BENEFITS        info@truetrust.com

 CHOOSE BENEFICIARIES NOW, CHANGE AS DESIRED

 * BENEFICIARY - The equity, value, or distributions from the trust
 will benefit the beneficiary.  There can be different types of
 beneficiaries.  For instance, income could go to one person for any
 period of time; and principal could be distributed differently.
 Beneficiaries could be limited to the benefit for only their life. 
 That would mean that their families (heirs) would not have any
 rights to any inherited benefits.  You could name some of them as
 remainder beneficiaries anyway.  That's the good news.  Your
 choice, your way.  Many trusts have "remaindermen" or remainder
 beneficiaries, who'll receive the trust assets after the trust
 terminates, or after some of the other beneficiaries are gone.  The
 income beneficiaries and the remainder beneficiaries may be, but
 don't have to be the same.
 
 In some trusts, the same individual can be creator, trustee, and
 beneficiary.  Thus, he or she has complete control and benefit of
 the assets, even while the assets are owned by the trust.  Even if
 the creator can't fill all the roles, the trustee and the
 beneficiary frequently are one and the same.  If it is of primary
 intent to use the trust as a protector of assets; it is best if all
 positions are NOT filled by the same person.

 SELECTING THE BENEFICIARY(s)
 
 You can see that the main benefit is to select a method to provide
 for your beneficiary.  Usually, it is your intent to use and enjoy
 the assets for your lifetime, and then your children.  This intent
 is called a "Life Benefit".  This Life Benefit intent usually
 extends to your spouse.  The Trustee can also be a beneficiary. 
 The main thing to remember is that a Trustee has power, whereas, a
 beneficiary (in their capacity as beneficiary) has no power.  In
 fact, the reason for any attacks by tax authorities or claims
 against individuals named as beneficiaries, are usually attempting
 to determine if you mistakenly gave "power" to the beneficiary;
 thereby eroding seperation and protection of assets held in trust. 
 
 Can you be a Trustee AND a Beneficiary?  Sometimes, especially if
 you set up a revocable trust.  However, with most irrevocable
 trusts, where you want tax and asset protection advantages, you
 should name someone else as trustee, to establish seperation of
 control.  Moreover, even if you act as trustee of your own
 revocable trust, you'll need to name a successor trustee, in the
 event the original trustee becomes unable to serve.
 
 NAMING BENEFICIARIES ACCORDING TO THEIR NEEDS
 
 If you anticipate an estate-tax obligation, you're often told to
 reduce your estate by giving away assets during your lifetime.  But
 real life situations aren't always so clear-cut.  Suppose you
 expect to leave a sizable estate but you're not sure that you--and
 your spouse--will have enough to live on if you give money away
 now.  Naturally, you'll be reluctant to part with assets you might
 need later.
 
 Even if you decide to give away some assets, to whom would you give
 them?  To the child who already has a family and a promising
 career, to the emotionally disturbed child who is likely to have
 lifelong problems or to the child who is still too young to
 assess?  And once you give away assets, how can you be sure they'll
 be well conserved?
 
 You can resolve such problems with an irrevocable sprinkle trust. 
 These trusts can preserve assets for yourself and your spouse, in
 addition to your children and grandchildren.  They enable you to
 provide for each family member, according to his or her needs,
 while avoiding gift and estate tax.
 
 The first steps are to establish the trust and fund it.  You can
 transfer up to $600,000 worth of assets to a sprinkle trust free of
 gift tax.  If your spouse goes along with the gift, you can shift
 up to $1.2 million, tax-free.
 
 Observation:  Making large gifts will cut into or use up your
 $600,000 exemption from estate taxes.  However, using this
 exemption now, while it's still valid, may be a good idea:  As
 Washington sniffs around for new sources of tax revenue, this
 exemption could be trimmed at any time.
 
 Once assets are shifted to an irrevocable trust, they're out of
 your taxable estate.  If you transfer assets that may appreciate
 (stocks, real estate), any future growth also is out of your
 estate.  Of course, "irrevocable" means that you can't change your
 mind.  Once you make the transfer, the assets no longer belong to
 you.
 
 You can name a number of trust beneficiaries, including your
 spouse, your children and your grandchildren.  No beneficiary is
 entitled to trust income, as a matter of right.  Instead,
 distribution of trust income and principal is entirely at the
 discretion of the trustee.
 
 The key to an effective sprinkle trust, then, is the selection of a
 good trustee or trustees.  You or your spouse can't be trustees and
 neither can a child or a grandchild.  You may choose an in-law, a
 friend, a professional advisor an institutional trustee.  A trustee
 must have absolute integrity, common sense and a knowledge of your
 family circumstances.
 
 Recommendation:  When choosing co-trustees, try to pick people who
 are compatible, so deadlocks can be avoided.  Include a provision
 for selecting successor trustees in case the original trustees die
 or resign.
 
