Empowering Your Estate

In estate planning, the choices you make today can shape the future for generations to come. A living trust is a powerful and versatile estate planning tool that can provide individuals with greater control and flexibility over the management and distribution of their assets. 

Also known as an inter vivos trust, a living trust operates during your lifetime, allowing you to maintain control and adapt your plans as circumstances change. 

Whether you’re just beginning to explore your estate planning options or are further along, read on to learn how a living trust can safeguard your legacy, streamline asset distribution, and provide a lasting impact on your loved ones’ financial security. 

Key parties involved in a living trust

Before we get started though, let’s go over some terminology that we’ll use going forward. A living trust involves several key parties:

• Grantor: The person who establishes the trust and transfers their assets into it.
• Trustee: The individual or entity responsible for managing the trust assets. The grantor often serves as the initial trustee, retaining full control over the assets during their lifetime. Successor trustees are designated to take over management upon the grantor’s incapacity or passing.
• Beneficiaries: Those who will receive the trust assets according to the grantor’s instructions. Beneficiaries can include family members, friends, charitable organizations, or even the grantor themselves during their lifetime.

The basics of a living trust

So, what is a living trust? A living trust is a legal entity that holds and manages a grantor’s assets during their lifetime and facilitates the seamless transfer of those assets to designated beneficiaries upon the grantor’s passing. 

Unlike a will, which only takes effect after death, a living trust is active from the moment it is created, allowing for immediate asset management. The assets held in a living trust do not go through probate (the court-supervised process of validating a will and distributing assets). As a result, living trusts offer greater privacy and efficiency in estate distribution.

Types of living trusts

Living trusts can be categorized into two main types: revocable and irrevocable.

As the most common type, a revocable living trust allows the grantor to make changes or terminate the trust at any time. It provides maximum flexibility, enabling the grantor to retain control over the assets and amend the trust’s terms as life circumstances change.

An irrevocable living trust, on the other hand, cannot be modified or revoked without the consent of the beneficiaries. While irrevocable trusts offer less flexibility, they provide significant asset protection and can be beneficial for tax planning purposes.

Do I lose control of my assets with a living trust?

No, you do not lose control of your assets when you create a living trust. In fact, one of the primary advantages of a living trust is that you retain full control over your assets during your lifetime as the grantor and trustee of the trust.

When you establish a revocable living trust, you transfer ownership of your assets into the trust’s name, but you maintain control as the trustee. As the trustee, you have the authority to manage and use the trust assets as you see fit, just as you would if they were not in the trust. You can buy, sell, or change the assets, and you can also amend or revoke the trust entirely if you wish.

The living trust becomes especially beneficial in the event of your incapacity or passing. If you become unable to manage your affairs, a designated successor trustee can seamlessly step in and take over the management of the trust assets according to your instructions. This ensures that your assets are managed according to your wishes and helps avoid the need for a court-appointed guardian or conservatorship.

What are the benefits of establishing a living trust?

Living trusts offer a wide array of benefits that make them a highly appealing option in estate planning. One of the most significant advantages is probate avoidance. By utilizing a living trust, assets can seamlessly pass to beneficiaries, without the need for probate—saving time, money, and privacy concerns. Unlike wills, which become public record during probate proceedings, living trusts provide a higher level of confidentiality, keeping your estate details out of the public eye. 

Living trusts ensure continuous asset management during incapacity, as designated successor trustees can smoothly step in to manage the trust without court intervention. For those with special needs beneficiaries, living trusts can incorporate provisions to provide ongoing financial support without jeopardizing their eligibility for government assistance. Additionally, irrevocable living trusts can offer asset protection, shielding your wealth from potential creditors and lawsuits, while also facilitating strategic tax planning. 

Furthermore, the seamless transition of asset management to successor trustees ensures that your estate remains secure and efficiently managed in the event of your passing or incapacity. The comprehensive benefits of living trusts make them a versatile and indispensable tool for creating a robust and lasting estate plan.

How do I fund a living trust?

To ensure a living trust functions as intended, it must be properly funded. This involves transferring ownership of assets, such as real estate, bank accounts, investments, and other personal property, into the trust’s name. Funding a trust requires updating the titles or beneficiary designations of these assets to reflect the trust as the owner or beneficiary. Assets inadvertently left out of the trust may still need to go through probate, underscoring the importance of a comprehensive funding strategy.

Does a living trust mean I don’t need a will?

While a living trust offers numerous benefits in estate planning, it is essential to remember that a will still plays a critical role in handling assets not transferred to the trust and addressing any remaining matters. Having a will allows you to dispose of any assets that were not placed in the trust, ensuring that all your possessions are accounted for. Moreover, a modest probate estate can have its advantages. Going through probate proceedings provides a formal platform for addressing alleged creditors’ claims, giving them their day in court. Once probate is complete, any later claims against the estate are generally barred, providing a level of finality and closure. By utilizing both a living trust and a will, you can create a comprehensive estate plan that covers all aspects of your assets and wishes, maximizing protection and efficiency.

Considerations and limitations

Living trusts are not a one-size-fits-all solution, and they may not be necessary for every individual’s estate plan. Some considerations and limitations include:

• Costs: Establishing a living trust typically incurs higher upfront costs compared to drafting a will.
• Complexity: Living trusts require ongoing maintenance, including funding and asset management, which can be more complex than managing a will.
• Tangible Assets: While living trusts are ideal for managing financial assets, they may not be necessary for assets like vehicles, furniture, and personal belongings.
• Retirement Accounts: Retirement accounts, such as IRAs and 401(k)s, have unique tax implications that may require special consideration in trust planning.
• Time Sensitivity: Creating a living trust involves a time commitment, including discussions with an attorney and the proper execution of legal documents.

