Purposeful Planning: Trusts That Help Protect and Provide for What Matters Most
Trusts may serve as tools to align long-term intentions with legacy goals.
Over the course of time, individuals often look for methods to protect their assets and provide support for their family’s future. At Welch & Forbes, we recognize that trusts may be a prudent approach to guide how assets are managed and distributed for current and future generations.
A trust is an entity to hold assets—like your home, investments, or personal property—for the benefit of others. It is a legal structure employed to delegate the responsibility for managing and distributing assets according to your instructions. Trusts can also help minimize taxes and may reduce the cost and delay associated with probate court.
The formation of a trust strategy typically involves assistance from multiple professionals. Welch & Forbes portfolio managers can help identify goals and needs, assess alternatives, and coordinate with clients’ estate planning attorneys. The trustee(s) you appoint play key roles in managing the trust’s assets while upholding established goals, sensitive to family dynamics.
Trusts with a Primary Purpose – and with Flexibility
Trusts can be established with a primary purpose in mind, such as providing education support. A common scenario is when family members seek to learn about methods to save for future education costs. The following example is hypothetical and provided for illustrative purposes only. Mike and Jessica are clients who have young children. They are interested in saving for their children’s education but are unsure of which approach to use. With their Portfolio Manager, they start to explore options. The situation is a multigenerational family relationship in which parents, grandparents, and other family members are interested in contributing. The clients compare options such as a simple custody account, a 529 plan, and an irrevocable trust where education support is the priority.
Each approach has pros and cons. In this example, the choice is a trust because of the flexibility it can offer. Financial support for a child’s education is often a high priority for parents. At the same time, other priorities can develop that become more important than education. An unforeseen, non-reimbursable health care need is one example of a situation when a trust could shift priorities and provide aid. Additionally, a traditional college education may not be the best path for some young people after high school. The trustees can seek to adapt to changing circumstances to provide intended benefits with flexibility.
After close consultation with the parents, the trust is drafted by a third-party Trust & Estate attorney with specialized skills and experience. Welch & Forbes individual professional trustees are chosen for their independence, continuity, professional experience, and commitment to parental intent. No parent knows when their children will be ready to assume financial responsibilities and make prudent decisions with assets. In this instance, if assets remain unused for other needs, the trust continues until the child reaches the age of thirty. At that point, the assets could be distributed in a tax-advantaged manner, depending on the trust’s terms and applicable tax laws.
Trusts for Continuity of Asset Management
Another hypothetical example, provided for illustrative purposes only involves the establishment of trusts to ensure continuity of asset management in the event that one partner passes away. In this illustrative example, clients Rob and Sue, are retired with children and grandchildren and have a variety of trust instruments. Historically, one spouse is responsible for managing the family’s assets.
However, as Rob and Sue get older, they have concerns about what might happen if the spouse who manages trusts and finances predeceases the other. The goal is to ensure that the surviving spouse does not become burdened or overwhelmed in such a situation.
The couple turns to Welch & Forbes to review their circumstances, concerns, and options. In this hypothetical scenario, they consider appointing a professional trustee – such as a Welch & Forbes Portfolio Manager – to serve as a Successor Trustee. In this role, as Successor Trustee, the Portfolio Manager manages a trust if the original trustee passes away or is unable to continue to fulfill trustee duties. The Successor Trustee assumes responsibility for the trust to follow the terms of the trust according to the original intent.
In addition to serving as a Successor Trustee, a Welch & Forbes Portfolio Manager can serve as a Co-Trustee, sharing responsibilities with a family member. In these circumstances, a professional partner such as Welch & Forbes can help support oversight and continuity in the management of the trust.
Getting Started
Welch & Forbes offers trust management services grounded in neutrality, stability, and decades of experience in supporting families with the careful administration of their financial plans and legacies.
If you are considering whether a trust might be useful for your situation, the team at Welch & Forbes would welcome the opportunity to review it together with you. Our Portfolio Managers can work closely with you and your other advisors—such as estate planning attorneys and tax professionals—to determine the right approach to your long-term goals. Please contact us to discuss your needs.
Disclosure: The client stories described herein are hypothetical and provided for illustrative purposes only. These examples may not be representative of the experience of all clients and are not a guarantee of future performance or success. Past performance and case examples are not indicative of future results.
The information contained herein is believed to be reliable at the time of publication but is not a representation –expressed or implied –as to its accuracy, completeness, or correctness. This communication does not constitute a recommendation or solicitation to purchase or sell any securities or investment services.
Readers should not infer or assume that any strategies or services described were or will be profitable or suitable for their individual objectives, financial situation, or needs. The implementation of any financial strategy should only be undertaken in consultation with your attorney, tax advisor, and investment advisor.