. Determined that when they died, Bob would inherit their wealth, and thus wouldn't spend the remainder of his life toiling day and night the way they had, they believed theirs to be the perfect plan. Honest, hard working people, Bob's parents started a small business after World War II. They struggled-often working seven days a week, in hopes that Bob and generations to follow would reap the benefits.

In 1999 when Bob's aging parents died within seven months of each other, Bob consoled his grief with the assumption that he would soon be living his parent's dream. Yes, he'd have to keep his job, but things would be better. He would no longer have to work the second job in the evening to put away money for his three growing children's college tuition. Or would he?

He would. And he would wind up spending additional money he had already saved for vacations and future college years. Bob got hit with a whopping inheritance tax. He had to pay this immediately before claiming any of what remained of his parent's estate.

Did Bob's parents set him up for certain failure? Certainly not. They had what they believed to be Bob's best interests at heart. They simply hadn't worked diligently at protecting those plans in their mind.

Mistakes like this are made annually by thousands and thousands of well-meaning relatives, assuming that their passing will allow loved ones to experience a few of life's comforts. Instead their passing creates immediate financial burdens-often resulting in the liquidation or severe reduction of any remaining estate.

Could Bob's parents have avoided this unfortunate situation? Yes. It simply would have required the hiring of a trust lawyer, and a few subsequent visits to establish goals.

There are many kinds of trust funds. Growing in popularity is the living trust, which actually begins dispersing estate funds prior to the demise of the estate owners. This is a choice that grows increasingly popular by the year, as elderly parents often enjoy watching their families enjoy the fruits of their labors. It also significantly reduces the inheritance tax upon the estate owner's death.

Retirement trusts ensure the ultimate in tax advantages for those putting money away fro retirement years.

Charitable trusts allow benefactors to earmark part of their savings to be collected by a charity in the event of their death.

How does one establish such a trust und? One way is to research area lawyers. Look for one with extensive expertise in setting up Living Trusts. Another way is contact a financial advisor. They are prevalent in the Yellow Pages, and a similar interviewing process can ascertain their abilities. Ask around. It seems the most ridiculously simple of the three alternatives, but what better way to find out a person's opinion of the outcome of a lawyer or advisor's work?

Institutions like savings banks, investment firms, and mutual fund investors can all provide adequate information to educate prospective estate investors with the opportunities available. From there it becomes a matter of which type of investment yields the best return. What remains is the actual setting up of the trust fund. Trustees are appointed-typically from the institution where the account is set. Both estate owners and beneficiaries are educated on the mechanics of the account.

Is setting up a trust fund a lengthy and costly venture? It does take time and it does cost money. However the benefits afforded the beneficiaries and the peace of mind afforded the estate owners makes the research and careful planning worth every bit of the effort.

Just ask someone like Bob.

Some Specifics:

Banks and trust fund administrators are required to do the following:

1. Formulate and monitor trust fund policies and procedures.
2. Maintain an institutional link with donors, ensuring they are provided with quality and timely reports and acting as the bank's main channel for trust fund resource mobilization.
3. Provide a central point for processing new trust fund proposals.