Ned Armand, President of Eastern Point Trust Company

Ned Armand is the President of Eastern Point Trust Company.

Recent Posts

Transferring Education Savings Accounts to a Trust with Kiss Trust

Posted by Ned Armand, President of Eastern Point Trust Company on May 10, 2017

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UGMA/UTMA accounts mature when the Beneficiary reaches the age of 18 or 21 (depending on the state). And that has many parents panicking because the beneficiaries of those accounts have open access to the funds once maturity occurs. This happens whether the donor desires this, or not. With a trust, you can restrict the use of assets better than any other financial tool available, simply allowing you (the Grantor) to stipulate the distribution terms.

Delay access and regain control of assets in an UGMA/UTMA account

A way to regain control of the assets in an UGMA/UTMA account is to create a trust to succeed the UTMA/UGMA account. Here’s how:

  1. Create a 3rd-party irrevocable trust with Kiss Trust (EPTC, the Trustee, will replace the UTMA/UGMA account custodian)
  2. Transfer the funds from the account into the trust
  3. Close the UGMA/UTMA account

Rules of UGMA & UTMA accounts

If you are considering opening an UGMA or UTMA account, or already have one open, it is important to understand the rules.

  1. Each UTMA/UGMA account has only one Beneficiary (a minor child) and one Custodian (usually a parent).
  2. The Custodian has “all rights, powers, duties and authority over such assets.”
  3. When the Beneficiary reaches the age of majority, the Beneficiary has full and unfettered access to the account.
  4. Asset in an UTMA/UGMA account is irrevocable, thus the Custodian cannot use UTMA/UGMA assets for the benefit of anyone other than the minor, or beneficiary of the account.
  5. The Custodian of an UTMA/UGMA account may use “so much of the custodial property as the custodian considers advisable for the use and benefit of the minor, without court order.” Thus, there is a clear basis for the Custodian’s discretion to use the assets for the minor’s direct or indirect benefit.

As noted, when the Beneficiary attains the age of majority or dies, the Custodian must transfer the assets to the Beneficiary or the Beneficiary’s estate. However, prior to the age of majority the Custodian has the right to transfer UTMA/UGMA account assets into a trust or another investment vehicle that benefits the Beneficiary.

We note that there are no known court precedents voiding the Custodian’s right to make such a preemptive transfer, as long as the new trust does not delay the availability of benefits until the death of the donors. Thus, if the Custodian has a “reasoned basis” for delaying the Beneficiary’s access to the assets, and there is no dilution of the custodial assets, then preemptive delay is appropriate. A “reasoned basis” can be as simple as the Custodian’s judgement that the Beneficiary will use the assets to his or her harm, or that the Beneficiary may waste the assets frivolously or imprudently.

The UTMA/UGMA account custodian is not subject to the usual fiduciary duties of a trustee—the Custodian’s only duty is that the property be used for the minor’s benefit. This “beneficial use standard” is satisfied if the Custodian transfers the property to a trust that benefits the same Beneficiary exclusively.

Converting a UTMA/UGMA into a Kiss Trust is a wise decision and will give you the peace of mind of knowing that the assets will be spent how and when you (the Grantor) wants, based on the distribution terms of the trust.

GO TO YOUR ACCOUNT TO BEGIN:

Go to Your Account

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Tags: Education Trust

The Surfer and the UTMA (How It All Went Wrong For Two Caring Parents)

Posted by Ned Armand, President of Eastern Point Trust Company on Feb 29, 2016

An UGMA was depleted because of the ebb and flow of a career in surfing

When a passion for surfing led to unwarranted injuries, Skyler sought aid from his UGMA. Quickly, the funds were depleted, leaving his parents wishing that they had known about Kiss Trust.

Key Takeaways

When Dave and Brenda learned that Dave’s parents had left a fairly large bequest to their son, Skyler, they were delighted.  Skyler was their only child, and since Dave was an only child the amount inherited was easily enough to cover four years of college and the expenses associated with starting life after school.

Being devoted parents, Dave and Brenda put the money into an UGMA (Uniform Gift to Minor Account), where it would earn interest.  When Skyler turned 18, the account would transfer to him and he would have the money available to concentrate on his studies at college without having to get a job outside school.

