Despite its value to a client, trust planning is not widely understood, even by some insurance advisors. Knowing why and how to engage in trust planning can bring value to your clients and to your business. Not only can trusts help solve clients’ wealth transfer and taxation concerns, but the implementation process can also help deepen advisor relationships with clients across generations.
Trust planning is valuable to your clients and to your business. For your clients, trusts can help alleviate disharmony by eliminating the need for difficult and uncomfortable conversations about wealth transfer among beneficiaries after clients have passed away. Among the financial benefits to clients, trusts can provide greater control over assets than a will — serving as the vehicle to implement the wishes laid out in a will — including where blended families, heirs with spendthrift tendencies, or children with special needs are concerned. With trusts, clients are in greater control of their estate planning and the orderly disposition of everything they own once they die.
(Related: Trust Planning for the Middle Market: 5 Issues to Consider)
Trusts also allow clients’ estates to avoid probate, a process that may add time and lawyer fees to the distribution of assets and make the details of clients’ estates public knowledge; and help facilitate the preservation of assets across generations while enabling the gift of income for heirs.
In terms of your business, in addition to cultivating relationships with future generations, the process of trust planning can increase interaction with centers of influence such as attorneys and CPAs, creating a source of mutual referrals.
Why Trust Planning with Annuities?
Annuities can be used to optimize trust planning and effectively help solve the challenges that today’s investors’ face.
It’s beneficial for advisors to understand the various ways annuities can fit into their overall trust planning strategy to achieve clients’ long-term financial goals.
As an example, when structuring a trust using an annuity, an annuity can be owned by a trust to create a flexible income and wealth transfer strategy. When elected with non-qualified money, it can provide tax-advantaged lifetime income for clients and their beneficiaries.