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Care in verbiage and discretion urged for trusts

Floridians concerned about estate planning have many options to consider, including various trusts. In times past, trusts were considered to be only useful for the very wealthy but have become more common for a wider audience in more recent years. They can be set up as part of an overall estate plan that may include a living will, a health proxy, a power of attorney and more. The need to preserve assets and protect survivors after the loss of a loved one make trusts one of today’s most beneficial strategies in planning for the future.

There are many components of trusts and decisions that must be made when they are initially drawn up. Tax implications and any ongoing rights or claims to the trust are typically high on the list, especially for complicated estate planning situations. A recent news article discussed various terminologies and delineations regarding the discretion that can be granted to a trustee that can have direct impact on both of these issues.

Discretion is often allowed for a trustee to either pay or distribute income to a beneficiary and whether or not the trust directs income to be paid or accumulated alone will affect whether or not the IRS considers the trust a simple or a complex one. Another area of concern is regarding the payment of principal to a beneficiary and how this may be directed. The government will look very differently upon a trust that says a trustee may provide payment for certain uses than it will a trust that says a trustee shall provide such payment.

People who are interested in drafting estate planning documents may take the time to discuss their situation with a lawyer experienced in these topics. This can be a helpful way to preserve future trust assets for loved ones.

Source: WealthManagement.com, “Estate Planning Shades of Grey,” Joseph C. Mahon, December 11, 2013.

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