Living in Florida, the whole family spent a lot of time at the beach, and Skyler learned at a young age that he had an affinity and a talent for surfing.  He won his first competition at the age of 11, and by the time he was 16 he had an entire wall full of trophies he had won from all across the East Coast, and even two from tougher competitions in California.  His parents were very proud, but always emphasized that surfing was a hobby and that academics came first.

As graduation time approached, Skyler began to bristle at his parents’ insistence on grades and studies over his beloved surfboard. He’d put in applications at several colleges, especially in California where he knew he’d have better access to big waves, and his good grades got him accepted in several.  However, when he turned 18 two months before graduation and learned about the UGMA which would be his, he abruptly decided that college could wait.  To his parents’ chagrin, he graduated, took the lump sum from the UGMA and headed for the West Coast, determined to make his living with his surfboard.

He soon learned that paying for your own food, lodging and expenses really cut into the infrequent winnings from competitions, and an ankle injury sidelined him for an entire season.  He started giving lessons to get regular money coming in, but he had trouble competing with older surfers who had years of experience and championships to recommend them to potential students. He kept having to tap into the UGMA funds, and within four years he had drained it.

Skyler was left with no savings, no real job experience, and his surfboard. He moved back home with Dave and Brenda, got a job at a sporting goods store selling the surf equipment he once thought would be his livelihood and started saving up for classes at community college.

This situation could have easily been prevented had Dave and Brenda taken the generous bequest and put it into a third-party managed trust, such as those offered byEastern Point Trust Company through Kiss Trust.  The trust allows for grantors to set requirements for distributions, such as graduating high school, going to college, and maintaining good grades among many other options. It also allows grantors to build in penalties for bad behavior, failure to complete school or even criminal activity or substance abuse.

Instead of Skyler being in his early 20s with very little money and a long road ahead of him to get to a successful life, a Kiss Trust would helped him strive for his work passion, instead of giving him an easy way out.

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Your Children May Be Endangered... By The Very UTMA Account Intended To Help Them (But, A Trust Can Help)

Posted by Ned Armand, President of Eastern Point Trust Company on Feb 24, 2016

Trust Funds with HEMS provision can deter or guide beneficiaries with substance abuse problems

You don't know it yet, but unfettered access to assets in a UGMA/UTMA custodial account for minor who could develop substance abuse issues can destroy a lifetime of savings.

Key Takeaways
  • A dependency issue can threaten to deplete assets in a custodial account.   
  • Parents and custodians of UTMA UGMA accounts can transfer funds to a supplemental needs trust or Health education maintenance and support trust if it is in the best interest of the beneficiary.                                    
  • Assets of supplemental needs trusts or (HEMS) health education maintenance and support trusts can use the funds in the account for rehabilitation programs for the beneficiary.


Substance Abuse Threatens UTMA Assets

A UTMA/UGMA custodial account is opened when children are still very young to transfer ownership and/or build wealth for later years, and well before any display of irresponsible behavior or substance abuse issues arise. When children become the legal age of 18, or in some states as old as 18, they gain unfettered access to potentially large sums of money. Parents who have witnessed irresponsible behavior are often deeply concerned about the assets in the custodial account being spent foolishly.

You Can Still Preserve The Funds

While parents can't go back in time to select better savings plans for their child, there are still some options available to them to help preserve the wealth in the account. Before adolescents turn (the age of majority) 18 or 21, parents have the ability to remove custodial assets so long as the intended use will benefit the beneficiary. If parents are concerned about the funds being spent recklessly, they can open a trust fund keeping the minor as the beneficiary. A trust fund would then allow the parents to set certain restrictions on how and when the assets are distributed. This is permissible since it is in the best interest of the beneficiary and the assets remain for the sole benefit of the youth.

Treatment Expenses Can Be 

If the beneficiary encounters drug or alcohol abuse issues before turning the age of majority for UTMA/UGMA’s, parents have the right to transfer the funds to a Supplemental Needs or Health Education Maintenance and Support Trust (HEMS). A trust with these provisions will allow the use of funds to help the adolescent with rehabilitation programs or other drug and alcohol control resources.

