Trust Fundamentals (A 30+)

Trust Fundamentals (the musical). Lyrics by Tim Griffin,
4/4 time, 80 bpm.
May be sung to the groove of “Alexander Hamilton” by Lin-Manuel Miranda,
but let’s try to make it sound like an “homage” rather than a “rip-off.”

How does a multi-millionaire, growing in maturity
Secure and confer a long-term financial legacy?
Maybe for philanthropy or aid to their descendants
Without turning them into degenerate dependents?

Welcome to the world of trust fundamentals
Where client communications and relations are essential
As you gently assist, assigning asset allocations
To maximize the benefit for future generations.

The first question is the client’s intention:
Are they funding a foundation for a philanthropic intervention
Or just a trust for their grandkids’ tuition?
Set the goals, then let those define the mission.

You’ll need to know every asset that is owned by
The client, its value and how much it has grown by.
Understanding all the ownership arrangements
Will help you to avoid future family estrangements.

Sit the client down stat and state the facts:
The greater the estate, the greater the estate tax
Now’s the time to plan philanthropy
And gifting between spouses is unlimited and tax-free.

A trust is great to protect assets from probate
Or move them altogether out of the estate, but don’t wait
This may come as a bit of a shock: you’ll
Find it’s still in the estate unless the trust is irrevocable

Next let’s unpack some facts about the gift tax
The annual gifting exclusion really kicks ass
It isn’t huge but it’s definitely worth a mention
‘Cause it does not apply to the lifetime exemption.

Did I just mention the lifetime exemption?
It’s how you pass assets tax-free to future generations
But the taxable estate includes gifts above the annual
So start planning now to keep the taxes minimal.

Different kinds of trusts may be great
But learn your local laws because they vary from state to state
One difference you will definitely see:
Some states use common law, some community property

But above all else, your top priority
Must be to see what your client can do comfortably
Any CFP can get assets dispersed
But the best plan puts the client’s needs first.

Word to the fiduciary.