Three ways trusts can help — even if you are not rich

Trusts can be an efficient way to provide a financial legacy to the people and causes you care about. Plus, there are other benefits you may not have considered, according to Bank of America. 

Many people assume that trusts are only for the very wealthy. That is not the case. “Trusts are tools that give you very specific control over how your wealth is used and protected, no matter how much money you have,” says Kevin Hindman, managing director of Retirement & Personal Wealth Solutions at Bank of America. 

Broadly speaking, you can think of a trust as a sort of container that holds your assets — from investments and real estate to even a private business. With the help of a lawyer, accountant and financial advisor, you establish the rules for what happens to the assets in your trust and who will manage it, either during your lifetime or after you die, and name beneficiaries of your choosing. You can set up a trust while you are alive to provide for the management of assets in the event that you or a loved one becomes incapacitated — a valid concern given our increased life spans compared to decades ago and the prevalence of conditions like Alzheimer’s that can require costly long-term care. But trusts are also useful in helping ensure that your money is distributed as you wish after you are gone. Here are three potential benefits to consider. 

1. More control. You can use a trust to set rules or conditions about when and how your beneficiaries will receive their inheritance. For instance, if you prefer that your son complete a professional degree or pursue a career rather than buy a sports car, you could establish a trust that sets a specific age or milestone before the money becomes available, such as graduating from law school or turning 30. 

Trusts also can help you reach charitable goals or improve tax efficiency. By setting up a charitable trust, for example, you can support philanthropic causes now or in the future while also providing an income stream for you or your heirs and minimizing gift or other potential taxes.  

2. A measure of protection. Trusts can help ensure that your children, grandchildren, cherished friends or other loved ones receive their inheritance if you divorce or remarry. They also can help shield assets if you or your heirs are in professions that come with a high risk of litigation. By making a trust the beneficiary of your life insurance policy — or putting the policy within a trust — you can dictate how the proceeds can be spent, adding another level of protection for your heirs. A trust can also be used to help keep a business in the family or provide for a child with special healthcare needs.  

3. Investment guidance. A trust allows you to designate a professional money manager, so if loved ones are unable to handle investments, family property or a business, they may be protected from costly mistakes. The same goes for heirs who are too young to invest and manage an inheritance. For the beneficiaries of your trust, the financial stewardship you put in place can also help ease the transition to managing the assets. 

Trusts are just part of a larger plan you can put in place — and adjust over time — to establish your legacy and help protect the financial future of those you love.

For more information, contact Merrill Financial Advisor Don P. Martone of the Hughes Landing office at (281) 882-4818 or don.martone@ml.com.

Investing involves risk. There is always the potential of losing money when you invest in securities. Past performance does not guarantee future results. Asset allocation, rebalancing and diversification do not guarantee against risk in broadly declining markets.

Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.
 

This material is not intended as a recommendation, offer or solicitation for the purchase or sale of any security or investment strategy. Merrill offers a broad range of brokerage, investment advisory (including financial planning) and other services. Additional information is available in our Client Relationship Summary. 

This material does not take into account a client’s particular investment objectives, financial situations, or needs and is not intended as a recommendation, offer, or solicitation for the purchase or sale of any security or investment strategy. Merrill offers a broad range of brokerage, investment advisory (including financial planning) and other services. There are important differences between brokerage and investment advisory services, including the type of advice and assistance provided, the fees charged, and the rights and obligations of the parties. It is important to understand the differences, particularly when determining which service or services to select. For more information about these services and their differences, speak with your Merrill financial advisor.

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Merrill Lynch Wealth Management - Don P. Martone, CFP®, CPWA®, ChFC®, CLU®

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