 
Know Your Options

The use of comprehensive trust and trustee services allow for parents to withhold assets for children until they demonstrate financial maturity or help in the treatment of substance abuse expenses if they encounter issues with drug and alcohol abuse during their formative years.  These services are now available easily and affordable with online trustees such as Kiss Trust.

Tips On How To Maximize The Effectiveness  Of Your Bad Behavior Penalty Elections

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Tags: Irrevocable Trust, UGMA, UTMA

True Story: Can a trust fund provide protection where an UTMA can't?

Posted by Ned Armand, President of Eastern Point Trust Company on Feb 19, 2016

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A diagnosis of mental illness is always tough on both the patient and the close friends and family members.  While it may come as a relief to finally have professional recognition of a problem, the certification that the problem exists can be difficult to handle.  As advanced as our society has become, those with certain mental illnesses still find themselves stigmatized and forced to the fringes of human interaction.

When Allison’s daughter, Summer, was diagnosed with bipolar disorder at age 15, Allison knew that the young woman would need a lot of help and support to deal with the diagnosis, the treatment and the daily medication regimen needed to keep her on an even keel.  Unfortunately, as a single mother, Allison didn’t have as much time as she would have wanted to attend to her daughter’s needs and give her all the support necessary to protect her fragile psyche and keep at bay those who would seek to prey on her perceived vulnerability.

In her up cycles, Summer was a vivacious, articulate, engaging and charming young woman who could light up a room.  But when that cycle ended and she entered a down phase, she would spend hours at a time in bed or in a living room chair, lost in dark thoughts and tears.

As part of her divorce settlement, Allison had insisted that her ex-husband make regular payments into an UTMA, or Uniform Transfer to Minors Account, to pay for Summer’s college expenses.  He had done so faithfully, and Allison was relieved to know that at least she wouldn’t have the worry of coming up with tuition, fees and living expenses to deal with on top of everything else.  When she turned 18, the entire amount of the UTMA would be hers to do with as she chose. While that prospect gave Allison some pause, she knew that she’d raised her daughter well and trusted that she’d make good choices.

The first semester went great, with Summer getting acclimated to life in the city, making new friends and enjoying her classes.  As winter turned to spring, though, Summer moved off campus into an apartment with new “friends” on a hand shake arrangement and began to slide into a down cycle.  After disclosing to her new roommates, about her hefty UTMA account they devised a scheme to take advantage of her vulnerability convincing Summer that she owed unreasonable sums of money to them for past room and board.  And threatened to have her arrested if she did not make good on her debits immediately.

As the account rapidly dwindled Summer only became more depressed. Rather than seeing her therapist and getting her medication adjusted, Summer withdrew, her grades plummeted and she soon quit going to class. 

When Summer finally revealed the situation to her mother Allison, Allison was frantic and immediately contacted several trust companies in an attempt to preserve what was left of her daughters account, however it was too late.  Within a few short weeks, her “friends” had all but completely exhausted the money in Summer’s UTMA account and moved on.

Summer did manage to get through the hard times, and her faculty advisors, wracked with guilt at having not seen her plight, petitioned the art school for additional money to help her continue her schooling.  She managed to finish school, but all the money from the UTMA was gone, and she had a very difficult time supporting herself with her art alone after school, ending up in a series of “small” jobs which kept her bills paid but also kept her from pursuing her dream.

If Allison had chosen to put Summer’s college savings into a third-party managed education trust, such as those offered by Kiss Trust through Eastern Point Trust Company (rather than an UTMA), Summer’s false friends would never have been able to wreak the havoc they did.  With controlled distributions tied to things like successful course completions, finishing school and other milestones, a Kiss Trust encourages positive life choices.  The trust also allows the grantor to build in penalties such as suspension of benefits for bad behavior, failure at school, alcohol or drug abuse issues and the like.  A third-party managed trust is a far more secure way to handle the large (or even not so large) sums of money that can become available to a young person upon attaining their majority.

