Trust Funding Analysis Services

Trust funding is an invaluable tool for estate and tax planners, along with clients. Some planning is accomplished before death (pre-mortem), while other planning takes place after death (post-mortem). We have wide-ranging experience in both types of trust funding.

For example, some clients may want to fund their revocable trusts while they are alive with the goal of “avoiding probate.” In those instances, we have relationships with law firms to help accomplish that goal. We can work directly with legal counsel to ensure that any applicable assets are correctly and accurately titled in the name of such revocable trust.

In other cases, in effort to accomplish certain gift and estate planning goals, clients may want to create and fund an irrevocable trust. This kind of trust typically includes, but is not at all limited to, an irrevocable life insurance trust. Again, we have relationships with law firms to help accomplish such planning. We can work directly with legal and tax counsel to ensure that all accounts are titled correctly and that all funding is accomplished, according to plan. There are many types of irrevocable trust planning. While we have listed just one example, we have experience working directly and indirectly with legal and tax experts that practice in this arena.

At the time of death, many estate administrations result in the funding of trusts. Some trusts involve lifetime benefits for spouses (QTIP’s or marital trusts), while others provide for families for multiple generations. Any many cases, estate administrations result in multiple trusts.

We have distinct experience in this area. When trust planning provides for subjective or objective flexibility in terms of trust funding, an opportunity presents itself for potential income tax, estate tax, and even generation-skipping transfer tax (GSTT) savings. Methodically funding trusts is momentous, and the results may have a lasting impact on family beneficiaries.

This kind of planning is best accomplished with the collaboration, understanding and agreement with all service professionals of a family, including legal counsel, tax planners, fiduciaries, beneficiaries, and investment advisors. We excel and enjoy connecting service professionals to effectuate success for clients.

Another aspect that occurs on occasion (if not more frequently) involves equitable equalization. If an estate consists of a $1 million home, $1 million of publicly-traded stock, and $1.3 million of cash; and if three (3) children of the decedent are to each inherit (in trust) equally (1/3 each), trust funding services comes into play.

If the estate is not going to sell all of the illiquid assets, this is where trust funding and “equitable equalization” comes to the rescue. Suppose the decedent died on January 1. Suppose the estate administration is expected to close on or about December 31. Suppose Child A wants the House. Suppose Child B wants the stocks. Suppose Child C wants cash. Finally, suppose the House has not changed in value between January 1 and December 31.

In order to ensure that each beneficiary receives not only an equal value in assets, but also the same tax position for such inherited assets, careful trust funding is involved.

For example, suppose the stocks, with a value of $1M on January 1, are worth $950,000 on December 31. If Child B receives the stock with a $1M basis and $950,000 of current fair market value, that child is arguably receiving something different than the child receiving the House and the child receiving cash. It is in this area that we can deploy our experience and expertise in ensuring that everyone receives an equal and equitable share. We have worked with law firms, tax firms, corporate trustees, and individual fiduciaries for decades to resolve these types of funding issues. Collaboration, communication, and agreement are the recipe for avoiding dispute, debate, and that dreaded term for many: litigation.

The Fiduciary Consultant offers collaborative services to legal, accounting, and corporate fiduciary professionals.

For Professionals & Families.