FREQUENTLY ASKED QUESTIONS

What is a trust?
A trust is an arrangement in which you transfer assets to a legal entity, the trust, created by a separate agreement. The trust is to be administered by a trustee (a trust institution such as ours or an individual) for a beneficiary (yourself or another person).

Is it difficult to set up a trust?
No. You would start by discussing your financial concerns and investment goals with us and with your attorney. Your attorney should prepare your trust agreement. You sign the trust agreement as creator of the trust, and we sign to indicate acceptance of the responsibilities you give us as trustee. Finally, you deliver the money or investments that you wish to place in trust. It's that simple.

What kind of investment performance should I expect?
That depends on the market conditions and your specific investment objectives. Historically, the average annual return from a balance investment program of stocks and bonds is somewhere around 8-10%. However, good performance isn't measured solely in percentages. What really counts is how well a trust investment program meets your goals, without taking more risks than you are comfortable taking.

Is my money safe?
Trust assets are safeguarded by periodic audit, both internal and external. In other words, the chances of anybody making off with assets from a fiduciary administered trust are extremely slim. And even if an unlikely mishap should occur, institutional trustees have the capital strength to make good.

Do I have enough money for a trust?
Many people still mistakenly believe that trusts are only for the very rich. Unfortunately, banks that cater to a very wealthy clientele reinforce this belief. We are not like that. The great majority of our clients do not classify themselves as rich; they don't have multi-million dollar trusts. Whether you just sold your business for a great deal of money or need to safeguard a modest retirement nest egg, you should consider our trust services. There are no minimums with LTC.

Why should I pick a trust institution as trustee?
In addition to possessing financial strength and professional investment capabilities, we know how to take care of all trust and investment details. (Astonishingly, a lot of do-it-yourself trusts prove worthless because people never do the paperwork necessary to fund their trusts.) We also offer extremely flexible and responsive services. For example, some trust clients like to research investments for themselves, while others leave the job to us or have us submit periodic recommendations.
What's more, in the trust agreement, a client can authorize us to provide full personal financial management service in the event they ever become incapacitated. With a well-planned trust and a reliable trustee, the need for a court-appointed conservator or guardian can usually be averted.

Is a trust expensive?
No. Clients often find that our annual charges as trustee are actually less than they were previously paying for investment advice or mutual fund services.

How does a trust avoid probate?
When someone dies, his or her will must be probated and proven valid. Loosely speaking, the entire process of settling an estate controlled by will (or distributed under the laws of intestacy when there is no will) is referred to as "going through probate."
Because a living trust is a separate legal entity, assets that have been placed in the trust are not subject to probate when the creator of the trust dies. As a result, the directions contained in the trust agreement can be carried out without undue delays. Also, the terms of a living trust agreement generally remain private, unlike the terms of a person's will, which become public record once the will is probated. Some people consider estate-planning privacy to be the major benefit of avoiding probate.

Does a living trust save estate taxes?
Although assets placed in a revocable trust are removed from your probate estate, they are not removed from the assets that must be listed on your estate tax return if you leave more than *$1,500,000. Nevertheless, many spouses use a living trust to save estate taxes. With a revocable trust, a married person can shelter as much as $1,500,000 from unnecessary federal estate tax at the later death of his or her surviving spouse. The same tax savings can be accomplished by leaving a testamentary trust, but the difference is that assets left in a testamentary trust must first pass through probate.

Do I have to give up control if I set up a trust?
This is the question we hear most often, by far. No, you do not give up control when you create a revocable living trust. You keep as much control as you want. After all, it's YOUR trust. Typically, the creator of a living trust stays in charge by retaining the power to do one of the following:

- Take his or her business elsewhere by changing trustees.
- Withdraw trust assets.
- Change instructions to the trustee by amending the trust agreement.
- Cancel the trust altogether.

Remember, flexible living trusts allow you to keep control. It is sad to think that some men and women will never take advantage of living trusts because they fear they would be giving away control of their assets. To find out how our trust services can help you take control of your financial future, call Bonnie Guinn, our trust specialist, at (502) 637-1949.