Putting it all together

A living trust offers you complete control and flexibility over your assets during your lifetime, while also providing a mechanism for seamless asset management and distribution in the event of your incapacity or death. It is a powerful estate planning tool that empowers you to protect and manage your assets efficiently and according to your wishes.

About Norway Savings Asset Management

At Norway Savings Asset Management Group, we manage trusts and investments for people like you. We’re more than just financial advisors—we’re family fiduciaries—which means we’re both legally and ethically bound to put your interests first. We take the responsibility of safeguarding your assets incredibly seriously. We’re here to make sure your story lives on.

*This article is intended for educational purposes only and should not be construed as legal or tax advice.

Unraveling the Trustee’s Role

In the field of estate planning and asset management, trustees play a pivotal role in overseeing and safeguarding the interests of beneficiaries. Appointed to manage a trust, trustees serve as fiduciaries, which means they have a legal and ethical obligation to act in the best interests of the beneficiary or principal and are entrusted with significant responsibilities. 

Understanding the trustee’s duties and obligations is important for anyone involved in estate planning or considering the creation of a trust. Read on to learn more about the multifaceted role of a trustee, exploring their responsibilities, legal obligations, and the importance of their expertise in ensuring the efficient administration and long-term success of a trust.

Defining the trustee’s role

A trustee is an individual or entity appointed to manage a trust established by a grantor (also known as a trustor or settlor). The trust document outlines the trustee’s duties, the beneficiaries’ rights, and the terms governing the trust’s operation. Trusts can serve various purposes, such as preserving wealth, providing for loved ones, supporting charitable causes, or ensuring the well-being of beneficiaries with special needs. 

Legal obligations of a trustee

As fiduciaries, trustees are held to the highest standards of care, loyalty, and good faith in carrying out their responsibilities. Trustees have a profound responsibility to act in the best interests of the trust beneficiaries and to carry out their duties with utmost integrity and diligence. 

Some of the key legal obligations of a trustee include:

• Duty of Loyalty: Trustees must act solely in the best interests of the beneficiaries and avoid any conflicts of interest that could compromise their fiduciary duty.
• Duty of Care: Trustees are required to exercise the same level of care and skill that a prudent person would exercise in managing their own affairs.
• Duty to Follow Trust Terms: Trustees must adhere to the trust document’s provisions and follow the grantor’s intentions as expressed in the trust.
• Duty of Impartiality: If a trust has multiple beneficiaries, trustees must treat all beneficiaries fairly and impartially, considering each beneficiary’s needs and circumstances.
• Duty to Account: Trustees must keep detailed and accurate records of all trust activities, including financial transactions, income received, and distributions made. 
• Duty to Diversify Investments: Trustees have a duty to prudently manage the trust’s investments and to diversify the portfolio to minimize risk and maximize returns.
• Duty to Avoid Self-Dealing: Trustees cannot engage in self-dealing or personally benefit from the trust’s assets unless explicitly authorized by the trust document or applicable law.
• Duty to Avoid Commingling: Trustees must keep the trust assets separate from their personal assets and avoid commingling funds.
• Duty to Preserve and Protect Trust Assets: Trustees have a duty to preserve and protect the trust assets from loss or depreciation, using reasonable care and diligence.
• Duty to Exercise Discretion: Trustees must act in good faith and with impartiality.

Key responsibilities of a trustee

Keeping those legal obligations or duties in mind, a trustee has some key responsibilities that they need to perform in their role. These include:

Asset management: One of the primary roles of a trustee is to manage the trust’s assets prudently and in accordance with the trust document’s provisions. This may involve making investment decisions, overseeing property management, and maintaining accurate records of all financial transactions.

Distribution of income and assets: Trustees are responsible for distributing income and, when appropriate, assets to the trust’s beneficiaries based on the terms outlined in the trust document. This may include regular payments or discretionary distributions based on specific criteria.

Record keeping and reporting: Trustees must keep detailed records of all trust activities, including financial transactions, income received, and distributions made. They are also required to provide regular reports and accountings to the beneficiaries, ensuring transparency in the trust’s administration.

Tax compliance: Trustees are responsible for ensuring the trust complies with all applicable tax laws. This includes filing tax returns and paying any necessary taxes on behalf of the trust.

Prudent decision making: Trustees must make decisions regarding the trust’s management and distributions in a prudent and thoughtful manner, taking into consideration the best interests of the beneficiaries.

Conflict resolution: In some cases, conflicts may arise between beneficiaries or in interpreting the trust’s terms. Trustees must address such conflicts impartially and resolve them in a fair and equitable manner.

Can I be my own trustee?

Whether or not you can act as your own trustee depends on which type of trust you are considering.

In a revocable trust, such as a living trust, you can act as your own trustee. In this situation, you, as the grantor, retain control and can act as the initial trustee. 

However, in an irrevocable trust, you cannot be your own trustee. Because irrevocable trusts involve transferring assets permanently out of the grantor’s ownership and control, the grantor cannot serve as their own trustee in an irrevocable trust. Instead of being your own trustee, you must appoint an independent trustee to manage and administer the trust. 

