Part 36
Thomas M. Boles, 33, G.C.

The most popular trusts used today provide many benefits.

Please Note: This information is distributed with the understanding that the author is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expertise is required, the services of a competent professional should be sought. From: A Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers.

Many have come into our store and found wonderful buys. But, believe it or not, I’m still getting quite a few inquiries about the fundamentals of trusts and what they are. Therefore, with your kind indulgence, I would like to review briefly why you should have a trust, and what are the most popular trusts in use today.

A trust is a legal document that can be used to achieve a variety of financial and personal objectives. It describes an agreement in which one person grants property to another to manage or use for the benefit of another person or institution. Trusts may be established by a will or placed into effect during the trustor’s lifetime. Due to their flexibility, trusts can serve a wide range of needs.

Increasingly, people are using trusts to simplify their lives, manage their investments, plan for their retirement, and control the final disposition of their property. A trust can relieve you of the burden of managing your investments. Trusts can also provide security for your family members or friends unable to manage assets themselves, and they can be used to preserve your assets through the efficient use of tax deductions and credits.

All trusts are governed by a trust agreement (or declaration of trust) describing the trust’s objectives and instructions. This agreement should itemize the property placed in the trust, dictate how it should be managed, how its income and principal should be distributed, and when the trust is to terminate. Trusts can last for a specified number of years or for the lifetimes of the beneficiaries. Virtually any type of property can be placed in a trust, including stocks, bonds, cash, real estate (raw land, income property, or businesses), personal property, and life insurance.

The most common trust used is a Living Trust. The living trust is a type of inter vivos trust that many people use either as a substitute for a will or in addition to a will. Living trusts are usually revocable, but in some circumstances may be irrevocable. Revocable trusts can be changed or terminated at any time, whereas irrevocable trusts preclude any change to the trust agreement. You can create a trust that enables the trustee to fulfill your objectives under changing circumstances, such as the disability of the trustor or beneficiary.

While offering flexibility, control and privacy, living trusts can also help you to take advantage of substantial tax benefits. For example, some trusts can be used to preserve the estate tax credit for each spouse, which can result in overall tax savings while ensuring that significant assets are available for the surviving spouse.

For some people, living trusts offer another attractive feature: avoidance of probate. Unlike wills, living trusts do not go through probate and are, therefore, not considered public records which means that details of your trust will remain private. However, it is important to note that avoiding probate is not the same as avoiding taxes, and in some cases probate may be advantageous. You should consult your attorney to determine the most effective means of settling your estate.

Other very common trusts used today include: Annuity Trusts, Unitrusts, and Split-interest Trusts. Included there in are Charitable Remainder Trusts which I will discuss next month. So keep on reading. In the meantime, if you have any questions, please write or call. I’m ready to be of service to you. Which leaves my “ad” for this month to read:

Trusts have been used since ancient times; they’re just as good today as then.

For an investment of securities and/or real estate, please run a calculation and send it to me based on an investment of $__________. Assume the cost basis of the asset (what was originally paid, less depreciation) is $__________.

My birth date is _________________; My spouse’s is _________________.

Name ____________________________ Date _______________________

Address _______________________________________________________

City _________________________ State ________ Zip _______________

Send to: Scottish Rite Foundation, c/o Thomas M. Boles, 1761 East Woodcrest Avenue, La Habra, CA 90631-3260

The Scottish Rite Pooled Income Fund allows you and, if you wish, your wife and/or other beneficiary(ies) to receive a worry-free lifetime income as well as attractive tax benefits by joining the Fund via a financial gift to The Scottish Rite Foundation, S.J., USA. For more information call, 1-800-486-3331 or fax 202-387-1843.

Grand Commander Kleinknecht will personally respond to your inquiry. If he is not available, please leave your name and number, and the Grand Commander will return your call at his earliest opportunity. Through the Scottish Rite Pooled Income Fund, you can do well for yourself and your family while also doing good for others!