Financial Advice: Why Your Financial Plan Should Include a Trust

It’s never fun to think about, but it’s essential to plan out how your money will pass to your family when you die. Mark Gerard, of Charles Schwab in Rockford, shares the benefits of including a trust in your estate plan.


Estate planning is never a fun topic. No one wants to plan for their eventual demise, including me. I have realized, however, that a little bit of planning and time spent now will save your loved ones days, and perhaps weeks, of effort, over the many months it can take to close out an estate. If you take a few easy steps now, your executor, beneficiaries and loved ones will all truly appreciate it. I see it play out practically every week in our Rockford office.

Most of us are familiar with wills and may have one in place. But when people think of trusts, they often picture something reserved for the very wealthy. That’s not the case. A personal trust can actually be helpful for people in a variety of situations.

Simply put, a trust is a legal relationship in which the trustee, who can be you or someone you name, holds legal title to assets and manages them on behalf of the beneficiaries of the trust. Those beneficiaries could include you, your family or your favorite charities. The assets inside the trust could include your home, investment accounts and more.

You can set up the trust so you always have access to the assets at any time. For example, you could sell investments held in the trust to pay college tuition for a child.
Trusts can offer a number of benefits:
May minimize transfer/estate taxes
May help your beneficiaries avoid the expense, delay and publicity of probate
Allows you to create rules for how your assets will be distributed
Allows for charitable giving strategies
Potentially enables informed financial decision-making, should you become incapacitated
Potentially allows for detailed planning in unique family situations, such as ongoing care for a special needs child.

A common approach we see is an individual will set up a trust and act as the trustee, with the intent to do so until their death. This gives them the latitude to hand over trustee responsibilities to someone else should they be unable to continue due to age or illness.

Deciding who should succeed you as trustee is a critical decision. Your trustee should be able to impartially manage your financial assets, and be willing to assume all the accompanying legal complexities and administrative duties. They should be able to fulfill this responsibility for the full term of the trust, which could be decades into the future.

Because of the responsibilities, time commitment and knowledge the role demands, many people choose a corporate trustee to succeed them. A corporate trustee offers the benefits of financial expertise, unbiased decision making, fiscal responsibility and sworn fiduciary duty to always act in the best interest of the trust and its beneficiaries. This provides continuity to ensure your wishes are carried out and your estate is carefully managed into the future. A corporate trustee can serve as the sole trustee, or as co-trustee, working alongside a family member or trusted individual you choose.

One question I frequently get asked is whether or not a trust is better than a will. There are advantages and disadvantages to both. Bear in mind that a trust does not necessarily replace the need for a will. A trust is just one part of an estate plan, and this should be considered as you are planning for the future. It is important that you seek the guidance of an attorney when deciding whether a will or trust is the best thing for you and your family.

I experienced the importance of planning for a family’s financial future firsthand in 2016 when both my father and father-in-law passed away. The planning they had done helped ease the transition for my wife Joanna and I, and our mothers. In our branch, we help clients navigate the terrain of estate planning, and eventually, we help their loved ones move forward.

Mark Gerard is an Independent Branch Leader at Charles Schwab in Rockford with more than 22 years of experience helping clients achieve their financial goals. Follow Mark Gerard on Twitter @MarkGerardCS. Some content provided here has been compiled from previously published articles authored by various parties at Schwab.

Information presented is for general informational purposes and is not intended as personalized advice. Employees of Charles Schwab & Co., Inc. are not estate planning attorneys and cannot offer tax or legal advice, or create and prepare legal documents associated with such plans. Where such advice is necessary, please consult a qualified legal or tax advisor. (1219-98GA)