Will My Trust in Stuart Reduce in Value After I’m Gone?

Generational wealth is infamously difficult to preserve. One of your greatest concerns as you approach estate planning might be the reduction of the wealth you leave behind for your loved ones. Will your trust diminish in value within a few short years, leaving your family struggling with financial pressures? What are the chances of this happening? This is something you might want to discuss with an experienced estate planning attorney in Stuart.

Expect Annual Trust Administration Fees After You’re Gone 

If you’re setting up a trust in Stuart, you should expect the trust to incur annual administration fees after you’re gone. These fees are usually a percentage of the total trust assets, typically only a few percentage points. As a result of these administration fees, your trust could decrease in value by an amount that depends entirely on your total trust assets. Your loved ones will not have to pay these fees directly, as the trust company will simply take them from the available trust assets.

Your Trust Will Decrease in Value When Your Loved Ones Receive Assets

Perhaps most obviously, your trust will also decrease in value when your loved ones receive assets. These could be significant distributions at one time or gradual, spendthrift distributions made over a prolonged period. If you plan to provide financial security for your loved ones over many years, a spendthrift trust may make more sense. If you simply want to use your trust as a means to avoid probate before distributing most or all of the assets you leave behind, a different type of trust might make more sense.

Your Trust Can Grow in Value Despite Fees and Distributions

If you’re worried about your trust assets diminishing in value after you’re gone, you can consider various strategies to help your assets grow instead. An obvious strategy might involve investing the trust assets in something like an S&P 500 ETF. You might also consider treasuries, bonds, or dividend-paying stocks for potentially more reliable, stable returns.

With this approach, it is possible to grow your trust assets even after distributions and fees take their toll each year. For example, your trust might contain $3.5 million in assets when you pass away. Each year, you can expect to pay 1-2% in administration fees ($20,000 to $40,000). You might also distribute $100,000 to each of your three beneficiaries each year to maintain their standard of living.

This equates to a reduction of about $320,000 each year. If you invest your $3.5 million in an S&P 500 ETF from the outset, you can expect a return of about 10.5% per year. This equates to an annual return of $367,500 each year. As you can see, your trust would grow slightly each year despite annual costs and distributions.

Can a Stuart Estate Planning Attorney Help Me Preserve the Value of My Trust? 

A Stuart estate planning attorney may be able to help you assess strategies to preserve the value of your trust. Even when you account for legal fees, trust administration costs, and other expenses, your trust could grow in value as your loved ones get older. If you set up a trust in a certain way, it could preserve your family’s quality of life for decades or even multiple generations. Contact Kitroser Lewis & Mighdoll today to expand on this conversation.

Source: 

investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp