Today, I’d like to CONTINUE our video series on different types of accounts investors should open…
In this video, I will start covering trust accounts that may benefit frum families with a range of wealth, lifestyle, and personal circumstances.
First, let’s discuss Revocable trusts: A revocable trust, also known as a living trust, is a legal document that allows you to manage your assets while you’re alive and potentially avoid probate upon your death. You can change or cancel it at any time while you’re alive and competent. A revocable trust also allows for an element of privacy when managing assets after the owner’s death. There are no tax advantages to utilizing a revocable trust, however, the other benefits still make it useful for many families.
To set up this type of account, you must first speak with an experienced trust and estates attorney to determine if and how a revocable trust is suitable for you and your personal situation.
Next, there are Irrevocable trusts: An irrevocable trust cannot be easily changed or dissolved by the creator. This means that once assets are transferred into an irrevocable trust, the creator, or grantor, gives up ownership and direct control over them. The assets are then managed by the trustee for the benefit of the specified beneficiaries.
There are many uses for irrevocable trusts, including protecting assets from creditors, minimizing estate tax liability, bypassing probate, qualifying for Medicaid benefits, or supporting a beneficiary with special needs.
Like a revocable trust, consulting with an experienced trust and estates attorney to set up and correctly execute this type of account is a requirement. It is also important to hire a competent financial manager who can work with the attorney and who understands the terms of the trust, can execute the strategy correctly, and appreciates the responsibility of acting in a fiduciary capacity. Cutting corners when it comes to trust planning will inevitably lead to mistakes, potentially flushing lots of money down the toilet due to errors, missed opportunities, or forfeiting the benefits.
In my next video I will cover several other types of accounts and a final thought about how families should approach the account hierarchy question.