Trust Services 

 

Northwestern Mutual Wealth Management Company can serve as trustee, co-trustee or successor trustee for a wide range of trust accounts.

  • Personal Trusts, including revocable and irrevocable trusts, whether created during your lifetime or established through your estate plan
  • Endowments and Foundations
  • “Rabbi” Trusts (for certain executive benefit plans)

We provide a full range of fiduciary and trust services, including:

  • Trust administration
  • Disbursement management
  • Trust income tax reporting, where appropriate
  • Continuous management and supervision of investments
  • Quarterly reports of investment performance
  • Annual summary of tax data for tax preparers

Trust Basics 

FAQs 

Types of Trusts 

Philanthropy 

 

 

How a Trust Can Help You

The transfer of legal ownership of assets within a trust arrangement creates powerful tax-planning opportunities. Also, the terms of the trust allow you to control the use and disposition of your assets, even beyond your lifetime.

The trustee is responsible for managing the assets for the benefit of particular people or institutions (the beneficiaries) according to the written terms and conditions of the trust document. In some trusts, the grantor is also a beneficiary.

Trusts are commonly used to:

  • Distribute assets according to specified instructions.
  • Preserve wealth by reducing or eliminating estate tax.
  • Support a spouse, children and grandchildren.
  • Reduce income and capital gains taxes.
  • Avoid the probate process and ensure financial privacy.
  • Keep family businesses intact for the next generation.
  • Fulfill charitable intentions.
  • Provide long-term, consistent asset management.

A successful legacy requires vision, long-term planning and financial strategy. A corporate trustee can have the resources and necessary experience to manage your trust. Do you know what questions you should ask before naming a trustee to manage your assets?

FAQs of Trusts

These frequently asked questions on trust services provide general information that may or may not be applicable to your specific situation. Consult your attorney for specific advice on how trusts can help you.

What is a trust?
Which type of trust arrangement do I need?
Which types of trust arrangements provide estate tax savings?
What are the first steps in setting up a trust?
What do I need to prepare before meeting with my Consultant?
What is the fee schedule of Northwestern Mutual Wealth Management Company?
Which trust arrangements offer me the flexibility to change the trust document over time?
How is a trust funded?
How can a trust be used for business planning?

What is a trust?
A legal agreement where an individual (the trustee) controls property or assets put into a trust by another (the grantor) for the benefit of another (beneficiary).

Which type of trust arrangement do I need?
The best way to answer this question is by meeting with your attorney and a Northwestern Mutual Wealth Management Company® Wealth Management Advisor. The specific details of your situation along with the objectives you want the trust to achieve will determine which type of trust arrangement is best for you.

Which types of trust arrangements provide estate tax savings?
Many trusts offer tax savings strategies by sheltering an individual's assets from his or her estate when the ownership of property is transferred to the trustee. This transfer of ownership provides the opportunity for an individual to minimize his or her estate tax liability.

Some arrangements take advantage of existing estate law, such as marital and unified credit trusts, or generation skipping trusts. Other arrangements, such as a charitable remainder trust, gift valuable assets out of an individual's estate to a charitable organization, helping that individual reduce estate tax, while fulfilling the individual's charitable intentions.

For specific information about using a trust for estate tax savings strategies or trust services, contact a Northwestern Mutual Wealth Management Company® Wealth Management Advisor.

What are the first steps in setting up a trust?
If you're ready to consider setting up a trust, Northwestern Mutual Wealth Management Company's® trust professionals can help you decide which kind of trust fits your situation. To get started, contact your Northwestern Mutual representative who will put you in touch with a Northwestern Mutual Wealth Management Company® Wealth Management Advisor, or call (414) 271-1444 to locate an advisor.

What do I need to prepare before meeting with my advisor?
Once your initial meeting is scheduled, you should spend time evaluating your financial and estate planning objectives. Think about your financial needs and how you wish to distribute your assets to your loved ones. You should also be prepared to bring financial documentation, such as copies of your most recent tax return, investment and bank account statements, and life insurance policy statements.

What is the fee schedule of Northwestern Mutual Wealth Management Company®?
Fees for services performed by Northwestern Mutual Wealth Management Company® will depend on the type of trust, the types of assets (and the market value of those assets) held by the trust, as well as the services being requested. For information on pricing, please contact your Northwestern Mutual representative or call (414) 271-1444.

