Building and Protecting a Child’s Fortune

Posted by Ned Armand, President of Eastern Point Trust Company on Dec 17, 2015

Growing your savings

Growing and protecting your assets for your heirs has never been more simple and accessible as it is now, with Kiss Trust.

Key Takeaways

  • Look for all-in-one tools that provide a family and friends donation portal
  • Open accounts with minors listed as beneficiaries
  • Maintain control of funds with an irrevocable trust

  

Safeguard Family Donations  

Grandpa Joe and Grandma Jane did very well in life and saved a lot of money. They now wish to bestow their fortune upon their grandchildren in the form of annual gifts. With the ability to gift up to $14,000 per child tax free annually, they give a total of $70,000 each year to their five grandchildren by way of personal checks passed to their sons, Tom and Peter.

It is estimated that by age 18, each grandchild could have over half a million dollars in their accounts thanks to long-term compounded growth. At the end of each year, Grandma Jane takes out her checkbook to write a check and hesitates, wondering what actually happens to the money she gives. Does it get deposited into a savings account per their wishes? Or is it cashed and spent frivolously on toys, clothes and other luxuries? What if, during especially tight months, the check is cashed and used for groceries or even household bills?

While not every grandparent has the resources to be as generous as Joe and Jane, many enjoy the role of benefactor and love gifting money to their grandchildren. Parents should look for all-in-one affordable tools that offer a “friends and family” portal that provides reassurance to donors about where their gifted money is going.

 

Avoid Common Mistakes

Parents often open UTMA (Uniform Transfer to Minors Act) or UGMA (Uniform Gift to Minor Act) accounts for their children that list parents as custodians of an account belonging to a minor, making the child the owner, rather than the beneficiary. This significant difference means that by age 18, the child has access to all of the money, leaving the parent with no control over how the money is spent. UTMA and UGMA accounts give parents no control over the distribution of the money saved.

Affordable all-in-one plans that offer irrevocable trusts listing children as beneficiaries, rather than owners, are preferred over either UTMA or UGMA accounts. This packaged savings, investment, and trust solution enables parents to determine how money is distributed to safeguard the child’s future assets. For example, for children who elect to not attend college, parents can reallocate distribution elections to prevent having the beneficiary acquiring a lump sum windfall and spend the entire amount quickly and unwisely.

 

Contributions With Easy Access

The last thing a parent wants is to make it difficult for donors to make a contribution to a trust. An all-in-one savings trust with a friends and family portal can eliminate uncertainty and establish a schedule of gifting with a one-time gift or ongoing contribution. Look for a feature that is confidential and secure. Spare Grandma Jane the worry over the use of the money she and Grandpa Joe gift each year by opening an all-in-one savings trust.

 

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Tags: Estate Planning, Inheritance Trust, Heir

Inheritance Trusts Can End the Shirtless-to-Sleeveless Cycle

Posted by Ned Armand, President of Eastern Point Trust Company on May 22, 2015

 

Inheritance Trusts can end the 'shirtless-to-sleeveless in three generations' cycle in just one day when starting a Kiss Trust.

Key Takeaways

  • Inheritance trusts can end the shirtless-to-sleeveless in three generations adage.
  • Leaving a general inheritance can cause the misuse of your estate.
  • Inheritance trusts are an easy solution to ensuring the outcome of your final estate’s use.


Estate Planning and Inheritance

Inheritance trusts are a good tool to use when planning and executing wealth transfers from generation to generation – commonly referred to as inheritance. Your descendants will certainly inherit many things from you – from the shape of their nose to the color of their eyes. However, how they will use the wealth that they inherit from you is not guaranteed. Unfortunately, general (unrestricted) inheritances can have repercussions, which is where the adage shirtless to sleeveless in three generations came about. So, how the gift of your estate will be utilized should be planned with caution and taken seriously. Many variables should be considered, which is why having only a final will and testament may not be your best option. However, an Inheritance trust can solve the problems of when, how, and by whom your final estate may be used.

What are they used for?

These types of trusts are established to ensure the maximum control over the transfer of wealth to your heirs or unrelated parties. Although different trust types are available to address your estate planning needs, you can create a customized trust based on your specific wants and unique situation.  It can receive death benefits from life insurance or annuity policies, as well as other sources like 401Ks, IRAs, and more. 