Trustee’s role in specialized trusts

Trustees may be involved in managing various types of specialized trusts, each with its unique considerations and objectives. Some examples include:

• Special Needs Trusts: Trustees of special needs trusts must carefully navigate the complex rules to ensure that distributions do not jeopardize the beneficiary’s eligibility for government benefits.
• Charitable Trusts: Trustees of charitable trusts are tasked with managing assets for charitable purposes, such as funding education, research, or community projects.
• Revocable Living Trusts: For revocable living trusts, the grantor often serves as the initial trustee during their lifetime, retaining full control over the trust assets. Successor trustees take over management upon the grantor’s incapacity or passing.

Choosing the right trustee

Selecting the right trustee is crucial to the success of a trust. Make sure you consider individuals or entities with the necessary expertise, integrity, and understanding of the grantor’s objectives. Family members or close friends may be appropriate choices, as long as they possess the required financial acumen and impartiality. 

Alternatively, professional trustees, such as banks or trust companies, can offer expertise, stability, and objectivity in managing complex trusts.

Trustee succession planning

If you’re considering setting up a trust, make sure to consider trustee succession planning to ensure a smooth transition of trustee responsibilities. Naming successor trustees and defining the process for their appointment is essential to avoid potential disruptions in trust management.

Putting it all together

The role of a trustee is complex and multifaceted, requiring a deep understanding of trust law, financial management, and the grantor’s intentions. As fiduciaries, trustees bear the responsibility of safeguarding the trust’s assets, adhering to legal obligations, and acting in the best interests of beneficiaries. By understanding the trustee’s role and carefully selecting the right trustee, individuals can establish a robust and well-managed trust that will provide for the well-being and future of their loved ones for generations to come.

About Norway Savings Asset Management

At Norway Savings Asset Management Group, we manage trusts and investments for people like you. We’re more than just financial advisors—we’re family fiduciaries—which means we’re both legally and ethically bound to put your interests first. We take the responsibility of safeguarding your assets incredibly seriously. We’re here to make sure your story lives on.

*This article is intended for educational purposes only and should not be construed as legal or tax advice.

Protecting Your Assets and Your Loved Ones

If you’re starting to think about comprehensive estate planning and how to protect your assets (now and after you’re gone), trusts are an essential tool to consider. Trusts offer numerous benefits, including asset protection, privacy, and control over distribution, and are a popular choice for individuals seeking comprehensive estate planning solutions. 

In this article, we’ll explore the different types of trusts and their unique features to help you make informed decisions about your estate planning needs.

What is a trust?

A trust is a legal arrangement where a grantor (the person who creates the trust) transfers assets to a third party, known as a trustee (the person or entity responsible for managing the trust), for the benefit of one or more beneficiaries. 

Trusts can be arranged in different ways and can specify exactly how and when the assets pass to the beneficiaries. Trusts usually avoid probate and are commonly used for various estate planning and asset protection purposes.

Key components of a trust

While trusts come in a variety of forms, they all share some key components. Take a look:

Grantor/Settlor: The person who creates the trust and transfers their assets into it. The grantor defines the terms of the trust and determines how the assets will be managed and distributed.

Trustee: The individual or entity appointed by the grantor to manage the assets held in the trust and carry out the trust’s instructions. The trustee has a fiduciary duty to act in the best interests of the beneficiaries and must follow the guidelines outlined in the trust document.

Beneficiary: The person or group of individuals who will receive the benefits from the trust. Beneficiaries can be individuals, organizations, or even charitable causes.

Trust document: A legal agreement that outlines the terms and conditions of the trust. It specifies the assets included, the rights and responsibilities of the trustee, the distribution of assets to beneficiaries, and any other relevant instructions.

What is the purpose of a trust?

The purpose of a trust is to provide individuals with a flexible and effective means of managing their assets, protecting their wealth, and providing for their loved ones according to their unique needs, goals, and wishes. Trusts can be customized to address various scenarios, making them an integral part of comprehensive estate planning and asset management.

Some of the primary purposes of a trust include:

• Estate Planning
• Asset Protection
• Minimizing Estate Taxes
• Providing for Minor Children
• Supporting Special Needs Beneficiaries
• Charitable Giving
• Family Wealth Preservation
• Managing Business Interests

Revocable vs irrevocable trusts

Trusts can be categorized into two main types based on their revocability, meaning whether or not they can be changed or voided. Trusts can be either revocable or irrevocable.

Revocable trust 

A revocable living trust is a versatile estate planning tool that allows the grantor to maintain complete control over their assets during their lifetime. As the name suggests, it is “revocable,” meaning the grantor can amend or revoke the trust at any time. With a revocable living trust, the grantor can transfer assets into the trust’s ownership, and they can also act as the trustee. This setup enables seamless management of assets while ensuring that beneficiaries are designated to receive the assets upon the grantor’s death.

The primary advantage of a revocable living trust is that it avoids probate, the often time-consuming and costly process of validating a will. By sidestepping probate, the trust’s assets can be distributed to beneficiaries privately and efficiently, minimizing the potential for disputes and reducing administrative expenses.

Irrevocable trust 

Unlike revocable trusts, irrevocable trusts cannot be altered or revoked once established, emphasizing their permanence and commitment to the beneficiaries. Once assets are transferred to an irrevocable trust, they are no longer considered part of the grantor’s estate for tax and legal purposes.

