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What to know about creating and managing a trust

A common mistake that people make when creating a trust is not picking the right person to oversee it. New York residents may prefer to have a bank or some other entity oversee it instead. These entities could have a greater ability to act as a fiduciary and have a better understanding of the other legal and administrative requirements related to being a trustee.

Using a bank or other financial institution to fill this role can be helpful if a person has long-term investments or other complex assets to manage. However, it is generally a good idea that the trustee knows both the grantor and the beneficiaries. This gives that person a better idea as to what each party wants or needs. Therefore, it can make it easier to make decisions about how to distribute or otherwise handle an asset. With a corporate directed model trust, the role of trustee can be split into two different positions.

A corporate entity will be retained to oversee the legal and administrative aspects of the trust. The grantor's financial adviser will then direct the trust using an already constructed financial plan. The corporate directed trust can be ideal for business owners or others who expect his or her wealth to benefit many generations of family members.

There may be many strategies that a person can use to create an estate plan that meets his or her needs. For instance, it may be possible to use a will to name a guardian for minor children or create a special needs trust to provide for their medical care. Trusts may also be created in an effort to avoid probate, reduce estate taxes and protect assets from creditors.

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