Which trust arrangements offer me the flexibility to change the trust document over time?
A revocable trust allows you to make changes to the trust document at anytime during your lifetime. Revocable trusts include living trusts, marital trusts and unified credit trusts.

How is a trust funded?
A trust is funded when ownership of assets is transferred to the trust. A trust can be funded in a variety of ways. How you choose to fund your trust will depend on your financial goals and objectives. Some of the most common types of funding arrangements include life insurance, highly appreciated assets and other estate assets.

How can a trust be used for business planning?
Business owners who wish to secure the continuation of their businesses can use trust arrangements to provide estate liquidity. These types of arrangements can help pay estate taxes, provide a source of funding for transition of ownership and pay off outstanding debt. Please seek professional advice from your attorney before making any trust arrangement decisions.

The Right Trust for You

Trust arrangements are as varied as the people who use them. Northwestern Mutual Wealth Management Company's® trust services can help you and your attorney choose a trust arrangement that best applies to your unique situation.

Revocable Trust

A revocable trust allows for the professional management of your assets for you and your family during your lifetime and following your death. This type of trust keeps your assets out of probate, ensures that your beneficiaries are provided for in a timely manner and keeps the assets of your estate from becoming public record.

A revocable trust offers flexibility, provides for special circumstances and benefits individuals.

Characteristics include:

  • Established while you are living and may be changed throughout your lifetime.
  • Assets are professionally managed.
  • Orderly disposition of assets to your children, assurance of privacy and avoidance of expense related to probate court.
  • Married individuals can strategically use their unified credits with a revocable trust to save estate taxes.

Irrevocable Life Insurance Trust

An irrevocable life insurance trust can be used to achieve a wide range of financial goals, such as decreasing the value of your taxable estate, providing liquidity for your estate, growing assets estate-tax free and providing a lifetime stream of income for a spouse. Irrevocable Life Insurance Trusts hold life insurance on the life of the grantor.

Characteristics include:

  • Established while you are living and may not be changed by you or anyone else.
  • Ability to transfer assets out of your taxable estate and into the trust, thereby reducing the assets subject to estate taxes.
  • Assets held by the trust will be professionally distributed according to your wishes upon your death and will avoid estate taxes as well as the probate process.
  • The proceeds of the insurance policy are not included in your estate, and therefore not subject to estate and income taxes.
  • Proceeds of the policy may be excluded from your spouse's estate as well.
  • The trustee can use the proceeds to provide liquidity for your estate, make special payments to your spouse or provide a lifetime stream of income to your spouse.

Charitable Remainder Trust

A charitable remainder trust is a split interest trust, benefiting two interested parties. These types of arrangements provide income to the donor or other specified individuals as established in the governing trust document and leave the remaining trust assets to charitable organizations.

Characteristics include:

  • Use of the tax status of charitable organizations provides financial benefits to two different groups of beneficiaries.
  • For individuals with highly appreciated assets with charitable giving intentions, can help generate retirement income.
  • Defer capital gains tax on highly appreciated assets, receive an income tax deduction in the year gifted, and turn assets into an income stream.
  • Benefit charitable organizations who receive the trust's remaining assets upon termination of the trust or at donor's death.

Funded Irrevocable Trust

An irrevocable trust allows for the professional management of your assets and allows you to make tax-free gifts to the trust, up to certain limits, that can grow free from estate tax for the benefit of your heirs.

Characteristics include:

  • Established while you are living and cannot be changed once it is established.
  • Use the gift tax annual exclusion to make gifts to the trust to realize estate tax savings.
  • Make discretionary distributions from the trust to your children while they are still alive.
  • Assets are professionally managed.
  • Trustee becomes responsible for paying taxes and handling the related administrative tasks, a benefit for those with a chronic illness or long-term disability.
  • Orderly disposition of assets to your children, assurance of privacy and avoidance of expense related to probate court.

Generation Skipping Trust

A generation skipping tax-exempt trust provides income and professional asset management to several generations of beneficiaries, while minimizing or avoiding Generation Skipping Transfer Tax.

Congress imposed the Generation Skipping Transfer Tax in 1986 to discourage wealthy individuals from gifting or bequeathing assets to grandchildren or great-grandchildren to avoid estate tax. The Generation Skipping Transfer Tax is not triggered if gifts fall within the limits of an exclusion that is indexed for inflation.