Advantages Using Kiss Trust

  • Peace of mind that assets you leave to your heirs will only be used for purposes you designate
  • Over 700,000 possible design combinations provide a wide array of customization for your needs
  • Ongoing professional institutional trustee oversight
  • Ensure your estate is not wasted by foolish impulses or immature decisions
 

Kiss Trust is Problem Solving

Inheritance Trusts take away the uncertainty of how your estate will be used. This is because you dictate the terms of the trust; how and when the money will be used. Instead of relying on the theory that your exceptional financial genes were passed down to your family, you can ensure that your wealth management skills are being put to use long after you have shuffled off the mortal coil – in effect, you can parent from the grave. Thus, your estate will not be squandered by your heir’s misfortune or misconduct. Funding a trust guarantees that your family will be able to reap the benefits and the trust will not be subject to the claims of their creditors or ex-spouses.

Common Mistakes

The biggest mistake people make is not having a complete plan. Some assume that a final will alone will cover everything you need for an effective inheritance or estate plan. While having a will is always wise, establishing a final will and testament solely to handle your entire inheritance provides no safeguards for the use of your estate.

Another mistake is leaving a child as the beneficiary of a life insurance policy. Children have underdeveloped money management skills, and trusting them with the power to use it prudently is an unnecessary risk to take. The best preventative action to take is to establish a trust fund, especially when you’re protecting your life earnings.

If your focus is preserving your legacy, strengthening your family’s financial condition, or ensuring that your family will not be shirtless to sleeveless in three generations, an Inheritance Trust is right for you.

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Tags: Trust Fund, Inheritance Trust, Financial Planning

Fundraising Memorial Accounts

Posted by Ned Armand, President of Eastern Point Trust Company on Feb 20, 2015

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Learn why a trust-based memorial fundraising account is better than a bank-based memorial fundraising account.

Key Takeaways

  • Trust-based memorial funds can control when and how the money in a memorial fund is used and provides far more oversight than a simple bank account.
  • An offical trust document that outline the usage of fundraised money for a memorial account increases the chances of more donations, since donors know where their money is going and how it will be used.
  • Banks provide no assurance that the solicited funds are not diverted into the pockets of the person(s) sponsoring the fund or for purposes outside the stated intent of the fund, so trust-based memorial accounts ensure that the longevity of the trust is maintained and upheld.

 

Two Types of Memorial Trusts

Memorial Trusts serve an important role when groups and individuals seek to provide a fund to aid victims of tragedy or establish memorial accounts for the surviving members of a recently deceased person.

Unlike bank accounts, a trust-based memorial account does more than just hold contributions. A trust can control when and how the money in a memorial fund is used and provides far more oversight than a simple bank account.

Most importantly, a memorial trust provides the donors peace of mind, ensuring that an independent trust institution is overseeing the use of the money. This added safety can greatly increase the motivation of donors to be more generous.

By contrast, here are some of the drawbacks of using a bank account as a memorial fund-raising account:

  • A bank-based fundraising memorial account can leave the donors worrying that no controls exist for the use of the account, resulting in smaller or lost donations;
  • Banks accounts offer no assurance that the funds will benefit who they were intended for, or go where they are supposed to.
  • A bank provides no contingency plans for use of the fund if the intended recipient(s) passes away or is unable to accept the funds.
  • Banks provide no oversight to ensure the fund is complying with tax and tax filing requirements related to its investment income.
  • The bank where the fund-raising account is housed does no due diligence before accepting the memorial account. It only verifies the identity of the person opening the account and does not implement any safeguards or oversight on the use of the money.
  • Banks provide no assurance that the solicited funds are not diverted into the pockets of the person(s) sponsoring the fund or for purposes outside the stated intent of the fund.

With affordable trust options now available online from providers like Kiss Trust you have an opportunity to increase donations by providing your potential donors with the assurance of an independently and professionally managed memorial fund. The affordable cost of Kiss Trust’s services is less than a tank of gas to get started.

Click below to access the check list of Benefits of a trust-based memorial fund and increase your fund-raising results.

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Tags: Inheritance Trust, Memorial Trust, Trust-Based Memorial Account, Memorial Accounts, Fundraising Memorial Accounts, Memorial Fund-Raising Account

Advisor Series #2: Revocable and Irrevocable Trusts! Why Not Both?

Posted by Ned Armand, President of Eastern Point Trust Company on Nov 3, 2014

There is much misinformation and misconception surrounding revocable living trusts and irrevocable trusts.

Advisor, Irrevocable Trust, Blended Family Trust, Revocable Trust, Kiss Trust

Picking the Right Tool

At first glance, one could seemingly identify the main purpose of these trusts merely by observing their names. Revocable living trusts (RLT) are just that, revocable, and can be revoked and amended at any time by their grantor(s). Irrevocable trusts are irrevocable and cannot be revoked or amended by their grantor(s) (however, they may be amended by the trustee if provided for in the document).