One of the significant benefits of an irrevocable trust is its potential for estate tax reduction. Since the assets are no longer owned by the grantor, they are not subject to estate taxes upon the grantor’s passing. Additionally, irrevocable trusts can provide asset protection, shielding them from creditors or legal claims.

Living vs testamentary trusts

Living trusts and testamentary trusts are two distinct types of trusts used in estate planning, each serving different purposes and offering unique benefits. 

A living trust is established during the grantor’s lifetime and allows the grantor to retain control over the trust assets. It provides a seamless mechanism for asset management during the grantor’s lifetime and facilitates the efficient transfer of assets to beneficiaries upon the grantor’s death, avoiding probate. 

In contrast, a testamentary trust is created through the grantor’s will and only takes effect upon their death. It allows the grantor to dictate how assets will be managed and distributed after their passing, addressing specific needs such as providing for minor children, supporting individuals with disabilities, or benefiting charitable causes. While living trusts offer privacy and flexibility, testamentary trusts provide posthumous control and guidance over the distribution of assets. 

Specific types of trusts

Trusts can be created for specific purposes. Here are some of the most common.

Marital Deduction Trust

A Marital Deduction Trust is a type of trust used in estate planning to take advantage of the marital deduction for federal estate tax purposes in the United States. The marital deduction allows an individual to transfer an unlimited amount of assets to their spouse during their lifetime or upon their death without incurring any federal estate or gift taxes. This deduction effectively postpones the payment of estate taxes until the surviving spouse’s death.

The primary purpose of a Marital Deduction Trust is to provide for the surviving spouse while still allowing the grantor to control the ultimate distribution of assets, particularly after the surviving spouse’s passing. It ensures that the assets transferred to the trust will qualify for the unlimited marital deduction, thereby reducing the grantor’s estate tax liability.

The use of a Marital Deduction Trust is especially valuable in situations where the combined value of a married couple’s assets exceeds the federal estate tax exemption limit. By establishing a Marital Deduction Trust, a portion of the grantor’s assets can pass to the surviving spouse without triggering estate taxes, thus preserving the full estate tax exemption for the deceased spouse. This, in turn, maximizes the overall wealth transfer to the grantor’s intended beneficiaries and minimizes the estate tax liability.

Qualified Terminable Interest Property Trust (QTIP)

Similar to a Marital Deduction Trust, a Qualified Terminable Interest Property Trust is a specialized type of trust used in estate planning to benefit a surviving spouse. The primary purpose of a QTIP trust is to take advantage of the marital deduction for federal estate tax purposes, allowing the grantor to provide for their surviving spouse while minimizing potential estate tax liability.

However, there are subtle differences between the two types of trusts. QTIP Trusts are instituted when a spouse dies. The assets of the deceased spouse can be used by the surviving spouse until they die, at which point, the assets go to the beneficiaries that were named by the initial benefactor. In addition, the surviving spouse can only use the trust’s profits when in their control, while the originally intended beneficiaries are able to use the principle investments as well.

The QTIP trust is especially valuable when one or both spouses have children from previous marriages or want to ensure that their assets ultimately pass to specific beneficiaries, such as children from their first marriage. By using a QTIP trust, the grantor can provide for the surviving spouse during their lifetime while maintaining control over the final disposition of the assets.

Qualified Domestic Trust

A Qualified Domestic Trust (QDOT) is a specialized trust designed to benefit a surviving non-citizen spouse in the United States. The primary purpose of a QDOT is to allow a non-citizen surviving spouse to take advantage of the marital deduction for federal estate tax purposes, similar to how a Marital Deduction Trust benefits a surviving U.S. citizen spouse.

The marital deduction allows a U.S. citizen to transfer an unlimited amount of assets to their spouse during their lifetime or upon their death without incurring any federal estate or gift taxes. However, before the enactment of the QDOT rules, this unlimited marital deduction was not available for non-citizen spouses.

Bypass Trust

A Bypass Trust is an estate planning tool designed to help married couples reduce or eliminate estate taxes upon their passing. It allows each spouse to utilize their individual federal estate tax exemption, effectively “bypassing” the taxation on a portion of their combined assets.

When a spouse passes away, their assets can be transferred into the Bypass Trust, up to the amount of their available federal estate tax exemption at the time of their death. The remaining assets go directly to the surviving spouse or into another trust, typically referred to as the “Marital Trust” or “A Trust,” which qualifies for the unlimited marital deduction.

Some couples choose to use Bypass Trusts in their estate plans due to their benefits and flexibility in providing for both the surviving spouse and future generations.

Spendthrift Trust

A Spendthrift Trust is a valuable tool for protecting trust assets from creditors and ensuring that beneficiaries receive financial support without the risk of losing the assets to their own financial mismanagement or external legal claims.

The primary purpose of a Spendthrift Trust is to provide financial support and security to the beneficiaries while preventing them from mismanaging or squandering the trust assets and shielding those assets from potential creditors.

Spendthrift trusts are subject to state laws, and the level of protection they offer can vary based on jurisdiction. Not all states recognize the same degree of creditor protection for spendthrift trusts and also may require certain conditions be met, so it is essential to consult with an experienced estate planning attorney to understand the specific laws in your state and tailor the trust accordingly.

Special Needs Trust

A Special Needs Trust plays a vital role in ensuring that individuals with special needs receive the care and support they need, while protecting their eligibility for essential government benefits, such as Medicaid and Supplemental Security Income (SSI). 

