Understanding Trust and Estate Planning

Understanding Trust and Estate Planning

Estate planning is an important part of your retirement, especially if you want to have control over how your assets are handled and who they will get passed on to.

A beginning step in estate planning is creating a trust. A trust is a documented agreement that spells out rules you want followed for assets left behind, that will be held in “trust” by your beneficiaries.

There are a few common reasons behind creating a trust: to reduce tax liability, avoid probate or protect specific property in your estate.1

Taxes will be taken out of a trust but according to which type of trust you choose. This gives you control over when and how they will be taken. A trust will help minimize the probate process. This ensures that your assets are distributed without interference from a court. Probate can also cost between 5% to 7% of your estate.2 A trust also helps keep your trust matters private because probate puts your assets on public record.

If a well-structured trust is in place, it will tell which parts will go to beneficiaries and/or what parts should be invested into growing wealth. You can also set up specific disbursement details, like having the trustee distribute certain amounts until the beneficiary comes of age.

The trust creation process will include: naming your trustee, naming the beneficiaries and deciding how you want your assets to be dealt with. This involves paperwork and a fee to get processed.

There are different kinds of trusts to choose from. Here are a few types to know when looking into trusts. The two most basic options are: a living trust and a testamentary trust. A living trust is set up by a living person. A testamentary trust is created in a will and effective only after the person’s death.3

Each trust provides different specifications to meet different needs. Within living trusts, you can choose it to be revocable or irrevocable. Revocable allows you to maintain control and make changes at any time. In irrevocable trusts, the assets are not controlled by you because beneficiary consent may be required. Yet, appreciated assets in an irrevocable trust aren’t subject to estate taxes.

There are also other types of trusts that are for specific circumstances. It will help the process go smoothly if you choose to receive financial consulting and hire an attorney. These two components will assist you in making the right decisions for your needs.

Deciding how to protect your assets is important when estate planning. If you plan on leaving assets behind to your beneficiaries you should decide what type of trust would be most beneficial for you. Our team at Miramontes Capital wants your estate planning to work for you. Consult with one of our financial architects to help define your options.


1. “What is a trust?” Estate Planning for Dummies. http://www.dummies.com/personal-finance/estate-planning/what-is- a-trust/. Web.
2. “Estate planning: Types of trusts.” CNN Money. http://money.cnn.com/pf/money-essentials-trusts/index.html. Web
3. “What Kinds of Trusts are there?” CNN Money. http://money.cnn.com/retirement/guide/estateplanning_trusts.moneymag/index2.htm. Web

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FOR MORE INFORMATION REGARDING ESTATE PLANNING CONTACT MIRAMONTES CAPITAL.

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Miramontes Capital is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Miramontes Capital and its representatives are properly licensed or exempt from licensure. This blog is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Miramontes Capital unless a client service agreement is in place.



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