 

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Tags: Trust Fund, UGMA, UTMA

7 Hidden Setbacks to UTMA and UGMA Custodial Accounts

Posted by Ned Armand, President of Eastern Point Trust Company on Feb 10, 2016

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UTMA and UGMA accounts may look good on the outside, but parents should be aware of the many hidden disadvantages to these custodial accounts.

Key Takeaways

  • Custodial accounts have a number of limitations that could prevent your money from being used how you want                             
  • UTMA and UGMA custodial accounts can negatively impact a minor’s eligibility to financial aid
  • It is possible to roll UTMA and UGMA accounts into a Kiss Trust for minors

 

Explaining Custodial Accounts

UTMA and UGMA accounts are a popular option for investors to easily transfer large sums of money, real estate, or other inheritance to a minor without the need or expense of an attorney. While the accounts have some advantages, primarily their simplicity to establish, there are also a number of disadvantages that every investor (parent and guardian) should be aware of.

 

Disadvantages of UTMA and UGMA Accounts

While these accounts may have their advantages, here are the inconvenient disadvantages that could cost your child thousands in student loan debt:

  • By definition, these irrevocable trusts cannot be taken back by the Giftor. Once the assets are transferred to the minor, they belong to the minor. It is important for investors not to transfer funds that they may need to recover.
  • Regardless of the maturity level of the UGMA UTMA beneficiary, at age 18-21, depending on your state, the assets must transfer to the young adult at their request.
  • Assets in UTMA and UGMA accounts impact financial aid because the assets owned by the child are weighted more heavily than parental assets (according to Forbes, custodial accounts only make sense if you are certain your child will not need financial aid).
  • Money in a custodial account cannot be transferred to another child. The assets belong to one child only. This may impact families who are unable to give as much money to subsequent children as they were to for the first one.
  • Custodians have no control over how the funds are used, meaning that the child may use these assets for anything, even if the intent was to save for their education.
  • If the Giftor serves as the custodian and dies before the account matures, the assets in the account may be included among the custodian’s assets for estate tax purposes.
  • If the child dies prior to receiving the assets in the account, the accounts are dealt with according to the laws of the state, which may not be in your favor.
 
Know the Real Costs

Before opening a savings account for a minor, it is important to review disadvantages, as well as the advantages and consider alternatives. Even the best intentions can come back to haunt parents who establish UTMA or UGMA accounts who are poorly informed. Many financial institutions open these accounts without advising the custodian of their drawbacks and limitations. If parents have UTMA / UGMA accounts already established, some financial institutions offer opportunities to roll custodial accounts into alternatives such as an custom irrevocable trust.

 

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Tags: Student Financial Aid, Financial Aid, UGMA, UTMA

How A Trust Protected UTMA Assets From Poor Choices (And How To Roll UTMAs and UGMAs Into A Kiss Trust)

Posted by Ned Armand, President of Eastern Point Trust Company on Feb 5, 2016

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UTMA assets are not protected against poor decisions or frivolousness, but there is a way to protect assets with Kiss Trust.

Key Takeaways

  • Assets within an UTMA  and UGMA accounts are given to the minor at the maturity age of 18 or 21, which can leave room for misuse
  • UTMA  and UGMA accounts can rollover into an irrevocable trust to provide extra security for parents and custodians
  • Kiss Trust makes UTMA and UGMA conversions easy with our trust solutions

How A Trust Protected UTMA Assets From Poor Choices

The birth of a child is a huge event for any couple, and when Mark and Brittany welcomed Ashlynn to the world, they wanted to make sure that her life would be full of far less struggle and uncertainty than theirs had been. They had both come from humble backgrounds, and through many years of hard work Mark had established himself as a dentist with a thriving practice, and Brittany had found fulfilling work as an attorney.

Before Ashlynn was even born, Mark and Brittany began planning for her financial future. They looked at their options, and decided that a Uniform Transfer to Minor Account, or UTMA, was the best way to go. They started with a small deposit, just a few hundred dollars, and added to it on a regular schedule over the years. Family members who were so inclined also made contributions, and by the time Ashlynn was in her teens there were tens of thousands of dollars in the account.