10 Gallons of Water in a 5 Gallon Bucket

Often, revocable living trusts are used for tasks that they were never meant to achieve, such as managing the grantor’s assets after their death. Revocable living trusts are wonderful tools to manage assets of the grantor(s), avoid probate, and provide maximum flexibility during the grantor’s life. However, upon the first grantor’s death, the power left to the surviving spouse to revoke or amend the trust is a risk that can be abused.

Bring in the Ringer

Irrevocable trusts are a perfect second act to a client’s estate planning; the better design is for the RLT to “pour over” into the irrevocable trust after the first spouse (one of the RLT grantors) has died. Having an irrevocable spousal support trust established in advance to manage the assets after the death of the first spouse, will allow for the surviving spouse to be provided an income stream and assets to meet their needs. Additionally, the irrevocable trust protects the integrity of the deceased spouse’s intentions, and distributes the assets according to the language of the trust upon the death of the surviving spouse.

Let’s recap what we have learned;

  • RLTs are great tools for your clients, and should only be used for avoiding probate and providing flexible asset management during the lifetime of the grantors, but RLTs are often misused, and doing so introduces new risks.

  • The RLT should be designed to “pour over” its assets into the pre-established irrevocable spousal support trust. With this plan in place, the surviving spouse is provided for and both spouses’ intentions are protected from being altered by the surviving spouse (or their attorney).

  • Irrevocable trusts can be created as “sleeping trusts” which sleep awaiting the passing of the first spouse.

  • Finally, the use of an RLT as the sole trust in a blended family opens the door for even greater risk
Help your client's evaluate all of their trust planning risk factors by downloading our Final Estate Planning Checklist below.


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Tags: Blended Family Trust, Irrevocable Trust, Inheritance Trust, revocable trust, Financial Advisor

5 Reasons an Inheritance Trust is Better Than an Outright Inheritance

Posted by Ned Armand, President of Eastern Point Trust Company on Oct 29, 2014

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Trusts are not just for the wealthy and there are many reasons why disbursing your final estate to your heirs through an Inheritance Trust is preferable to a Will.


 

What is an Inheritance Trust?

An Inheritance Trust is an irrevocable trust and is like a Will, in that it allows you to stipulate who receives your final estate and in what proportion. However, unlike a will, the Inheritance Trust also allows you to set rules about “when and how” the assets you leave behind may be used. For example; you may design the trust to limit the use of assets to educational funding, 

he following are five of the most important reasons to consider a trust to manage your final estate, or for a first time home purchase, or to provide a series of scheduled income payments over time.

1) Control of Use

A Will provides no ability to control when or how the assets you leave behind are used. A trust allows you to set rules (terms and conditions) about when the heir(s) may receive the money and how the money may be used. Also, a trust can set bonus or penalty provisions to reward certain behaviors (i.e. getting married or obtaining an MBA). Additionally, a trust can include penalty provisions for unwanted behaviors such as substance abuse or criminal activity.

2) Protection from Claims of Ex-spouses

A trust also provides the ability to protect the assets you leave behind so that they are never subject to the claims of a current or future ex-spouse of the beneficiary. For the married or unmarried beneficiary, the assets in a trust are in effect an automatic prenuptial agreement as the assets are segmented, and cannot become community or marital property.

3) Creditor Protection

A properly designed trust can also provide creditor protection to both the beneficiary and grantor and thus prevent any current or future creditor from attaching the beneficiary’s inheritance.

4) Prevent Squandering of Inheritance

A recent T. Rowe Price study showed the average inheritance in America lasts only 90 days. A trust can prevent the beneficiary from economic folly that might otherwise occur by limiting access and restricting how the money may be used – something no Will can accomplish.

5) Multi-Generational Benefits

If your final estate is in a trust, it can be designed to benefit not only the current generation of heirs, but also the future generations of your heirs. Legacy provisions can provide for new family members to also benefit from your final estate – a feature that Wills are unable to accommodate.

Summary

Managing your estate in an irrevocable inheritance trust can provide benefits that cannot be accomplished in any other manner. The key for an effective trust is a well thought out trust design. There are now easy to use and cost effective online solutions available that can assist you in planning the disposition of your final estate and designing your trust. 

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Tags: Estate Planning, Irrevocable Trust, Inheritance Trust

Kiss Trust

Creating a Trust
Has Never Been Easier

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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