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Trusts & Investments

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Requently Asked Questions

Who does a trust benefit?
What are the duties of an executor?
When should I consider an estate plan?
Why do I need a will?
What is the difference between a living trust and a testamentary trust?
Does the FDIC insure trust funds?

Q: Who does a trust benefit?

A: Beneficiaries who are:

  • Minors or those who lack a certain level of mental maturity;
  • Individuals in ill health;
  • Those inexperienced in financial matters;
  • Individuals dealing with creditor judgments and;
  • Individuals surrounded by undue influence.

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Q: What are the duties of an Executor?

A: The responsibilities of an executor are to:

  • Arrange with your attorney the probate of your will;
  • Collect, inventory, value and protect your assets;
  • Manage your property, including your business during the settlement period;
  • Distribute your assets to your heirs as directed in your will;
  • Pay your estate taxes, expenses and debts and;
  • Prepare and file income tax and estate tax returns.

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Q: When should I consider an estate plan?  

A: You should consider an estate plan if:

  • You are 18 or older;
  • You have children;
  • You own a home or property;
  • You own a business;
  • Your estate is valued at $1,500,000 or more (in the year 2004 and 2005);
  • You anticipate inheriting money or if;
  • You donate money to charity.The 1st 1,500,000 of every estate is tax-free at the federal level, but beyond that tax rates can soar as high as 50%. Sometimes large inheritances, insurance settlements, or retirement plan payouts can push a taxpayer into a higher tax bracket.

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Q: Why do I need a will?   

A: You need a will so that you can:

  • Direct how your estate will be distributed;
  • Insure the security of your family;
  • Name the executor of your choice;
  • Name a guardian for your minor children;
  • Take advantage of estate tax savings opportunities and;
  • Avoid additional settlement costs and delays.

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Q: Difference between a Living Trust & a Testamentary Trust?  

A: A Living Trust:

  • Takes effect during your life;
  • Includes you as one of the beneficiaries and;
  • Is a private matter between you, the trustee, and the beneficiaries.

A: A Testamentary Trust:

  • Takes effect upon your death, as outlined in your will;
  • Does not include you as a beneficiary and;
  • Is a matter of public record and open to public inspection.

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Q: Does the FDIC insure trust funds?

A: Trust funds are normally invested in stocks, bonds and other income-producing assets, which are not bank deposits. As a result, FDIC insurance is limited to cash (up to $100,000) that is invested in  bank deposits, such as CD’s or income awaiting distribution.