Funding a trust or foundation can be scary. A primary concern often being, “how do I get money out so I can live as I desire?”
It’s an understandable question and a critically important matter to get right.
A trust or foundation must be properly structured to achieve the asset protection and tax benefits you require while also facilitating your desired lifestyle.
Fortunately, there are many ways for you and your loved ones to get money out of your trust.
The most traditional strategy is for trust or foundation beneficiaries to receive distributions or use of trust assets.
But trusts and foundations can also financially benefit others. Here are three less-traditional ways you can receive money from a trust… even if you are NOT a beneficiary.
Director Fees – Trusts and foundations commonly own many corporations and LLCs. Also, some wealthy individuals elect to have a Private Trust Company might serve as trustee. You may receive compensation for serving on one or more boards of directors of such entities.
Foundation Councilor Fees – Under the right circumstances, it might be appropriate and desirable for you to serve as councilor of your foundation. You may receive compensation for this service
Investment Advisor Fees – Trustees are often required to consult an investment advisor before investing trust assets. You may serve as your trust’s investment advisor and be compensated for this service.
Regardless of how one receives money from a trust, it may be taxable to the recipient – this depends on a number of variables such as the recipient’s tax residency and the tax domicile of trust assets.
In my experience, clients understand the importance of putting assets into a trust or foundation but may be reluctant to take action because they (rightfully) fear getting it wrong.
Getting locked out of your wealth is a worst-case scenario and a legitimate possibility with improper planning.
It’s my job as an advisor to take a client’s preferences, fears, and desired outcome and first determine what is legally possible under the circumstances. Second, I must design a trust or foundation that balances protection and tax benefits with the flexibility required to ensure lifestyle goals can be met despite life’s big events (marriage, death, divorce, health problems, etc.)
In my latest video, I walk through some of the many considerations that must be made when designing a trust or foundation around a client’s particular situation.