Investment Trusts

royals.gif (17926 bytes) INVESTMENT TRUST:
Your investments earn more for you on a tax deferred basis.

The Investment Trust, an irrevocable, inter vivos trust.

Specific Purpose: To hold paper investments such as mutual funds, stocks, bonds, any form of securities, second mortgages, etc. so that the earned "income"--dividends, capital gains and any other form of gain--may be allocated to the corpus [principle] to provide either retirement income or a fund for emergency situations available to the named beneficiaries without creating any tax liability until such funds are paid directly to the named beneficiaries. If the "governing instrument" contains the provisions for it certain other expenses may be paid directly to creditors without creating a tax liability to the beneficiaries. It may even be designed to pay I.R.S. debt for the named beneficiaries such as through a Grant.

Special Provisions: The trustor works with the creator to draft a "contract" which becomes the "governing instrument" of the trust. This "governing instrument" is otherwise known as the indenture or the contract agreement. If the specific provisions are written in the "governing instrument" then those provisions override statutory law. If there is no provision covering a certain circumstance then the statutes are applied.

The Board of Trustees may consist of one person or as many as the creators may desire. Lord & Carter recommends from 3 to 7 persons depending upon the specific purposes of the Trust. The signing power for banking purposes may be delegated to one person only, or several, as deemed appropriate by the board of trustees. The trustee may appoint a manager to certain accounting duties; however, the trustee is the final fiduciary and responsible as an overseer of all trust activities. In order to maintain the trust as irrevocable there must be an unrelated trustee; an adverse trustee (one who has a small financial interest in the trust estate) and a third trustee who is not a beneficiary, but may be related. One of several beneficiaries, may serve as one of several trustees. The sole beneficiary may not be the sole trustee.

Beneficiaries: In FDIC insured banks accounts are insured up to $100,000; however, trust accounts are insured up to $100,000 per beneficiary as long as the beneficiaries are registered with the trustee. It would be advisable to also give a bank a list of beneficiaries for the trust's legal file held by the bank

If you would like more information, please fill out the following form.

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