Be prepared, know the basics.
If you are thinking about opening a trust account, it is best to seek trust advice from the experts first.
Trust experts can include financial professionals such as your accountant, attorney or banker. It is in your best interest to be certain that the financial professionals you do chose to work with knows trust law.
Before your meeting though you should know a little bit about trust law so that you can understanding what the financial professional is talking about. By knowing the basics of trust accounts you can ask the experts the proper questions as they relate to your personal situation. Read below about the basics of trust accounts.
A Few Basics Of A Trust Account
- Property within a trust account is managed by one person for the benefit of another person.
The Trust Agreement
- To set up a trust account, a trust agreement must be established.
- The owner of the trust account is called the trustee.
- There are revocable trusts and irrevocable trusts.
- Each type of trust is taxed differently. Be sure to consult your accountant about the taxation of each.
- Irrevocable trusts cannot be changed, altered or terminated in any way once they are established.
- If you don’t like the beneficiary you have chosen, oh well.
- The inability to make alterations to an irrevocable trust is such an important concept and one that often gets confused or overlooked.
- So make sure you thoroughly understand the consequences before you establish an irrevocable trust.
- Revocable trusts give the owner more control than an irrevocable trust.
- With a revocable trust the owner has the ability to change or cancel the beneficiary.
Your financial professional should have additional information for you about trusts. We have just tried to get you to understand the basics. Work with your accountant, banker and attorney; each professional may present the concepts to you in a different manner.
If your accountant, banker or attorney does not understand the basics, find a different one to work with; that’s how important it is to work with a knowledgeable financial professional. It’s okay if one of those professional doesn’t know trust law, that doesn’t make them a bad professional; not everyone specializes in trust law.
If you do establish a trust be sure to notify your home insurance agent. If you own a business, you may also need to notify your commercial insurance agent, depending on how the business is set up.