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Advantages of Trusts
- Protection for Beneficiaries -- In addition to assuring that your property will pass the way you want, trusts provide assistance and protection to your beneficiaries.
- Tax Savings -- A trust plan can also mean substantial savings in taxes for your family. Assets placed in a properly drafted trust can avoid taxation in the surviving beneficiary’s estate.
- Investment Management & Safekeeping -- First Bank & Trust will relieve you or your beneficiaries of the day-to-day management and administration of your assets.
Types of Trusts
Trusts Under Will
These trusts are a wonderful way to provide for your beneficiaries. Your instructions as to how your property is to be managed for your family’s benefit and eventually distributed to them can be set out explicitly by your lawyer. During your lifetime you continue to own and control your property. You can change your will from time to time as the needs of your family change. First Bank & Trust would be named as Trustee or Co-Trustee in your will and assumes responsibility for your assets after your death.
All of the advantages of a trust under will can be obtained from a "living trust", plus some others. The basic difference is that a living trust can become operative during your lifetime. To set up a living trust you transfer some of your property to the trustee, i.e., stocks, bonds, real estate or cash. During your lifetime you can be the beneficiary if your wish.
At your death your living trust can continue without any "red tape" for the beneficiaries who succeed you. If you wish, you can retain the right to revoke the living trust at any time, or you can withdraw assets, direct and control investments, and change the provisions and beneficiaries of the trust. These are known as "revocable" living trusts.
Additional Benefits with a Living Trust
- You see your estate plan in action during your life and can modify it as you see the need.
- The property in it passes automatically to the successor beneficiaries without having to be "probated" in your estate.
- Your trust is confidential and need not be disclosed in public records.
- It can free you, at any time you so decide, of the burdens of managing investments and keeping records.
Irrevocable Living Trusts
An irrevocable trust is a special form of living trust for particular purposes, such as reducing taxes. Thus, if you set up an irrevocable trust for the benefit of someone other than yourself, such as a child, you can not only reduce your income taxes, but also cut down the size of your taxable estate! The only "hitch" is that for the duration of the trust you are restricted in the benefits you receive yourself, and in the control of it.
Life Insurance Trusts
Under a life insurance trust, the insurance proceeds are payable to a trustee who handles them for your family in a manner similar to a trust under will.
For more information, talk to your Trust/Investment advisor.