Estate Trust Funds
For those families with very large estates, particularly those with assets that amount to greater than $5 million, a family trust can be beneficial because they can be used to reduce the overall size of the estate. This can be important for federal taxation purposes.
When families begin planning for a trust fund they must know that a trust involves three people, which includes the grantor, the trustee, and the beneficiary. The grantor is the person who creates and funds the trust, while the trustee is the person who acts as the administrator of the trust. In the end, the beneficiary is the person who receives the funds.
A family may be interested in setting up a trust because they can be used to transfer assets from the income tax bracket of the parent to the child's tax bracket. Family trusts are also attractive because they are highly flexible. They offer unrestricted investment options and the grantor retains the ability to change the beneficiary. The trustee can also control when the beneficiary receives the funds.
Whether to create a fund for college or to provide income for a child, a family trust can be created for any number of reasons and can be valuable for children and parents.
Those in Connecticut and elsewhere who are interested in family trusts may benefit from consulting with an experienced estate planning attorney. Planning an estate or trust fund can not only be confusing, but intimidating as well. An attorney may be able to determine the best plan of action for each family's specific situation.
Source: Fox Business, "How to Pay for College: Creating a Family Trust," Emily Driscoll, Oct. 10, 2011
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