Financial Literacy is Important, Trust Us
It’s National Financial Literacy Month and Mike Hines sat down with Judy Ross to discuss what might be of particular interest to our clients.
Mike: There are so many topics we could discuss when it comes to financial literacy, from financial and estate planning to business succession and the coming tax changes. Is there one topic where you think our clients could benefit most by increasing their financial literacy?
Judy: One area that both interests and confounds some clients is trusts. When to have a trust, when not to have a trust and how trusts operate.
Mike: A trust is really just a tool designed to accomplish a specific goal – so think of a trust like a wrench. As you know, there are all kinds of wrenches: the monkey wrench, adjustable wrench, socket wrench, Allen wrench, etc. Each of these wrenches has a specific purpose just like there are different types of trusts that serve specific goals.
Judy: And there are all kinds of trusts: revocable and irrevocable trusts, intentionally defective grantor trusts (IDGTs), asset protection trusts, testamentary trusts, charitable trusts, generation-skipping trusts and more.
Mike: Exactly. Knowing which trust best suits your needs is the key to protecting your wealth and ensuring your money gets handed down from generation to generation in your family – and not someone else’s.
Judy: Trusts can also be used as a methodology for avoiding probate – or to potentially save on some significant estate tax bills.
Mike: One thing people should know is that a trust can be tailor-made to do whatever you want.
Judy: Right again! Increasing your financial literacy about trusts, especially with certain tax laws to sunset in 2025, could save your family a lot of money – and a lot of heartache.
Mike: So if you have a trust, it’s important every few years to review them with your attorney or financial advisor. Circumstances change. Family dynamics change. Tax laws change. So, it’s important to review and make necessary updates.
Judy: Exactly. The only constant is change. Please know that your CPC team will work with you and your attorney to see if you need a trust and if so, how do you get the most out of your trust.
Mike: Thanks, Judy. Understanding how trusts work and which trust you should have could save you millions – literally.
