The Elder and Disability Law Firm, APC June 14, 2018

California residents can use trusts as a part of their estate plan to ensure that certain assets are managed according to their preferences. The person they select to oversee the trust should be aware of exactly what the role entails.

When it comes to distribution, trusts make a distinction between principal and income. Many trusts, particular those that were established years ago, permit the distribution of income to one person at a time and allow the principal to be issued to the same person at another time or to a different individual.

Cash can be used to make the payments of income and the distributions of the principal. The trustee will also have the authority to distribute securities in addition to cash. Individuals involved with the planning of an estate and the creation and execution of wills and trusts should take care to understand the terms attached to the legal devices. Assumptions regarding the distribution provisions should be avoided as there is no such thing as a typical distribution provision.

The fiduciaries of trusts should obtain professional financial assistance regarding the investing of trust assets if they have no financial experience. An experienced investment advisor can suggest investment strategies and recommend assets to sell in order to have cash for expenses, gifts and taxes. The advisor may also explain how capital gain and income taxes can be minimized. It is important to obtain the necessary financial counsel regarding the investments of the trust as heirs can claim that the fiduciary is in violation of the law pertaining to trust investments or failed to invest wisely.

An attorney who provides trusts and trust administration services may advise clients which types of trusts could be best suited for their assets and estate planning goals. The attorney may draft provisions that adhere to the client's wishes on how the assets are to be managed.

Related Posts: Estate planning for chronic illness, Using a trust, BIG NEWS ON TRUST TAXATION, When trusts are better than wills

Share on: