Trust & Estate Planning

Trust and Estate Planning


A trust is a legal entity where someone, who’s called the grantor, arranges with another person, who’s called the trustee, to hold property for the benefit of a third party, who’s called the beneficiary. The grantor names the beneficiary and trustee, and establishes the rules the trustee must follow in a document known as a trust agreement.

When you create a trust, you split the ownership of the trust property – legal ownership goes to the trustee and beneficial ownership goes to the beneficiary. That means that the trustee is legally responsible for managing the property according to the trust rules, and that the beneficiary receives the financial benefits, such as income, principal, and use of and enjoyment from the trust property.

A trust that you create while you’re alive is referred to as a living (or “inter vivos”) trust. A trust that is created upon your death (for example, under the terms of your will) is referred to as a testamentary trust.

If you have the right to change or end the trust anytime you want to, the trust is described as a revocable trust. If the trust cannot be changed or revoked, the trust is described as an irrevocable trust. A revocable trust generally becomes irrevocable when you die, since you’re no longer around to change or revoke it.

While we won’t go into great detail, revocable trusts are commonly used to plan for incapacity, and avoid probate. A trust avoids probate because the trust agreement itself determines what happens to the trust property upon your death. Irrevocable trusts, on the other hand, are commonly used for transfer tax planning and creditor protection.

Estate Plan

What is an estate plan? Simply put, it’s a map of how you want your personal and financial affairs to be handled in case of incapacity or death, and the subsequent implementation of the strategies that will fulfill those objectives.

Who needs an estate plan? Chances are, you do. You may think that estate planning is just for the wealthy, but it’s not. In fact, an estate plan may actually be more important if you have a smaller estate, because your final expenses will have a much greater impact on your estate and it’s more likely that your loved ones could suffer from a lack of financial resources. The fact is, without an estate plan, you can’t control what happens to your property if you die or become incapacitated.

Generally, people create estate plans because they want that control. They also want to make sure that their wishes are clear in order to avoid family disputes. In addition, they care about preserving their property for their loved ones and want to make sure that their loved ones are properly provided for.

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*Non-deposit investment products and services are offered through CUSO Financial Services, L.P. ("CFS"), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. Elevations Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members.

i Volatility is a statistical measure of the dispersion of returns for a given security or market index. Volatility measured by using the standard deviation between returns from that same security or market index. Commonly, the higher the standard deviation or volatility of the portfolio, the riskier the overall vehicle is. Read more: Volatility.

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