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Could a Trust Help You Reach Your Estate-Planning Goals?

People who establish trusts do so for many reasons but share one common motive: to preserve wealth for the next generation. However, not all trusts are created equal. Some let you pass property – tax free – to heirs, some pay you during retirement and others continue your philanthropic work after you're gone. Consider these trusts to help you reach your goals.

Credit Shelter Trust. Eliminate or reduce the federal estate taxes your beneficiaries owe. A credit shelter trust, best for a married couple whose estate exceeds the amount exempt from federal estate tax, divides your and your spouse's estate into two parts when you die. One part passes to your spouse without being taxed because of the marital deduction. The second part is sheltered and its assets pass to your other beneficiaries when your spouse dies. Downside: Your spouse is restricted in how he or she spends trust assets.

Charitable Remainder Trust. Place an appreciated asset in a charitable remainder trust, and the trust pays one or more persons (including yourself) for a number of years. At term's end, the balance goes to charity. You receive income for retirement, support your favorite cause and avoid capital gains taxes. Downside: Because the property you contributed to the charity is excluded from your estate, the amount your heirs receive is reduced.

Charitable Lead Trust. Contribute to your favorite charity first with specified annual payments. Your beneficiaries receive the asset balance at the end of the trust's term. You help a charity and preserve assets for your heirs without incurring estate taxes and asset liquidation costs. Downside: Neither you nor your heirs get an immediate asset payout.

Qualified Personal Residence Trust. Transfer your home to a qualified personal residence trust and dramatically reduce the cost of passing property to your heirs. After living in your home for a fixed period of years, the property is retained in the trust – or distributed – for your beneficiaries' advantage. Because you resided in the house, the value of your "gift" is discounted. Beneficiaries pay taxes only on the value of the gift and not the full value of your home. The entire value of your residence is removed from your estate if you live beyond the trust's term. Downside: You'll need other living arrangements at the end of the occupancy term, although tax provisions let you lease back the residence.

Grantor Retained Annuity Trust. Contribute assets to a grantor retained annuity trust and receive fixed-dollar annuity payments for a term of years. When the trust expires, the balance passes to your heirs tax free. Downside: If you die before the end of the annuity term, the trust assets are included in your estate and estate-tax savings are lost.

  • SCCU Routing Number: 263177903

Space Coast Credit Union membership is open to all who work or live in Brevard, Broward, Flagler, Indian River, Martin, Miami-Dade, Monroe, Orange, Osceola, Palm Beach, Seminole, St. Johns, St. Lucie, or Volusia Counties in Florida.

  • Brevard: 321-752-2222
  • Broward: 954-704-5000
  • Miami-Dade: 305-882-5000
  • All Other Areas: 800-447-7228

*APR = Annual Percentage Rate. ^APY = Annual Percentage Yield.

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