 Once assets are transferred to the trust, the trustee runs the
 show.  He or she has a broad latitude in distributing trust assets
 to the beneficiaries.  The trustee might, for example, distribute
 money to your son toward a down payment on a house or to finance
 your granddaughter's private schooling.  If your daughter needs
 special medical care, the trustee can provide the necessary money. 
 If your own fortune suffers a reversal and you run short of
 retirement income, the trustee can distribute funds to your spouse.
 
 Observation:  The consensus among experienced attorneys is that it
 is not a good idea to let the trustee make distributions directly
 to you, the grantor.  If the trust documents forbid the trustee to
 make distributions to you,  you avoid any incidents of ownership,
 and thus deter attempts by the IRS to try to pull the trust assets
 back into your estate after your death.
 
 If you have the right trustee, a sprinkle trust gives you the best
 of all worlds.  You avoid gift and estate taxes, you provide for
 your family's future needs and you have a prudent trustee (who is
 legally required to act responsibly) rather than your family
 members handling the assets.
 
 There may be income tax advantages as well.  Say you have a
 $400,000 securities portfolio, throwing off $15,000 a year in
 taxable income.  In your possession, that $15,000 is added to all
 of your other income and taxed at 30% to 40%, including state and
 local taxes.  Your trustee, though, may be distributing the funds
 to lower-bracket recipients. Example:  Your grandson is in
 college.  Money needed for education might be distributed directly
 to your grandson, rather than to your daughter and son-in-law, who
 are probably in a higher tax bracket.  Moreover, the trust itself
 has a tax bracket, which means a surplus (income minus
 distributions) may be taxed at only 15% or 28%.
 
 Recommendation:  Consider a sprinkle trust only if you're certain
 your trustee will serve well and if an experienced attorney handles
 the trust creation.
 
 TOP US BEFORE WE SPEND MORE
 Spendthrift trusts, as the name implies, are designed to protect
 beneficiaries who spend every penny they get their hands on, and
 then some.  Known as support trusts in some states, these can also
 be helpful in providing for someone, usually an adult, who can't
 manage his or her own finances.
 
 You might expect to control spendthrifts with a strong trustee, who
 doles out trust funds carefully.  However, that may not fully
 protect a trust beneficiary with a desperate need for funds.  There
 are individuals and organizations who buy out trust beneficiaries,
 paying them perhaps 20% on the dollar.  That is, for a chunk of
 cash now, a beneficiary might transfer his interest to future
 income and the distribution of trust principal.
 
 A spendthrift trust forbids the beneficiary from selling or
 assigning his interest in the trust and places it beyond the reach
 of creditors.  In a typical spendthrift trust, the trustee is
 instructed not to give large sums outright to the beneficiary, but
 to use his own discretion.  A trustee, for example, could pay the
 beneficiary's housing costs, utilities, insurance premiums and so
 on, and perhaps provide a spending allowance as well.
 
 Sometimes a spendthrift trust is not meant to last until
 termination.  A variation is sometimes known as an incentive
 trust.  This might specify that if the beneficiary shows signs of
 being able to handle money--in the trustee's judgment perhaps as a
 result of earning a substantial income--the beneficiary can receive
 more funds from the trust.  
 
 Observation:  A spendthrift trust also can keep assets from a
 child's spouse, in case of a divorce.
 
 Spendthrift trusts are not necessarily restricted to children.  You
 may be concerned about your spouse's ability to manage money after
 your death.  It may be hard for her to turn down requests from
 relatives regarding "business opportunities," unexpected expenses
 and so on.  A spendthrift trust can protect her, preserving
 lifetime income.
 
 There are, as you might suspect, some limits on spendthrift trusts:
 
 * You can't shift your own assets into a spendthrift trust to
 protect yourself from creditors.
 
 * In most cases, court orders for child support can't be avoided by
 means of a spendthrift trust.
 
 With a spendthrift or a support trust, the trustee is expected to
 provide "necessary" sums for the beneficiaries to live on.  This
 raises the question, "What is necessary?"  Help the trustee by
 spelling out your intentions as specifically as possible in the
 trust documents.
 
 Caution:  Don't put a spendthrift clause into a trust without a
 good reason.  Such a provision may prevent the beneficiaries from
 terminating a trust that has worn out its usefulness or
 practicality.
 
 IN BRIEF:
 * Trusts can preserve assets by preventing family members from
 squandering money or selling out their trust interests, by keeping
 money out of divorce negotiations and by moving money out of the
 reach of creditors.
 
 * Sprinkle trusts allow trustees to distribute money, as needed,
 among various family members, even to the grantor's spouse.
 
 * With reliable trustee, a sprinkle trust permits you to reduce
 your taxable estate yet still have access to the trust assets in
 case of emergency, through your spouse.
 
 * Spendthrift trusts prohibit trust beneficiaries from selling or
 assigning their future interests in trust assets.
 
 * A spendthrift trust or a sprinkle trust can help your heirs
 refuse requests for money, without hard feelings, after your death.

              info@truetrust.com