Unfortunately, that’s also when the trouble began. Brittany got a job offer at a firm in another town, Mark sold his practice and they relocated. In the new town, Ashlynn made friends with the wrong sort of kids, and the usual adolescent straining at the rules was magnified into a series of small offenses. She was caught shoplifting at a mall jewelry store even though she had money in her purse to pay for the purloined goods. She and two other girls were caught smoking marijuana on school property after a basketball game and were expelled. It was soon clear that Mark and Brittany’s darling girl was heading down the wrong path despite their best efforts.

On her seventeenth birthday, Ashlynn announced to her parents that she intended to drop out of high school. She wanted to move to Chicago and start a band with some of the same school friends with whom she’d gotten in trouble. She knew about the UTMA, and knew that the day she turned 18 she’d have access to an amount of money that was now nearing six digits. She figured she could work odd jobs until then and support herself until her ship came in, then she’d use the money to launch her career.

Mark and Brittany were horrified. They knew that Ashlynn was making a poor choice, and that all the money they’d set by for her college education and to get her started in life was going to be squandered. But there was nothing they could do. By the terms of the UTMA, Ashlynn had completely unfettered access to the entire proceeds of the account at age 18.

If the parents had instead chosen to set up a Kiss Trust instead of an UTMA, they could have built in requirements for things like education and good behavior that would have helped ensure that the money they’d set-aside was used wisely. With a Kiss Trust, the creator can set milestones for dispensations, and build in penalties for poor choices such as failing to finish school, engaging in criminal activity or substance abuse. With a Kiss Trust in place, Ashlynn could still have made the same choices, but she wouldn’t have had unfettered access to a large amount of money to make such choices more appealing.

No one wants to think of their children growing up and making decisions that put their future in peril, but with a Kiss Trust rather than an UTMA, at least you can make sure they are only rewarded for steps down the right path. 

How To Roll UTMAs and UGMAs Into A Kiss Trust

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Tags: UGMA, UTMA

The History Of The UGMA Account

Posted by Ned Armand, President of Eastern Point Trust Company on Feb 4, 2016

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The UGMA was created to help investors transfer property to minors.

Key Takeaways

  • UGMA allows the transfer of securities to minors

  • The act allows minors to enter into legally binding contracts

  • Every state and district has adopted some form of the UGMA


  

UGMA Defined

In 1956, the United Law Commission announced the Uniform Gifts to Minors Act (UGMA). This Act closely modeled “Act concerning Gifts of Securities to Minors” which was sponsored by the New York Stock Exchange and the Association of Stock Exchange Firms. This predecessor was adopted in 14 states. The 1956 model broadened the act so that it allowed gifts of money as well. About a decade later the act was again expanded to broaden the types of financial institutions that could serve as depositories of custodial funds. Not all states adopted the 1966 revisions, but rather made their own revisions leading to non-uniformity. Uniformity is important since the act is intended to avoid conflicts of law when the laws of more than one state apply. This Act was later changed to refer to “Transfers” rather than “Gifts” which is today the Uniform Transfer to Minors Act.

 

UGMA Today

Today, every state and district has adopted some form of the UGMA. The act permits minors to own property, such as securities without requiring an attorney to draft a trust. The act allows minors to enter into legally binding contracts allowing parents to transfer assets directly to children. When the minor turns 18 they receive full access to the account. Investors select UGMA accounts for minors because they can be opened quickly by filling out an application form and providing a social security number.

 

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Tags: UGMA

A Short Story: How Uncle Joe's Family Was Saved By A Trust By Will

Posted by Ned Armand, President of Eastern Point Trust Company on Feb 2, 2016

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Transfering trustee duties to experienced trustees, like Eastern Point Trust Company, is simple with Kiss Trust's Trust Wizard.

Key Takeaways

  • Not all friends and family members are equipped with the time, knowledge, or resources to handle trustee duties
  • Trust by will duties can be easily assigned to experienced trustees, like Eastern Point Trust Company
  • Kiss Trust's Trust Wizard makes it simple to create unique trust funds for your family in little time, with little cost

 

 

The Generous Uncle

Everyone in the family knew that Uncle Joe was wealthy. Trips to his home were always highlighted by seeing his newest art acquisition or the sports car he’d picked up for weekend driving. He gave lavish but thoughtful gifts on birthdays and at Christmas, and had helped several family members over the years who were trying to start businesses or go to college. As he’d never had children of his own, he treated all his nieces and nephews as daughters and sons.