Creating a special needs trust involves careful consideration of the beneficiary’s unique circumstances and future needs, making it essential to work with an experienced estate planning attorney to design and establish the trust properly.

Dynasty Trust

A Dynasty Trust is a long-term, irrevocable trust designed to benefit multiple generations of a family. The primary goal of a dynasty trust is to preserve and pass on wealth while minimizing estate taxes across several generations.

It’s important to note that dynasty trusts are subject to state laws, and not all states permit trusts that last for multiple generations. Additionally, some states may impose a “rule against perpetuities,” which limits the duration of trusts. 

Charitable Remainder Trust

For individuals with philanthropic inclinations, charitable trusts present an excellent way to leave a lasting legacy while obtaining certain tax advantages. Charitable trusts are designed to benefit charitable organizations or causes while potentially providing the grantor with tax deductions.

There are two primary types of charitable trusts: charitable remainder trusts (CRT) and charitable lead trusts (CLT). A CRT allows the grantor or other designated beneficiaries to receive income from the trust for a specified period, after which the remaining assets are transferred to the designated charity. A CLT, on the other hand, works in the opposite way – it provides income to a charitable organization for a set period, with the remaining assets ultimately passing to non-charitable beneficiaries.

Putting it all together

Trusts offer flexibility, asset protection, and tax benefits, making them valuable tools for comprehensive estate planning to protect assets and provide for loved ones after you’re gone. Whether you choose a revocable living trust for flexibility during your lifetime or an irrevocable trust for tax advantages, understanding the various types of trusts available can help you make informed decisions aligned with your unique circumstances and estate planning goals. 

It’s important to note that tax laws are subject to change, and estate planning strategies may need to be adjusted accordingly. So, if you’re considering a trust or any other estate planning technique, you should seek advice from an experienced estate planning attorney or financial advisor.  

About Norway Savings Asset Management

At Norway Savings Asset Management Group, we manage trusts and investments for people like you. We’re more than just financial advisors—we’re family fiduciaries—which means we’re both legally and ethically bound to put your interests first. We take the responsibility of safeguarding your assets incredibly seriously. We’re here to make sure your story lives on.

*This article is intended for educational purposes only and should not be construed as legal or tax advice.

When it comes to managing your wealth and assets, the importance of finding a professional you can trust cannot be overstated. This is especially true when you’re considering establishing a trust, a key financial instrument used for preserving and distributing assets over time. 

In this article, we’ll explore the many benefits of having a professional trustee, such as a bank, oversee your trust. Professional trustees bring a wealth of experience, knowledge, and impartiality to ensure your financial legacy is safeguarded, and your wishes are faithfully executed.

10 Benefits of Using a Professional Trustee

The decision to use a professional trustee is a pivotal one, bearing far-reaching implications for your financial legacy and the well-being of your beneficiaries. Here are 10 compelling benefits that come from entrusting your assets and estate to the expertise and fiduciary care of a professional trustee.

Benefit #1: Expertise and Experience

Professional trustees have a deep understanding of the intricate and ever-evolving world of trust and estate law. They are well-versed in the complexities of tax regulations, investment strategies, and fiduciary responsibilities. This level of expertise ensures that your trust is administered in full compliance with the law, optimizing its financial performance and minimizing potential risks.

Benefit #2: Unbiased Decision-Making

One of the primary benefits of using a professional trustee is their impartiality. They have a legal duty to act solely in the best interests of the beneficiaries, without any conflicts of interest. This impartial approach ensures that trust assets are managed without bias, personal gain, or favoritism, providing peace of mind to all involved parties.

Benefit #3: Consistency and Continuity

A professional trustee provides stability and continuity in trust administration. Their existence isn’t tied to an individual’s lifespan or circumstances, reducing the risk of disruptions due to events such as illness, incapacity, or death. This is particularly valuable for trusts intended to last for generations.

Benefit #4: Rigorous Record-Keeping and Reporting

Professional trustees maintain meticulous records and provide transparent reporting to beneficiaries. This level of accountability ensures that all transactions and decisions are well-documented and can withstand legal scrutiny. Beneficiaries can have confidence that the trust’s assets are being managed with transparency and accountability.

Benefit #5: Investment Expertise

Local banks and professional trustees often have access to a wide range of investment opportunities and financial instruments. They can leverage their investment expertise to make informed decisions that aim to maximize returns while managing risk. This professional approach can lead to better financial outcomes for the trust and its beneficiaries.

Benefit #6: Estate Tax Planning

Effective estate tax planning is essential for preserving wealth and minimizing tax liabilities. Professional trustees have the knowledge and resources to develop and implement tax-efficient strategies, potentially saving the trust and its beneficiaries substantial sums in taxes over time.

Benefit #7: Legal Compliance and Risk Management

Trusts are subject to a myriad of legal and regulatory requirements. Professional trustees are well-versed in these rules and regulations, ensuring that the trust remains in compliance at all times. They also help manage and mitigate various risks associated with trust administration, reducing the potential for legal disputes.

Benefit #8: Conflict Resolution

In situations where conflicts arise among beneficiaries or between beneficiaries and the trustee, professional trustees can act as neutral mediators. Their experience in conflict resolution can help maintain family harmony and ensure that trust assets are distributed fairly and in accordance with the trust’s terms.

