Trust Accounting | Middlesex County, NJ
A trust account is where a bank or trust company, authorized to act on behalf of a group or individual, holds funds for specific purposes, such as paying, taxes, fees, etc. Banks usually offer trust accounts as a service. The bank trust account is a useful way to convey and control assets on behalf of a third-party owner. One example, a Totten trust, allows a trustee to control the assets of an estate, while a real estate trust holds funds for payment of costs associated with a property.
Basic Types of Trusts
Marital or "A" trust
Designed to provide benefits to a surviving spouse; generally included in the taxable estate of the surviving spouse.
Bypass or "B" trust
Also known as credit shelter trust, established to bypass the surviving spouse’s estate in order to make full use of any federal estate tax exemption for each spouse.
Outlined in a will and created through the will after the death, with funds subject to probate and transfer taxes; often continues to be subject to probate court supervision thereafter.
Irrevocable life insurance trust (ILIT)
Irrevocable trust designed to exclude life insurance proceeds from the deceased’s taxable estate while providing liquidity to the estate and/or the trusts’ beneficiaries.
Charitable lead trust
Allows certain benefits to go to a charity and the remainder to your beneficiaries.
Charitable remainder trust
Allows you to receive an income stream for a defined period of time and stipulate that any remainder go to a charity.
Using the generation-skipping tax exemption, permits trust assets to be distributed to grandchildren or later generations without incurring either a generation-skipping tax or estate taxes on the subsequent death of your children.
Qualified Terminable Interest Property (QTIP) trust
Used to provide income for a surviving spouse. Upon the spouse’s death, the assets then go to additional beneficiaries named by the deceased. Often used in second marriage situations, as well as to maximize estate and generation-skipping tax or estate tax planning flexibility.
Grantor Retained Annuity Trust (GRAT)
Irrevocable trust funded by gifts by its grantor; designed to shift future appreciation on quickly appreciating assets to the next generation during the grantor’s lifetime.
If you've ever been concerned, even for a moment, about complying with the stringent rules of the Office of Attorney Ethics regarding attorney trust accounts, it's time to consider help from a CPA firm with more than twenty years' experience in this area.