Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Capital Preservation Trust Language
Old 03-10-2017, 02:29 AM   #1
Recycles dryer sheets
oscar1's Avatar
 
Join Date: Jul 2013
Posts: 79
Capital Preservation Trust Language

Anyone have capital preservation language in their trusts docs they would be willing to share. Was thinking about putting some language in family trust documents along the lines of modest annual distributions of 3.5% or less to maintain the capital base for future generations. How, exactly, to word that is my question.
__________________

oscar1 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-10-2017, 04:46 AM   #2
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Location: Huntsville, AL/Helen, GA
Posts: 3,754
I have a daughter that's completely without common sense when it comes to money. I'm going to have to setup a Special Needs Trust where any assets are in the trusts' name that are insulated from creditors. And withdrawals will be limited to things like insurance premiums, utility bills and very basic needs. She has two children that have to be protected, and they'll be provided for.
__________________

Bamaman is offline   Reply With Quote
Old 03-10-2017, 07:40 AM   #3
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Posts: 2,347
Quote:
Originally Posted by oscar1 View Post
Anyone have capital preservation language in their trusts docs they would be willing to share. Was thinking about putting some language in family trust documents along the lines of modest annual distributions of 3.5% or less to maintain the capital base for future generations. How, exactly, to word that is my question.
Are you looking for a dynasty trust covering many generations?
Having an irrevocable trust with a long life will also take some tax planning. Earnings that remain in the trust will be taxed at (higher) trust rates. Also, who do you place a trustee and who would administer the trust? You likely don't want this choice to tear apart the family in the process.

Quote:
Originally Posted by Bamaman View Post
I have a daughter that's completely without common sense when it comes to money. I'm going to have to setup a Special Needs Trust where any assets are in the trusts' name that are insulated from creditors. And withdrawals will be limited to things like insurance premiums, utility bills and very basic needs. She has two children that have to be protected, and they'll be provided for.
Special Needs Trust? This is usually for people with disabilities. Your needs sound like a Spend Thrift Trust.

I would use a good estate lawyer to prepare either of these. There are many things that can go wrong with controlling money beyond the grave.

A corporate trustee will need clear instructions to follow. Not just on distributions, but how assets are invested. With too little instructions, they will likely choose overly conservative investments (CMA). Having a trust advisor (someone you trust) that can provide decisions for the trust company. The issue is how long will these people be around to provide this support.
bingybear is offline   Reply With Quote
Old 03-10-2017, 07:46 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 21,767
Search the web for for "Spendthrift Trust". It seems common to have language that says the trustee will distribute only the dividend/interest, so that would preserve capital. But a bank trustee will probably charge ~ 1% plus maybe a fixed sum each year. They are sometimes given some discretion to tap principal for medical needs, education, etc.

Check the NOLO publications, and others, if you want to DIY. Probably worth getting a pro since every state can have different requirements. But I'd still read up so you know what you are getting, and the options.

-ERD50
ERD50 is offline   Reply With Quote
Old 03-11-2017, 01:31 AM   #5
Recycles dryer sheets
Cat-tirement's Avatar
 
Join Date: Mar 2013
Posts: 242
When we set up our trust, our attorney included a "Spendthrift Provision" to protect against creditors, alimony, etc. We also didn't want to have distributions to beneficiaries in a single large lump sum because some have had money management issues. What we ended up doing was stipulating a maximum annual payout to each beneficiary until their share went below a specified threshold, at which point the remainder of their share would be paid. We were not trying to preserve capital, just throttle the inflow of cash to the beneficiaries.
__________________
How can you tell when a cat is retired?
Cat-tirement is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Rental property basis in trust vs. not in trust Dash man FIRE and Money 2 04-19-2014 08:20 AM
Capital Preservation emi guy FIRE and Money 20 11-25-2009 04:20 PM
Meryl Lynch Retirement Preservation MarathonMan FIRE and Money 13 08-19-2008 07:23 PM
FPA Journal: Withdrawal & capital preservation Brat FIRE and Money 15 01-16-2007 08:32 PM
SWR rule-of-thumb assuming principal preservation Delawaredave FIRE and Money 13 02-06-2006 12:22 AM

» Quick Links

 
All times are GMT -6. The time now is 01:48 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2019, vBulletin Solutions, Inc.
×