Benefit #9: Efficiency and Administration

Professional trustees have well-established administrative processes and systems in place. This efficiency not only streamlines trust management but also helps reduce administrative costs, which can be especially important for smaller trusts.

Benefit #10: Peace of Mind

Ultimately, having a professional trustee provides peace of mind. Knowing that your financial legacy is in the hands of experienced professionals who are legally obligated to act in your best interests and those of your beneficiaries can alleviate worries and allow you to focus on other aspects of your life and financial planning.

Can I be my own trustee?

While it is possible for an individual to act as their own trustee of a trust, there are certain important considerations and potential limitations to keep in mind.

A trust is a legal entity established to hold and manage assets on behalf of a grantor and its beneficiaries. The trustee is the person or entity responsible for managing the trust’s assets and ensuring that the trust’s terms and objectives are adhered to. In some cases, the trust agreement may allow the grantor (the individual creating the trust) to also serve as the trustee. This is commonly referred to as a “self-trusteed” or “grantor-trustee” arrangement.

Pros of being your own trustee:

• Control: Being your own trustee allows you to have direct control over the trust’s assets and how they are managed.
• Flexibility: As the trustee, you have the ability to make decisions regarding investment strategies, distributions, and other trust-related matters.
• Cost savings: By acting as your own trustee, you may avoid paying trustee fees to an external party, potentially saving on administrative costs.

Cons of being your own trustee:

• Fiduciary responsibilities: As a trustee, you have a fiduciary duty to act in the best interests of the beneficiaries. This means making decisions solely for the benefit of the beneficiaries and not for personal gain. Failure to fulfill these duties could lead to legal consequences.
• Conflict of interest: Being your own trustee may create potential conflicts of interest, especially if you are also a beneficiary of the trust. Balancing your interests with those of other beneficiaries can be challenging.
• Compliance and reporting: Trustees have legal and tax-related responsibilities, including filing tax returns and complying with relevant regulations. Being a self-trustee means taking on these obligations yourself.
• Professional expertise: Depending on the complexity of the trust and the assets involved, managing a corporate trust may require specialized financial, legal, and accounting knowledge. Hiring professionals might be necessary to ensure compliance and efficient management.
• Succession planning: If the trust’s assets need to be managed beyond your lifetime or in case of incapacity, a contingency plan should be in place to appoint a successor trustee.

Before deciding to act as your own trustee for a corporate trust, it’s crucial to consult with legal and financial professionals experienced in trust law. They can help you understand the legal implications, potential risks, and responsibilities involved in this role. If the trust is intended to have multiple beneficiaries or complex asset management requirements, it might be advisable to consider appointing a professional trustee or co-trustee to ensure efficient administration and protect the interests of all beneficiaries.

Putting it all together

The benefits of having a professional trustee, such as Norway Savings Bank, overseeing your trust are numerous and significant. Our expertise, impartiality, and commitment to legal compliance ensure that your financial legacy is preserved, your wishes are carried out faithfully, and your beneficiaries are well taken care of.

Bottom line? When considering the establishment of a trust, it’s essential to consult with a trusted financial advisor and legal counsel to determine the best trustee for your specific needs, ensuring a secure and prosperous future for you and your loved ones.

About Norway Savings Asset Management

At Norway Savings Asset Management Group, we manage trusts and investments for people like you. We’re more than just financial advisors—we’re family fiduciaries—which means we’re both legally and ethically bound to put your interests first. We take the responsibility of safeguarding your assets incredibly seriously. We’re here to make sure your story lives on.

*This article is intended for educational purposes only and should not be construed as legal or tax advice.

Estate Planning 101

From outlining your final wishes in a will to creating trusts, designating guardians, and addressing tax implications, an estate plan comprises a comprehensive set of legal strategies tailored to your unique circumstances. By crafting a well-thought-out estate plan, you can define how your assets will be managed, distributed, and protected during your lifetime and after your passing.

The Basics of an Estate Plan

If you’re not sure what goes into an estate plan, we can help. Here are 12 basic steps you can take to make sure your estate is in order. Hit them, and you and your estate should be in good shape.

1. Inventory your assets

Inventorying assets involves the comprehensive assessment and documentation of all your possessions and financial holdings. This includes real estate, bank accounts, investments, retirement accounts, life insurance policies, valuable personal belongings, and any other assets of value. 

By creating a detailed inventory, you’ll gain a clear understanding of your net worth and ensure that no asset is overlooked or forgotten. This inventory serves as a valuable reference for your estate plan, helping you make informed decisions about how to distribute your assets among beneficiaries, minimize potential tax liabilities, and plan for the future. 

Regularly updating your asset inventory is essential, particularly when significant life events occur, such as purchasing new assets, selling property, or undergoing major financial changes. Through a meticulous inventory process, you can approach estate planning with confidence and provide a solid foundation for managing and preserving your wealth for generations to come.

2. Identify your beneficiaries

Determine who will receive your assets and property after your passing. Beneficiaries can include family members, such as spouses, children, and grandchildren, as well as friends, charitable organizations, or other individuals you wish to include in your estate plan. 

Properly identifying beneficiaries ensures your assets are distributed according to your wishes and avoids potential disputes or confusion among your heirs. It is essential to regularly review and update beneficiary designations in legal documents, such as wills, trusts, and retirement accounts, to reflect changes in your life circumstances, such as births, deaths, or changes in relationships. By clearly identifying your beneficiaries, you can ensure that your estate plan reflects your intentions and provides for your loved ones in the manner you desire.

