When you are making your estate plan, you may want to include a trust. Many people make their estate plan because they want to leave some of their assets to their children, who will later become the beneficiaries. In your estate plan, you must ensure that the trust document highlights how you want the trustee to distribute your funds to the beneficiary.
You need to clearly mention how you want your funds to be distributed because if the trustee pays out excess money, a lot of money will be lavished. You will, therefore, lose more money in a divorce action. On the other hand, if the trustee pays out little money to the trust beneficiaries, they will have little money to spend.
Trust should direct the trustee about the distribution of trust income to beneficiaries. One problem with trust is that the trustee may define the trust income in various ways. If you want to avoid this problem, you need to ensure that you clearly define how you want the trust income to be paid to each trust beneficiary in the trust documents.
With the recent low earnings on fixed-income investments, it will not be adequate to pay out dividends and investment interests. You can avoid this problem of fixed income investment by instructing the trustee to use a “total return unitrust” approach. The total return unitrust approach directs the trustee to pay a certain percentage of the trust principal to the beneficiary every year. Using this approach, you can instruct the trustee to pay about five percent of the principal to the beneficiary each year, even if he needs to sell some assets to raise these five percent.
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I grew up in Dubuque, Iowa, where I learned the concepts of hard work and the value of a dollar. I spent years in Boy Scouts and achieved the honor of Eagle Scout. I graduated from Iowa State University and moved to Chicago and spent a few years managing restaurants. I then started working in financial services and insurance helping families prepare for the high cost of college for their children. After spending years in the insurance industry, I moved to Arizona and started working with Federal Employees offing education and options on their benefits. I became a Financial Advisor / Fiduciary to further help people properly plan for the future. I enjoy cooking and traveling in my free time.
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