Call Ascent Law LLC (801) 676-5506 When you need an estate planning attorney in West Jordan Utah. You’re a parent of course you want your children to thrive, to be as happy and successful as they can be. Along with parental love and practical advice, you may want to transfer some of your wealth to your children. To transfer wealth in the most protective and tax-efficient way possible, consider using a trust. The structure of your trust should reflect both your own and your children’s financial, professional and personal goals. But different generations have different perspectives. For example, surveys show that younger Americans tend to have a keener sensitivity to wealth inequality than their parents and grandparents. In other words, multigenerational understanding and dialogue are crucial to prudent trust and estate planning. To set up the most effective trust structure and strategy, you’ll want to understand the worldview of your children’s generation, whether Millennial (born 1981–1996) or Gen Z (born 1997–2012), and your own children’s passions and goals. Americans have long been known for an entrepreneurial spirit, but it may be especially pronounced among Millennial. One survey found that 66% of Millennial aspire to start their own businesses, and 61% of them feel they would have more job security by owning their own companies.
Here are a few ways you might help your children make that dream come true:
• Boost your children’s business engagement and sense of entrepreneurship by setting up a trust. For example, you might transfer your privately held business assets to your children in the trust. How might that spark an entrepreneurial spirit? Just knowing a trust is there might give your children the peace of mind to try something entrepreneurial, taking on the risks of starting a business that others would find daunting. But it is critical to choose the right trustee to provide guidance and expertise.
• Put seed money for your children’s businesses in a trust. Doing so would provide a resource to fund your children’s entrepreneurial ideas, while providing guardrails and oversight to protect the principal of the trust. Ensure that you work closely with an estate planning lawyer as well as a responsible and knowledgeable trustee so the terms of that trust’s distribution or loans from the trust work well for the children’s goals. Specifically, a trust can be set up to allow the trustee to support reasonable entrepreneurial initiatives, if your children choose to pursue them.
How Can A Trust Support Your Children’s Philanthropic Goals?
Many times, trust documents are written to distribute funds to beneficiaries according to the ascertainable standard (to help pay for their health, education, maintenance and support). However, this standard provision wouldn’t allow your children to withdraw trust funds to support their philanthropic endeavors. An alternative structure, including a charitable beneficiary alongside your children, can give a trustee the power to distribute trust assets to charity. Instead of trying to finesse the language of a trust agreement, you may establish and fund either a private foundation or donor-advised fund account. One important benefit: Children can sit on the board of the foundation and influence its donation strategy. A private foundation or donor-advised fund account can exist in perpetuity, and help you to instill and inspire philanthropic values for many generations.
As many aspiring grandparents know, children of Baby Boomers are getting married later in life. In fact, Pew Research found that Millennials are getting married on average four years later in life than their counterparts in 1987. Marrying later means that many members of the Millennial and Gen Z generations may have accrued a substantial pool of assets by the time they do tie the knot. That may strengthen the argument for a pre-nuptial agreement. If you do not want to broach this sensitive subject with your children, there are other ways to ensure that the wealth you intend for your children cannot be claimed by a potential ex-spouse:
• Establish a separate property trust for your children. This would help distinguish marital property from separate property in the trust (essentially property acquired before marriage or through inheritance or a gift). The assets in the trust will most likely never be considered marital property.
• Consider creating a dynasty trust. Such a trust would help transfer your assets from generation to generation without incurring transfer taxes, while providing asset protection in perpetuity. The terms of the trust may or may not include spouses of the family members or the option for a beneficiary to appoint trust assets to a spouse.
You want your wealth to best support your children’s ambitions and aspirations—and your trust should be structured accordingly. When establishing any type of trust structure, we recommend you involve the next generation early on—together, you’re building a family legacy. Your Estate planning attorney in West Jordan, Utah can work closely with you to help you make sure your trust works well for you and your children, and that it is well positioned to meet the challenges of the future.