3. Check beneficiary designations

Many of your assets, such as life insurance policies, retirement accounts, and bank accounts, allow you to designate beneficiaries directly. These beneficiary designations override any provisions in your will or trust. Therefore, it’s essential to review and update beneficiary designations regularly to ensure they align with your current estate planning goals and avoid unintended consequences.

Failing to update outdated beneficiary designations could lead to unintended consequences, leaving loved ones without the financial support you intended for them. By proactively reviewing and adjusting beneficiary designations, you can protect your assets and ensure your legacy is passed on to the right beneficiaries as you desire.

4. Assess the benefits of trusts

Deciding if a trust is the right addition to your estate plan requires thoughtful consideration of your unique circumstances and objectives. Trusts offer numerous benefits, such as probate avoidance, asset protection, and tax planning opportunities. 

If you have substantial assets, complex family dynamics, or a desire to provide ongoing support for beneficiaries, a trust may be a suitable option. Additionally, trusts can help ensure the smooth management and distribution of your assets according to your wishes, even after your passing. 

However, creating a trust involves careful planning and administration, which might not be necessary for every individual. It’s essential to consult with an experienced trust professional or estate planning attorney to evaluate your specific needs and goals. By conducting a thorough assessment of your estate planning requirements, you can determine whether a trust aligns with your objectives to secure your legacy for generations to come.

5. Make a will

A Last Will and Testament, commonly known as a will, is the foundational document of an estate plan. It enables you to specify how you want your assets to be distributed among your beneficiaries, appoint guardians for minor children, and even designate specific individuals or charitable organizations to receive your possessions. 

Without a will, your assets may be distributed according to the laws of intestacy (a set of legal rules that determine how a person’s assets and property will be distributed if they die without a valid will),  which may not align with your preferences.

By taking the time to make a will, you can avoid potential disputes among family members and provide clarity regarding your intentions. It’s important to regularly review and update your will as life circumstances (such as marriage, divorce, or the birth of children) change. Seeking guidance from an experienced estate planning attorney can help you navigate the process and ensure that your will complies with legal requirements. 

6. Execute a durable power of attorney

A durable power of attorney is a legal document that designates a trusted person, known as the attorney-in-fact or agent, to make financial and legal decisions on your behalf if you become incapacitated. This person can manage your finances, pay bills, make investment decisions, and handle other critical matters in your stead. A durable power of attorney ensures that your affairs are managed smoothly and prevents the need for costly and time-consuming court-appointed guardianship proceedings.

7. Execute advance directives for health care

The two most common advance directives for health care are the living will and the durable power of attorney for health care.

A living will is a legal document that tells doctors how you want to be treated, if you cannot make your own decisions about emergency treatment. In a living will, you can say which common medical treatments or care you would want, which ones you would want to avoid, and under which conditions each of your choices applies.

A durable power of attorney for health care is a legal document that appoints your health care proxy, a person who can make health care decisions for you, if you are unable to communicate these yourself. It’s important that your proxy be familiar with your values and wishes. Having a health care proxy helps you plan for situations that cannot be foreseen, such as a serious car accident or stroke. A proxy can be chosen in addition to or instead of a living will. 

8. Designate guardians for minor children

If you have minor children, appointing guardians is a critical aspect of your estate plan. In your will, you can nominate individuals whom you trust to care for your children in the event of your untimely passing. This ensures that your children are provided with a stable and nurturing environment if both parents are no longer available to care for them.

9. Consider tax-planning strategies

For those with significant assets, estate tax planning is a vital component of an estate plan. Various strategies, such as gifting, establishing irrevocable trusts, and utilizing the lifetime gift and estate tax exemptions, can help reduce potential estate tax liabilities and preserve more of your wealth for your loved ones.

10. Incorporate charitable giving

If philanthropy is essential to you, incorporating charitable giving into your estate plan allows you to support causes that are close to your heart. Charitable giving can take various forms, including bequests in your will, setting up charitable trusts, or designating charities as beneficiaries of certain assets.

11. Create a document holder

A document holder is a designated physical or digital space where you can store all your critical records, such as wills, trusts, insurance policies, property deeds, financial statements, and healthcare directives. By centralizing these documents in one secure location, you ensure easy access for you and your loved ones in times of need. Whether you opt for a physical file organizer or a password-protected digital folder, a document holder helps you stay organized and prepared for any unforeseen circumstances. 

12. Make arrangements for any safe-deposit boxes

When creating your estate plan, consider designating a trusted individual as an authorized signatory to access the safe deposit box upon your passing. That will ensure your beneficiaries can easily retrieve the documents and assets they need during the settlement process.

Putting It All Together

An estate plan is a comprehensive set of legal documents and strategies designed to protect your assets, express your final wishes, and provide for your loved ones. Each component of an estate plan serves an important purpose in ensuring that your legacy endures as you envision. 

Estate planning is a complex process, and it is advisable to seek the guidance of an experienced estate planning professional to tailor a plan that aligns with your specific needs and goals. By taking proactive steps to create an estate plan, you can achieve peace of mind and leave a lasting legacy for generations to come.

About Norway Savings Asset Management

At Norway Savings Asset Management Group, we manage trusts and investments for people like you. We’re more than just financial advisors—we’re family fiduciaries—which means we’re both legally and ethically bound to put your interests first. We take the responsibility of safeguarding your assets incredibly seriously. We’re here to make sure your story lives on.