Characteristics include:

  • Help individuals take advantage of gift exemptions and shelter their gifts in a trust that will protect and grow assets for future generations.
  • Irrevocable and intended to provide for the orderly distribution of an estate to the grantor's grandchildren or great grandchildren.
  • Keep assets out of the taxable estate.
  • Allow for distributions to the children of the grantor to an ascertainable standard.
  • Professional asset management as well as orderly and immutable distribution of the trust's assets according to the terms of the trust.

Marital Deduction Unified Credit Trust

A marital trust takes advantage of the federal marital deduction, which allows both spouses to pass unlimited assets to one another without federal estate tax under current law. A unified credit trust utilizes the applicable estate tax exclusion amount, which allows an individual to pass a specified amount of assets to a beneficiary free of federal estate tax.

Characteristics include:

  • Defer estate tax until the death of the second spouse.
  • Customize to reflect your particular situation, even providing for beneficiaries in addition to your spouse.
  • A properly arranged unified credit trust can shelter assets from estate tax at the surviving spouse's death.
  • Professional asset management; leverage the marital deduction and applicable estate tax exclusion.
  • Distribute assets according to their wishes and not according to state intestacy law.
  • Help individuals provide for spouses and children while reducing estate taxes and utilizing applicable exclusion amounts.

Court Appointed Trust

A court-appointed trust is created pursuant to court order to ensure that the terms of a court judgment are carried out for settlements such as wrongful death or personal injury suits.

Characteristics include:

  • Trustee is responsible for managing the property in the court-appointed trust for the benefit of individuals or institutions specified in and according to the written terms and conditions of the trust document.
  • A court-appointed trust cannot be changed or revoked by any party in the future without court approval.
  • Consistent with the terms of the document, the trustee makes all scheduled and discretionary distributions to the trust's beneficiary, pays the beneficiary's bills and handles all related financial affairs.

Special Needs Trust

A special needs trust provides for children, grandchildren, spouse or other loved ones of the grantor with special physical, mental or emotional needs. This type of trust sets aside assets for the benefit of an individual with special needs. It also requires the trustee to manage the assets of the trust according to the terms and conditions of the trust arrangement.

Characteristics include:

  • Cannot be changed or revoked by the grantor or another interested party in the future.
  • Created for individuals with very specific needs and circumstances.
  • Provide for special needs individuals during their lifetime, rather than minimize or defer estate tax for grantors.
  • Protect the assets designated for the special needs of the beneficiary.
  • The Trustee makes scheduled and discretionary distributions and pays the bills of the beneficiary consistent with the governing document.

Endowments and Foundations

Endowments and foundations are organized and operated exclusively for charitable purposes. Similar to other trust arrangements, endowments and foundations are created when an individual transfers ownership of property to a trust with another individual or company serving as trustee.

The trustee of an endowment or foundation is responsible for managing the property for the benefit of designated charities that are named as the beneficiaries of the trust, according to the written terms and conditions of the document.

Northwestern Mutual Wealth Management Company® possesses the specialized trust services skills required to handle the unique investment needs of private or public charitable foundations and endowments, including:

  • Trusteeship or investment management.
  • Sophisticated performance reporting.
  • Special tax reporting.
  • Trust accounting.

Centralized Charitable Giving

Private foundations are often used to focus the charitable giving of a wealthy family. Numerous members of the family can gift property to the foundation, which invests the gifts and grows the value of its assets for the continued charitable goals of the foundation.

The beneficiaries of a foundation must be charitable organizations. Foundations and endowments may be private or public organizations.

Benefits of a Private Foundation

Creating a private foundation or an endowment allows you to create a legacy within your community, while fulfilling your charitable intentions. The structure of a private foundation allows you to decide the amount of your grant, when you will distribute the grant and which charities will benefit. With Northwestern Mutual Wealth Management Company® as trustee, you gain access to professional money management and tax preparation.

Northwestern Mutual Wealth Management Company® possesses the specialized trust services skills required to handle the unique investment needs of private or public charitable foundations and endowments, including:

  • Trusteeship or investment management.
  • Sophisticated performance reporting.
  • Special tax reporting.
  • Trust accounting.
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