What Beneficiaries Need To Know To Optimize Their Resources
Trusts are commonly used wealth planning vehicles. Yet many beneficiaries don’t anticipate how the structure of their trusts may impact their entire financial pictures, from what they spend and how they invest to meeting their expectations and making future plans. Moreover, because trusts do not have to conform to a single structure, beneficiaries of multiple trusts may well want to think carefully about how, when and in what order they receive distributions and if the distributions they receive might impact their non-trust resources.
Irrevocable trust distributions can vary from being completely tax free to being taxable at the highest marginal tax rates, and in some cases, can be even higher.
Grantors, too, should examine whether or not the characteristics of the trust(s) they have created are benefiting—or likely to benefit—their heirs (and their decision making) to the degree originally intended. Your estate planning attorney can help you gather and assess the information you need.
How Irrevocable Trusts Work
There are three distinct components to consider: First, understand how the trust operates
Among the questions to have answered:
• Are you a current or future beneficiary? That is, will you receive distributions of income or principal now—or later, when the current beneficiaries’ interest terminates?
• Who is the trustee? Does the trustee have authority over investments and distributions? Or, is there a third party whose authority on investments and/or distributions supersedes that of the trustee?
Next, determine the tax characteristics
As a beneficiary, there are several key things you will want to know:
• Is the trust a grantor trust for income tax purposes? If so, the grantor is responsible for paying U.S. and state income taxes owed by the trust, and the beneficiaries will not owe income taxes on distributions they receive from the trust. Even so, for estate tax purposes, the assets in an irrevocable grantor trust may be considered outside of the grantor’s estate and therefore not subject to estate taxes at the grantor’s death.
• Is the trust a non-grantor trust for income tax purposes? Then keep in mind, the trust is the taxpayer for any trust income not distributed to a beneficiary (i.e., accumulated income), and may be taxed in several jurisdictions: the state in which the trustee resides, in the state in which the grantor resided when the trust was created, and/or in the state in which a trust beneficiary resides.
• Does the trustee have discretion under the trust agreement to distribute cash or other assets to the beneficiary, or are certain distributions mandatory? If you are the beneficiary of a trust that makes mandatory distributions, you likely will have a predictable income stream from that trust—and can plan accordingly (though investment decisions and investment returns can affect distribution amounts).
Conversely, if the trustee has complete discretion over distribution timing and amounts, you may not have a predictable income stream, making planning more difficult.
How A Trust Works May Affect Your Goals
Your relationship to a trust (grantor, beneficiary) can enhance your lifestyle and allow you to fund long-term goals, such as paying for a child’s college education or making charitable gifts. Consider:
• Grantor—If you are the grantor of an irrevocable grantor trust, then you will need to pay the taxes due on trust income from your own assets—rather than from assets held in the trust and to plan accordingly for this expense. Financial modeling can help determine whether this additional expense is sustainable without compromising your other goals.
• Beneficiary—When trusts make (at a minimum) annual mandatory distributions, beneficiaries can reasonably expect a reliable stream of income. However, this may not be the case if distributions are made solely at the discretion of the trust’s trustees. In such instances: If you don’t need discretionary distributions to accomplish your goals, you may want to inform the trustee of this fact. The trustee may then invest those assets with a longer time horizon in mind, since the remainder beneficiaries will ultimately receive these assets years into the future. (All else being equal, remainder beneficiaries stand to inherit more from a trust that does not currently make distributions and whose assets are invested with long-term growth as its primary investment goal.)
Withdrawal strategy: Minimize taxes
To minimize future transfer and income taxes to the extent possible, the widower worked with his advisors to implement a strategy for his spending, investing and gifting:
• Spending order—The plan is to first draw from the accounts that are subject to his estate taxes to meet his spending needs, and then from accounts that are exempt from estate taxes, as follows: Required Minimum Distributions (RMD) from his IRA; individual brokerage account and Marital GST Non-Exempt Trust; additional IRA withdrawals; Bypass GST Non-Exempt Trust; Bypass GST Exempt Trust.