*This article is intended for educational purposes only and should not be construed as legal or tax advice.

Choosing the Right Trustee: A Key Decision in Estate Planning

Choosing a trustee is one of the most important decisions in establishing a trust. A trustee plays a pivotal role in managing trust assets, ensuring compliance with legal requirements, and fulfilling fiduciary duties to beneficiaries. The right trustee can make a significant difference in the success and effectiveness of the trust, while the wrong choice may lead to potential conflicts and mismanagement of assets. 

In this article, we’ll delve into the factors to consider when selecting a trustee and explore different trustee options to help you make an informed decision in your estate planning journey.

Understanding the role of a trustee

Before we begin, let’s talk about the key responsibilities and duties of a trustee. A trustee is appointed to administer the trust according to its terms and the grantor’s wishes. Their primary duties include:

Asset Management: A trustee is responsible for prudently managing trust assets, making investment decisions, and ensuring the preservation and growth of the assets for the benefit of beneficiaries.

Record Keeping: Maintaining accurate records and accounts of all trust transactions and providing regular reports to beneficiaries.

Distribution of Assets: Distributing trust assets to beneficiaries in accordance with the trust document’s provisions and the grantor’s instructions.

Communication: Keeping beneficiaries informed about the trust’s performance, any changes in the trust’s administration, and addressing their questions and concerns.

Legal Compliance: Ensuring the trust’s compliance with relevant laws and regulations.

Factors to consider when choosing a trustee

As we mentioned earlier, choosing the appropriate trustee is a critical choice in estate planning, one that can greatly influence the trust’s overall success and effectiveness.  Choosing a trustee requires careful consideration of various factors to ensure that the appointed individual or entity is the best fit for the responsibilities ahead. Here are some of the key factors to consider when choosing a trustee, which will help you make an informed decision that aligns with your long-term objectives and safeguard the interests of your beneficiaries.

Trustworthiness and Integrity

Integrity is the foundation of any successful trustee-beneficiary relationship. A trustee must be someone you trust implicitly, as they will have substantial authority over the assets and beneficiaries. Look for a trustee with a reputation for honesty, transparency, and ethical conduct.

Financial Acumen and Expertise

Managing trust assets requires financial expertise and investment knowledge. Choose a trustee who is well-versed in financial matters, capable of making informed decisions, and adept at managing investments wisely.

Understanding of Your Wishes and Values

A trustee must understand and respect your intentions and values as outlined in the trust document. They should be committed to carrying out your wishes and ensuring that the trust’s objectives align with your long-term goals.

Impartiality and Fairness

If your trust has multiple beneficiaries, ensure the trustee is capable of treating all beneficiaries fairly and impartially. They should avoid favoritism and be adept at handling potential conflicts that may arise.

Responsiveness and Communication Skills

Effective communication is key to maintaining trust and transparency. Select a trustee who is approachable, responsive, and willing to keep beneficiaries informed about trust matters and financial performance.

Availability and Longevity

Consider the trustee’s availability and ability to serve as a trustee over the long term. Trusts can last for several years, so choosing someone who can fulfill their duties for an extended period is vital.

Familiarity with Local Laws and Regulations

Different jurisdictions have varying legal requirements for trusts. If your trust operates in a specific region, consider selecting a trustee familiar with the relevant local laws and regulations.

Options for Choosing a Trustee

Knowing what a trustee needs to do and some of the skills and other factors that make a good trustee gives you a great basis for choosing a trustee. People choose trustees from family, friends, and professionals. What’s right for you?

Family Members or Friends

Many individuals choose close family members or trusted friends as trustees due to their intimate knowledge of the family dynamics and values. Family trustees may have a deep understanding of the beneficiaries’ needs and can administer the trust with a personal touch. However, it’s essential to assess their financial acumen and ability to remain impartial.

Professional Trustees

Professional trustees, such as banks, trust companies, and law firms, offer expertise in trust administration and investment management. They have experience dealing with complex financial matters, legal compliance, and resolving potential conflicts among beneficiaries. While professional trustees typically charge fees for their services, their impartiality and expertise can provide peace of mind to grantors and beneficiaries alike.

Co-Trustees

Combining the strengths of family members or friends with the expertise of a professional trustee is an option through co-trusteeship. This arrangement allows for checks and balances, ensuring both personalized care and professional administration of trust assets.

Putting it all together

Choosing the right trustee is a crucial step in effective estate planning and trust administration. By evaluating factors such as trustworthiness, financial acumen, understanding of your wishes, and communication skills, you can make an informed decision that aligns with your long-term objectives. 

Whether you opt for a family member, a professional trustee, or a combination of both, selecting a trustee who can diligently manage and preserve your assets will ensure the successful execution of your trust and the well-being of your beneficiaries for years to come. 

And remember—estate planning can be a complex process. It’s essential to consult with an   estate planning attorney or a trust professional who can help you make the best decision for your circumstances.

About Norway Savings Asset Management

At Norway Savings Asset Management Group, we manage trusts and investments for people like you. We’re more than just financial advisors—we’re family fiduciaries—which means we’re both legally and ethically bound to put your interests first. We take the responsibility of safeguarding your assets incredibly seriously. We’re here to make sure your story lives on.

*This article is intended for educational purposes only and should not be construed as legal or tax advice.