When Joe died unexpectedly at age 60, the family was thrown into turmoil. He had been such a friend, trusted advisor and benefactor to so many in the family that they were at a loss. At the reading of his will, the attorney informed them that Joe’s younger brother, Ray, had been appointed as trustee of trusts to be created by the estate. There were numerous bequests to charities and local institutions, but the bulk of the estate was left to the family members via the trusts by will.

Ray was a respectable man, but he realized very quickly that the number of beneficiaries, distribution requests, investments and tax filings he would be responsible for thanks to Joe’s creation of a trust by will was more than he could handle. He was a hard-working man, and while he’d done well for himself he simply didn’t have the time to keep track of all the details involved in handling his older brother’s estate.

Ray’s wife, Melissa, told him about Eastern Point Trust Company, which could fulfill the duty of a professional trustee and handle all the trusts affairs, bequests, gifts, beneficiaries and other details. As a third-party trustee, Eastern Point would be an impartial administrator of Joe’s estate, and assure that his wishes were carried out.

With the help of Eastern Point’s easy online Trust Wizard, Ray quickly set up Kiss Trust accounts for all the nieces and nephews to satisfy the estates Trust by Will requirement. Far better than an old-fashioned bequest, the Kiss Trust would grant dispensations at pre-set times and on the occasion of certain life events such as high school and college graduation, fist time home purchase, etc. The trusts also had built-in encouragements for good behavior, as things such as dropping out of school or breaking the law would result in a temporary suspension of trust benefits.

The whole process was easy, and after the trusts were established and Eastern Point was installed as third-party trustee, Reuben was able to return to his daily routine secure in the knowledge that all the nieces and nephews Joe had so cherished would be the beneficiaries of his goodwill for years to come.

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Tags: Trust By Will

How To Benefit By Gifting Into A Kiss Trust

Posted by Ned Armand, President of Eastern Point Trust Company on Jan 29, 2016

What Is Gift Tax

By simply being generous throughout your lifetime and utlizing these exemptions, you can reduce your impending estate tax by thousands or even millions by gifting, while avoiding probate and other headaches along the way.

Key Takeaways

  • Gifting into a trust fund is a strategy that many individuals utilize for its numerous benefits.

  • Up to $14,000* per year can be gifted tax-free (or up to $28,000* for married couples) for as many persons or trusts. Up to 5.45* million dollars can be gifted per lifetime not including the accumulated total of your lifetime gifts without estate tax burdens.

  • Gifting into a trust fund can maximize the effectiveness of your gift by compounding the invested, and by holding it until distribution terms.


  

Why You Should Take Advantage of Gifting (A Can’t Lose Scenario)

Gifting is a strategy that is often underutilized. What is gifting, you ask? Put simply, gifting is the exchange of assets from one person to another or one person to another entity. There are a couple caveats, IRS rules however, that prevent individuals from gifting everything they have to avoid taxes.

 

Caveats Of Gifting Estate Assets

There are some crucial caveats and details regarding maximizing your effectiveness when gifting. Here is some help:

  1. Up to $14,000* per year can be gifted tax-free to multiple entities (or up to $28,000* for married couples).
    • Anything over $14,000* (or $28,000* for a couple) to any one individual or entity by you is subject to Gift Tax.
    • This $14,000* tax-free gift can be gifted to as many parties as you want. For example, let’s say you have 2 children and trusts established for both children. You could gift $14,000* into each trust as well as gifting $14,000* to each children tax-free, a total of $56,000* for an individual or $112,000* for a couple.
    • Once a gift is made those dollars are not subject to probate or death tax any longer.
  2. Over the course of your lifetime, 5.45* million can be gifted without estate gift taxes, and the amount that you gift over your lifetime combined (within the $14,000* annual exclusion) does not reduce your lifetime exemptions.
  3. Spouses can use any unused lifetime gift tax exemptions that their spouse does not use.
    • For example, if a husband dies with an estate of 4 million dollars, it will be gifted to his heirs without estate gift tax. But, there is $1.45 million* that was unused. His wife (or husband in some states), can contribute up to their limit, and the remainder of their spouses unused tax-free gift, which in this case amounts to $1.45 million.*

What this means is that individuals and couples can gift up to $28,000* per year per person or trust tax-free. As a general rule of thumb, it is better to gift your estate over the course of your lifetime to minimize taxes rather than waiting until you die. If you're having trouble understanding these limitations, you are not alone. Let's break it down. 

