3 Tips on Setting Up a Trust from the RJ Trust School

Contributed by: Matt Trujillo, CFP® Matt Trujillo

I recently had the opportunity to attend Raymond James Trust School in Cleveland, Ohio with about 30 other financial professionals.  It was a great refresher, but I learned some new things as well. Below are three of my key take-aways from the RJ Trust School that may help guide you in making decisions about a trust.

3 Take-Aways from the RJ Trust School:

  1. Sometimes to save money people will have a will drafted which calls for a trust to be set up at their death. This type of trust is called a “Testamentary Trust”. One of the issues with structuring your estate plan in this fashion is that with a Testamentary Trust the probate period will continue until the trust terminates which could be as much as 90 years in some states!  This is a long time for creditors to submit claims against an estate, and something to keep in mind when you are considering having documents drafted.
  2. Trusts aren’t just about avoiding estate taxes! There are many other reasons to have assets held in trust name. Here are a few that were mentioned at RJ Trust School:
    • If the beneficiary is a spendthrift and you are worried they might spend all the assets in a short period of time
    • If the beneficiary just doesn’t understand money well and will struggle with financial management
    • If the beneficiary doesn’t have time to manage additional financial matters
    • If the beneficiary has potential credit problems and if they inherited assets outright their creditors could seize the assets
    • If the beneficiary is in a bad marriage and inherit assets outright, a soon to be ex-spouse might have a claim
    • If the beneficiary has special needs it might be better to have inheritance held in trust so they don’t lose government funding
  3. If you’re married, you should strongly consider filing form 706 electing portability at the death of the first spouse, even if you don’t have a taxable estate at that time.  With the recent changes in estate tax law a lot of people think they automatically get their spouse’s estate tax exemption as well as their own. However, as the instructor at RJ Trust School pointed out, you only get both exemptions if you file the appropriate paperwork electing for “portability” at the first death.  For example, if an estate didn’t have estate tax issues at the first death, but grew significantly after the date of death, it could now be subject to estate taxes. That’s a situation that could have been avoided by filing form 706.

If you are considering implementing some estate planning documents or amending the one you currently have in place, you should meet with a qualified estate planning attorney first!

Matthew Trujillo, CFP®, is a Certified Financial Planner™ at Center for Financial Planning, Inc. Matt currently assists Center planners and clients, and is a contributor to Money Centered.


This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Matthew Trujillo and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. You should discuss any tax or legal matters with the appropriate professional.