What
is a trust?
A
personal trust is a powerful and flexible asset management
tool for you, your spouse and your family. Providing
you with confidence, stability and security in changing
environments, a trust is a legal entity that either begins
at your death, as provided by your will, or is effective
during your lifetime, as provided by a living trust agreement.
Created by you with the assistance of your attorney,
the trust holds property designated by you for the benefit
of your beneficiaries. A trust enables you to designate
in advance how your assets are used by and distributed to
your heirs following your death. Additionally, with
a living trust, should you become incapacitated, you can
ensure that your spouse and family are provided for and
that your affairs will be managed according to your wishes.
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Should
I complete an estate plan and establish a trust?
Take
a closer look if you think you are not wealthy enough to
need an estate plan. When you account for the value
of your home, investments, insurance, retirement funds and
other assets, you may easily have accumulated in excess
of the IRS' designated amount to trigger estate taxes. Currently,
assets in excess of $1,000,000 can trigger estate taxes.
The top estate tax rate for 2002 is 50% and will gradually
decline to 45 percent in 2007. If the total value of your
estate now, or its projected value at your death exceeds
$1,000,000, Mission may be able to help you ensure that
your assets are protected and your estate is handled according
to your wishes.
Even
if your estate will not be subject to estate taxes, there
are other reasons you should consider completing an estate
plan and establishing a trust. For example, you would
benefit from a trust managed by Mission if you are concerned
about becoming incapacitated and have no one to take care
of your finances in that event. A trust also serves
as a vehicle to ensure that your estate passes on to your
spouse, family and other potential beneficiaries promptly
and efficiently.
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Trust
Administration by Mission
As
your trustee, Mission will dedicate a skilled and experienced
team to coordinate the administration and investment management
of your account according to the terms set forth in your
trust document. Offering comprehensive services, we'll
help you build and preserve your wealth by minimizing estate
and gift taxes payable from your estate. You may retain
as much control over your investments as you wish.
You may establish specific guidelines and objectives for
your portfolio manager to follow, or you may reserve the
right to approve recommendations. Many individuals
are not familiar with the role of a corporate trustee, such
as Mission, and frequently ask why one should select a corporate
trustee.
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Why
Select a Corporate Trustee?
Experience
Unless
it is their chosen profession, few individuals are experienced
trustees. The staff of a corporate trustee is composed
of experienced professionals, familiar with managing all
types of trusts. They are knowledgeable in investments,
accounting, tax and estate planning, as well as the duties
of a trustee.
Responsibility
A
corporate trustee is required by law to perform faithfully
all of its duties and to follow the terms of the trust document
to the letter. All employees are covered by a fidelity
bond at no additional charge to the trust. An individual
trustee is not always covered by a bond, and when one is
covered, the cost of the bond, which may be substantial,
is usually charged to the trust account.
Full-time
attention
Individual
trustees typically perform their duties only part-time,
as an addition to their other personal and professional
responsibilities. As a result, when conflicts arise,
an individual trustee will often attend to personal priorities
first to the detriment of the trust. An individual
trustee may be unavailable from time to time. A corporate
trustee is always available and devotes its full time and
attention to the tasks required of a trustee.
Permanence
An
individual trustee may not survive the trustor, may become
ill, or may, for some other reason, be unable to act on
behalf of the trustor or beneficiaries. With a corporate
trustee, the trustor and beneficiaries are assured that
a competent and experienced organization will always be
ready to act when the time comes, even many years in the
future.
Investment/Experience
The
investment decisions of any trustee of assets other than
his or her own are measured against specific standards.
In Arizona, these include the Prudent Investor Act.
Most individual trustees are unfamiliar with the Act's requirements.
Even hiring an outside investment advisor does not relieve
the trustee of the ultimate responsibility of keeping investments
in conformity with the Act. A corporate trustee's
investment experience includes recognition of provisions
of the trust and of the Act's requirements.
Group Judgment
With
Mission as corporate trustee, experienced senior officers
make all major decisions with respect to investments, sales,
leases, mortgages and other property matters, as well as
decisions relating to the exercise of discretion in dealing
with the beneficiaries as mandated in trust documents.
By bringing together the knowledge and experience of a group
of professionals, a corporate trustee can render more fully
informed decisions.
Impartiality
An
individual trustee may find it extremely difficult to be
entirely impartial in making decisions as a trustee, particularly
if that person is also a beneficiary. Other beneficiaries
may criticize and express a lack of confidence in decisions
made by the trustee. This often leads to family dissension
and sometimes to the termination of lifelong relationships.
A corporate trustee is impartial in decisions relating to
the beneficiaries.
Record Keeping
An
individual trustee may have difficulty maintaining appropriate
records for the trust, which could result in losses to the
trust and inadequate information about trust matters for
the beneficiaries. A corporate trustee has a bookkeeping
system in place to safeguard assets, to ensure accurate
accounting of receipts and disbursements and to provide
monthly or periodic statements to the beneficiaries.
Control
During
their lifetimes, the trustors may retain control of the
trust in one or more ways: (1) retain the right to approve
or disapprove all contemplated investment changes; (2) retain
the right to change corporate trustees; (3) retain the right
to amend or revoke the trust and terminate the arrangements.
Regulation
Corporate
trustee accounts are examined at least once a year by the
State Banking Department or other regulatory agencies.
In addition, these regulatory agencies require annual audits
performed by an independent auditor. Trusts administered
by individual trustees are rarely subject to examination.
Personal
Liability
An
individual trustee may be personally liable even for good
faith conduct that falls short of legal standards.
Pledged indemnification from trust assets may prove insufficient
if the trust has been terminated or if remaining assets
are limited. A corporate trustee can better avoid
such liability and carries insurance as further protection.
Value
Unless
otherwise specified in the trust document, every trustee,
including an individual, is entitled to a reasonable fee
for administering a trust. Because corporate trustees
perform most needed services in-house and can negotiate
lower costs such as reduce commissions on investment transactions,
fees of a corporate trustee are highly competitive with
those of an individual trustee.
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What
is a Revocable Living Trust?
Simply stated, a REVOCABLE LIVING TRUST is
a personal agreement that provides for your present and
future financial concerns and wishes, both for yourself
and your beneficiaries. The trust acts in conjunction
with your will to ensure that your assets are distributed
according to your desires. It is "living"
because it is effective once you have created it, and "revocable"
because you can amend or revoke it at any time. A
living trust provides the grantor, or person who created
the trust, with control of assets you leave at your death.
Prepared by your attorney, a trust provides the following
key benefits:
-
Personal
Protection -- provides immediate protection in the event
you become incapacitated
-
Continuity
-- can provide financial protection for family members
after your lifetime
-
Avoids
Probate -- simplifies estate distribution and minimizes
court proceedings
-
Privacy
-- your trust is not a public record
-
Estate
Tax Savings -- with proper planning you can minimize
estate taxes.
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Electronic
mail
- General Information: info@missiontrust.com
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