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Trust Advantages

There are some significant benefits to establishing a trust. Your Dunham Trust Company trust officer can provide you with complete details of how each advantage might apply to your unique situation and needs while determining what strategies are right for you in building a lasting legacy.

Asset Protection
In simple terms, assets transferred to a trust no longer form part of a grantor's property and, in most instances, cannot be seized if a grantor falls into financial difficulties.

Asset Preservation
Preserving and increasing family assets in a trust serves individuals who wish to ensure that accumulated wealth is not divided up amongst heirs but is retained as one fund to accumulate further assets with provisions for payments to members of the family as the need arises and save for later generations.

Tax Planning
Assets transferred into a trust are no longer considered as belonging to the trust grantor. As a result, income and capital gains generated by trust assets are taxed according to the rules governing the legal owner - the Trustee. Inheritance tax would therefore be eliminated because the Trustee would continue in existence despite the death of the grantor. A correctly structured and administered trust should produce substantial savings in income tax, capital gains tax and inheritance/estate tax.

Avoid Probate
The death of a head of family can result in major disruption of a family estate, whether or not there is a will. In most common law jurisdictions, the estate must go through the probate procedure with possible added delay, expense and publicity. Probate can be avoided by establishing a trust because the death of the trust grantor will not affect trust property, which will continue to be held and managed in confidence by the trustee.

Probate is a public procedure. The IRS requires a complete list of assets valued as of date of death to assess any estate tax due. This payment of taxes and ceditor bills must be completed before any distribution of assets takes place in a probated estate. This procedure is unsuitable for people who wish to keep the details of their assets confidential. The transfer of assets via a trust generally curtails estate taxes and keeps details of trust assets confidential.

Estate Planning
Many people choose to make arrangements for the transfer of assets to their heirs, such as providing a source of income, but not capital, for a surviving spouse for life, making provision for the education of children, though not letting them have access to capital until later on in life, or providing a fund to protect family members in the event of sudden illness or other calamities. These are just a few examples. A trust is a flexible tool for making arrangements of this kind.

Special Needs
A trust provides a vehicle by which a person can provide for someone who may be unable to manage their own affairs, such as young children, the elderly, the disabled or persons suffering from debilitating illness. These trusts require a high degree of specific management to make sure that the trust benefiary does not forfeit access to SSI, Medicare, Medicaid and other government services and assistance.

Business Preservation
An entrepreneur who has built a business is often concerned with its ability to continue after retirement or death. A trust may be used to prevent the liquidation of a family company and to ensure that the individual's wishes are observed. These might include provision for payments to be made to members of the family from dividend income, with trustees retaining shares and keeping the company running except in special circumstances justifying sale of control or liquidation.

A Discretionary Trust can provide a system of management of property capable of adapting as circumstances demand. No beneficiary has any fixed or absolute interest in Discretionary Trust assets. Instead, the trust grantor may nominate a class of beneficiaries and the trustee is given wide discretionary powers of whether and to whom trust assets are distributed. Beneficiaries only have a contingent interest and therefore avoid any tax liability until such time as a distribution is made.

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