Primary Uses of Trusts

Trusts are deployed to achieve specific legal, tax, and administrative objectives:

Probate Avoidance

Bypassing the court system for real estate, closely held businesses, and taxable brokerage accounts.

Control Over Distributions

Conditioning distributions on age, educational milestones, or behavioral parameters.

Tax Mitigation

Leveraging irrevocable trusts to remove future appreciation from the taxable estate, utilizing the lifetime gift and GST exemptions.

Asset Protection

Shielding inheritance from a beneficiary’s creditors, divorcing spouses, or bankruptcy proceedings.

Charitable Planning

Splitting beneficial interest between charitable and non-charitable beneficiaries to secure income tax deductions and defer capital gains.

Match the structure to the objective rather than collecting trusts for their own sake. The dominant goal points to the vehicle:

Asset Funding Guidelines To make a trust effective, you must transfer ownership of your assets to the trust (a process called funding).

• Assets to Fund Into a Trust: Real estate (via a recorded deed), taxable brokerage accounts, closely held business shares, and valuable tangible personal property (via assignment of interest).
• Assets to Exclude From a Trust: Do not transfer ownership of retirement accounts (e.g., Traditional/Roth IRAss, 401(k)s) or Health Savings Accounts (HSAss) to a trust during your lifetime; doing so triggers immediate liquidation and ordinary income taxation. Instead, name the trust as a primary or contingent beneficiary. Similarly, do not place everyday vehicles or active checking accounts used for monthly expenses in the trust.