Types of Trust Services Offered
Preserving Your Family's Assets
Estate planning is much more comprehensive than dealing with issues of death and taxes.
The following fictitious examples may spur your own thinking about how trust planning might help you meet your own financial goals.
GOAL: Worry Free Financial Management
Sam and Janet are ready to live the "good life." They want freedom from financial worry, and they have enough wealth to make that happen. Janet has lined up a series of cruises and other vacations that she wants to take. When they are away, the couple will need someone to manage their finances. And they also are concerned about the possibility of incapacity. What happens to the financial management should one of them fall seriously ill?
SOLUTION: A Living Trust
Our most comprehensive and versatile financial management service is the revocable living trust. We'll help Sam and Janet develop an investment management plan, and we'll implement that plan. We provide continuous portfolio supervision, distributing or reinvesting trust income as directed. This service will not be interrupted should the couple decide to extend a European trip, should they plan to divide their time between several vacation homes, or in the event that one of them suffers a serious medical setback.
GOAL: Capital Protection and Growth
Allison has just learned that she'll be receiving an inheritance from her Aunt Julia. This will be a serious sum, one that is large enough to benefit from active management, but not so large that Allison can quit her day job. She doesn't have the time to learn to be an investment manager, but wants to maximize the opportunity given to her through this inheritance.
SOLUTION: An Investment Management Account
Our investment advisory and investment management services provide a practical solution to this dilemma. The officer assigned to Allison's account will work with her to establish an investment strategy suited to her goals and circumstances. Decision making and implementation of the investment plan can be delegated to us, should Allison choose to do so. We'll review the account with her on a regular basis to monitor progress toward her financial goals.
GOAL: Preservation of Tax Deferral
Mark's career has involved several job changes, and another one is looming. The new position will be challenging and rewarding, but he has one important concern. What should he do with the six-figure payout that he'll receive from his current employer's 401(k) plan?
SOLUTION: An IRA Rollover
A direct transfer of the 401(k) money to an IRA Rollover will preserve full tax deferral for Mark's retirement money. We'll also help him to develop an investment plan for the IRA that takes into account his risk tolerance and other financial resources.
GOAL: Protect a Surviving Spouse and Eliminate Estate Taxes
Rob and Laura have an estate that's worth about $2 million. Their investment assets are managed by us today in a living trust. Rob wants to make certain that Laura will continue to enjoy peace of mind provided by the trust service, and that the couple's assets will pass to their children after their deaths with minimal tax consequences.
SOLUTION: Marital Deduction and Credit Shelter Trusts
A two-trust plan is the most common approach today for bringing estate taxes under control and maximizing the financial assets available to the family. Rob and Laura would choose a marital deduction trust which provides lifetime income for a surviving spouse, and the trustee can be directed to invade the trust in the event of a financial emergency. Then based on today's federal estate tax law, to control taxes at death, a credit shelter trust is established to escape estate taxes at the surviving spouse's eventual death.
GOAL: Protect a Child's Inheritance from Creditors and Themselves
Richard likes his son-in-law, Fred, but knows the young man has had trouble with credit cards and with holding a long-term job. Richard is afraid that if he gives his daughter, Claire, her inheritance outright, Fred may misuse it. Or worse, in the event of a divorce, Fred may claim part of it.
SOLUTION: Spendthrift Trust
By using a trust to provide for Claire's inheritance, Richard will protect the money from the claims of creditors as well as from Fred. In addition, he'll be providing the couple with professional investment management assistance for the money. Richard also can specify in the trust how the trust principal might be used to benefit his grandchildren.
GOAL: Medicaid Planning
Grandma is an Illinois resident and needs professional nursing care services. She would like to qualify for Medicaid benefits, but does not meet the impoverishment standard. Is there a way to preserve Grandma’s estate and still meet the impoverishment standard to allow her to qualify for Medicaid benefits?
SOLUTION: The OBRA Trust
American Bank & Trust Company can hold Grandma’s modest estate in a special OBRA Trust which will allow her to qualify for Medicaid benefits and at the same time have financial resources available for things that Medicaid does not cover, such as hair cuts or a room upgrade.
We have just scratched the surface of what can be accomplished with a trust. To learn more about these ideas, or to explore other trust-based planning approaches that you've heard about, we invite you to talk to one of our Trust Professionals at American Bank & Trust to discuss your needs and concerns or click here to send us a message.