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Strategically Gift Your Estate

Gifting under the annual limit can maximize the effectiveness of your gifts when gifting into a trust fund. A disadvantage of gifting up to the annual limit is uncertainty of proper and prudent usage of your gift. Trusts prevent this and ensure that your gifts are being invested and distributed under your own terms and conditions. For example, you can gift up to $14,000* individually into as many separate Kiss Trusts per year. You can get started utilizing this tool by quickly and easily establishing a Kiss Trust for $20 with a discount code by clicking here, or the link below. Use the money you save on trust fees by using Kiss Trust to put towards your annual gift-tax exclusions. 

 *All figures are based on 2016 IRS data. Learn more.

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Tags: Gift Trust, Gifting

How Kiss Trust Bad Behavior Penalty Options Keeps Heirs On Track

Posted by Ned Armand, President of Eastern Point Trust Company on Jan 27, 2016

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Better control how your trust's assets will be used. Kiss Trust's Bad Behavior Penalty options gives you the power to set outcomes in the event that your beneficiary acts out, giving you the peace of mind that your trust will be used for good.

Key Takeaways

  • Grantors can use a trust fund as an incentive for positive behavior.
  • In the event of irresponsible behavior, or noncompliance, the grantor can suspend the trust for a penalty period.
  • All-in-one trust solutions offer options to give the grantor complete control, no matter future circumstances.

 

The Bad Behavior Penalty

Inheritance comes a level of responsibility, but not all heirs are well equipped to handle the responsibilities that come with an inheritance. With the ease and access of all-in-one trust tools, grantors have the ability with the simple click of the mouse to easily set penalties on distributions for poor behavior, including the failure to complete high school or higher education. It is a comfort for trust grantors to know that today’s online self-help trust services have the flexibility to set strict criteria on distributions that require beneficiaries to stay on the straight and narrow path through childhood, adolescence, and into early adulthood. While this doesn’t guarantee future success, it certainly increases the likelihood.

Create Incentives

While all-in-one trust tools offer specific trust language to distribute bonuses for successful academic achievement, they can also suspend allocations for failure to meet certain life goals. For example, if the beneficiary leaves high school and does not receive a diploma or GED, the grantor can suspend that distribution of the trust until the diploma or GED requirement is met, or until the penalty period is complete. Similar penalties can be applied with regard to higher education, including setting time limits on acquiring an associate’s or bachelor’s degree. However, in the event of medical emergencies or accidents, the penalty can be waived.

Bad Behavior

Another common distribution election used with DIY trust services is the “Bad Behavior” penalty. With this option selected, should the beneficiary exhibit poor judgment such as drug or alcohol abuse or other criminal activity, the distributions will be suspended upon notification by the family contact or grantor. The grantor can indicate the amount of penalty time the trust fund is suspended for a first and second offense. 

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Control In Your Own Hands

Today’s self-help trust technology by Kiss Trust puts the ability to create trusts and set specific distribution options right at your fingertips. With a click of the mouse, you can set specific criteria that give the you, the Grantor, some reassurance that their loved one is behaving responsibly and meeting their expectations. Using an online self-help trust service, grantors can set up trust funds for as little as a one-time $49 software and postage fee.

 

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Tags: Irrevocable Trust

Kiss Trust

Creating a Trust
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Kiss Trust is the only patented total trust solution in America. Kiss Trust Is a self-help trust creation tool with integrated trustee services and access to over 5,000 mutual funds, 1,000 ETFs and a brokerage account with stocks and bonds. Kiss Trust lets you create a powerful custom irrevocable trust without the expense and trouble of hiring an attorney.

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