What is a unitrust? Find out in this comprehensive overview from a reputable Georgia estate planning attorney.
What Is a Unitrust?
It’s never too early to start planning for your family’s future.
If you have questions, I’m here to help. There is no commitment and we provide free initial 15-minute phone calls. We look forward to meeting you.
To understand the intricacies of a unitrust, take the following scenario. A family member creates a trust to provide for the surviving spouse in the event that they pass away. Should the spouse die, the assets would pass on to the children, who in this scenario are from a previous marriage.
The surviving spouse wants to receive maximum trust income while the children would wish for appreciation. So, is there a reasonable way for a trustee to meet the needs of both parties?
In comes the unitrust. This form of trust dishes out a set percentage of the fair market value of the trust principal to the surviving spouse from our above scenario. The surviving spouse is also referred to as the current beneficiary.
Through prudent investments of acceptable risk (stock market, REITs, or Bitcoin), the asset in question grows, increasing the payout, as per the percentage of the trust principal and increasing the trust’s value. The interests of both parties are aligned, and there is no conflict between them.
What Is a Total Return Unitrust?
The key to such a trust is investing in options in the market that will guarantee an increase in the market value. From our industry experience, most trustees use a tried and proven approach known as Total Return Investing.
A total return unitrust focuses on a summation of all current earnings, including dividends, interest, and capital gains. Such a financial plan minimizes possible risk, considers the impact of inflation, and manages to generate income.
Drafting a trust with the format of total return investing is highly recommended. Get in touch with the Law Office of Paul Black to learn more at 404-410-6820 today! Receive a free initial 15-minute phone call consultation on your case.
How to Avoid Conflict of Interest With Unitrust
From the trust setup explained above, the tension between the lifetime beneficiary and the remainder beneficiaries is bound to be tense. The former would prefer a robust investment strategy, guaranteeing substantial growth and thus income. On the other hand, the remainder beneficiary would prefer to invest in safer options focused on the appreciation of the trust.
The interest of the beneficiaries can be comprehensively handled with the implementation of a unitrust.
Without the proper setup of the trust, payout, and other elements that the unitrust requires, the trust may fall out. Depending on the interests of the parties involved, the matter might find itself in a court of law.
You can always search for an estate planning attorney near me or simply contact the Law Office of Paul Black. We have the knowledge required to align the interests of both the beneficiaries and the principal.