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Preserve and Protect Your Wealth

Elvis Presley. John D Rockefeller. Walt Disney. J.P Morgan. Prince. All of these famous—and incredibly wealthy—people had something in common. They all died without a will in place.

The Cost of Procrastination
By not having a will, Elvis’ estate—which was worth over $10 million when he died—was reduced to just a little over $2.7 million. More than $7 million went to taxes and other costs. John Rockefeller’s estate was worth over $26 million; however, his heirs only saw a little over $9 million of that money. Over $17 million went to taxes.

Maybe you don’t have a million dollar estate, but the same principles apply. If you own property of any kind—a house, bank account, 401(k) plan, jewelry, car—you have an estate. And when you die, one of two things will happen: either you will have an estate plan in place and your assets will be distributed how and to whom you want; or the state will decide what to do with your assets, and will take a huge chunk of your life’s earnings in taxes, before distributing whatever’s left to your spouse or heirs. This process may be delayed in probate for months, even years.

Preserve and Protect Your Legacy
One way to ensure your estate is distributed how you wish, and avoid the delays of probate, is by establishing a trust. Whether you’re seeking to manage your own assets, control how your assets are distributed after death, or plan for incapacity, trusts can help you accomplish your estate planning goals. A trust allows you to preserve and protect your legacy for future generations, and to provide for a smooth transition of your wealth after you are gone.

What is a trust?
A trust is a form of property ownership where one party holds legal title with the responsibility and duty of managing the assets in the trust for the benefit of another party. A trust involves three primary parties:

  • Trustor, or Grantor – the person creating and contributing property to the trust
  • Trustee – the person or entity who manages the trust
  • Beneficiary(ies) – the person or persons designated to receive the trust

The power of trusts is in their versatility—many types exist, each designed for a specific purpose. Just as there are many different life situations, there are different trusts to meet a wide range of personal and financial goals. It takes very little time to set up, and you can have financial confidence knowing your loved ones will be taken care of after you’re gone.

Common types of trusts include, but are not limited to:

  • Revocable (Living) Trust. Allows for management of assets during life and after death to avoid probate. The trust can be changed at any time while the trustor/grantor is living. After death, all instructions set forth in the trust are carried out by the trustee.
  • Special Needs Trust. Provides financial support for a disabled or incapacitated family member without jeopardizing the individual’s eligibility for government assistance.
  • Life Insurance Trust. This trust enables the trustee to invest life insurance proceeds and administer the trust for one or more beneficiaries.
  • Spendthrift Trust. This trust provides structured resources for a person whom the trustor feels has poor judgment in regard to spending.
  • Credit Shelter Trust. This trust allows married couples to reduce or completely avoid estate taxes when passing assets on to heirs, typically their children.

Advantages of a Corporate Trustee
One of the difficult decisions when creating a trust is who to pick as your trustee, the person who will carry out your wishes after you’re gone.

Serving as trustee can be a difficult role for a family member, who may not be objective or may act in a manner that avoids conflict within the family. The trustee may be uncomfortable making decisions that might not be popular with your beneficiaries. For instance, giving more funds to a child that spends responsibly and less to one that is irresponsible with money. Plus, few family members have investment management skills or expertise in fiduciary law and practice.

A corporate trustee generally has the expertise and objectivity to follow the instructions laid out in the trust, and can make difficult decisions that might not be popular with your heirs or beneficiaries. A corporate trustee can also serve as a secondary trustee, in the event that the primary trustee you selected is incapacitated or otherwise cannot carry out the instructions set forth in the trust.

How to Get Started
To learn how trusts may fit into your financial plan, call Tower Wealth Management, the financial services group located at Tower Federal Credit Union, at 301-497-7062 or 866-56-TOWER, ext. 7062, or visit Invest at towerfcu.org.

Strategic Partnership with Members Trust Company
Tower Wealth Management has partnered with Members Trust Company to offer trust services to Tower members. Since 1987, Members Trust has provided trust services to credit union members. They provide a complete trust offering, along with highly-trained, licensed professionals.

Members Trust is owned by credit unions, with a local office in Fairfax, Virginia. The Fairfax office is staffed with an estate planning attorney and trust administrative staff, and is available to Tower members for face-to-face consultations. There are no fees for Members Trust consultations or future trustee appointments.

Non-deposit investment products available through Members Trust Company are not deposits of or guaranteed by the trust company, a credit union or credit union affiliate, are not insured or guaranteed by the NCUA, FDIC or any other governmental agency and are subject to investment risks, including possible loss of the principal amount invested. Members Trust Company is a federal thrift regulated by the Office of the Comptroller of the Currency.
This article is provided for informational purposes only and is not intended to provide legal or tax advice. For legal or tax advice, please consult an attorney and/or accountant.
Members Trust Company is not affiliated with Tower Wealth Management or LPL Financial. You are under no obligation to use the services of Members Trust Company and may choose any qualified professional to provide trust services.

Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Tower Federal Credit Union and Tower Wealth Management are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using Tower Wealth Management, and may also be employees of Tower Federal Credit Union. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Tower Federal Credit Union. Securities and insurance offered through LPL or its affiliates are:

Not Insured by NCUA or Any Other Government Agency Not Credit Union Guaranteed Not Credit Union Deposits or Obligations May Lose Value