• Asset allocation—The overall allocation of the $25 million in investable assets is 60% are in equities; 40% in fixed income. The assets that will be spent first are more conservatively invested than those that will be spent last, meaning most of the fixed income investments are held in the brokerage account and Marital Trust. The equities are in the Bypass Trusts.
• Treatment of charitable gifts—As part of his own estate plan, the widower plans to use funds from his retirement account (IRA) and personal assets, along with funds from trusts subject to the most estate taxes to make charitable gifts. He will not make donations using funds in his GST-exempt funds.
Difference Between an Estate Plan, a Will, and a Trust In West Jordan.
When telling your loved ones about your estate plan, it is important that each of you understand the difference between an estate plan, a will, and a trust. All these are important aspects of the estate planning process.
The estate plan includes all of the documents that specify what happens to your assets after you pass away or are otherwise unable to care for yourself. This typically includes a will and/or trust, a power of attorney, an Advance Medical Directive, and more.
A will is a legal document that takes effect after you pass away. A will identifies the assets each of your beneficiaries will receive from your estate after you pass away and your debts have been paid.
A trust is a legal entity that takes effect as soon as it is signed. A trust holds legal title to the assets placed in the trust and governs how those assets will be administered both during your life and after your death.
We all take risks every day. Some of those risks can be avoided and some can be transferred through use of insurance. Proper planning can also minimize liability by the creation of legal entities recognized by the law to provide protection from lawsuits, creditors, etc. You spend your entire lifetime building up your assets. It is important to at least know what options you have when it comes to asset protection. If you are in a profession where lawsuits can happen, this is especially key. Business owners can minimize personal liability by incorporating or setting up an LLC. Selecting the appropriate legal entity is critical for managing your risk. Sometimes special types of irrevocable trusts may be appropriate to protect assets like real estate, brokerage accounts or other funds. It may also become necessary to protect your assets from nursing home costs.
Proper planning can be advantageous to preserve assets.
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It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506
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West Jordan, Utah
West Jordan, Utah
|Coordinates: 40°36′23″N 111°58′34″WCoordinates: 40°36′23″N 111°58′34″W|
|Named for||Jordan River|
|• Mayor||Dirk Burton |
|• Total||32.33 sq mi (83.73 km2)|
|• Land||32.33 sq mi (83.73 km2)|
|• Water||0.00 sq mi (0.00 km2)|
||4,373 ft (1,333 m)|
|• Density||3,617.72/sq mi (1,396.88/km2)|
|Time zone||UTC−7 (Mountain (MST))|
|• Summer (DST)||UTC−6 (MDT)|
84081, 84084, 84088
|Area code(s)||385, 801|
|GNIS feature ID||1434086|
West Jordan is a city in Salt Lake County, Utah, United States. It is a suburb of Salt Lake City and has a mixed economy. According to the 2020 Census, the city had a population of 116,961, placing it as the third most populous in the state. The city occupies the southwest end of the Salt Lake Valley at an elevation of 4,330 feet (1,320 m). Named after the nearby Jordan River, the limits of the city begin on the river’s western bank and end in the eastern foothills of the Oquirrh Mountains, where Kennecott Copper Mine, the world’s largest man-made excavation, is located.
Settled in the mid-19th century, the city has developed into its own regional center. As of 2012, the city has four major retail centers; with Jordan Landing being one of the largest mixed-use planned developments in the Intermountain West. Companies headquartered in West Jordan include Mountain America Credit Union, Lynco Sales & Service, SME Steel, and Cyprus Credit Union. The city has one major hospital, Jordan Valley Medical Center, and a campus of Salt Lake Community College.
City landmarks include Gardner Village, established in 1850, and South Valley Regional Airport, formerly known as “Salt Lake Airport #2”. The airport serves general aviation operations as well as a base for the 211th Aviation Regiment of the Utah Army National Guard flying Apache and Black Hawk helicopters.