Investment Trust Funds Can be Given as Gifts With Benefits!
Trust funds play an important role in asset protection and estate plans. They have tremendous privacy benefits, and many experts recommend them to investors. A trust is basically a legal agreement that has been around for centuries. These days, investment trust funds are pretty popular in our society, as many investors prefer that their income or inheritance be in the hands of trustees.
Every type of trust has certain fundamental criteria. On a basic level, a trust is in the form of a written agreement between the settler and the trustee. This agreement allows for the grantor to transfer some money or other asset to the trustee, who will hold it for the benefit of the beneficiary. There are sometimes limitations imposed on how the beneficiary can receive the assets, such as that he or she cannot draw any income from the trust, until he or she reaches a certain age.
Some people decide to run investment trust funds that include stocks and bonds. A trust fund does not have to necessarily be money. Either, it could be an investment of some sort, property, or some other asset. For the most part, parents are the grantors of the assets and their children are the beneficiaries, although that is not always the case.
Charitable Gifts
It is not uncommon for a publicly traded security to be in the form of a non-cash, charitable gift. Indeed, many people prefer to be donors of investment trust funds, which entails that they want to give their highly valued stocks and bonds as a gift. There are also many benefits of giving out such charitable gifts. For one thing, donors receive an immediate deduction on their income taxes. They can also avoid capital gains taxes.
Securities as gifts are less expensive to give than cash. For instance, if a donor paid $1,000 for stock five years ago that is now at the fair market value of $2,500, the donor will receive an income tax deduction on the fair market value! So, not only will the donor save money by giving the beneficiary $2,500 worth of stocks that he or she paid $1,000 for, the donor will also receive a nice income tax deduction.
Making a gift of securities investment trust funds
Giving bonds, stocks, or other securities to a beneficiary is usually done by transferring. If the stock is in the form of a certificate, then it must be transferred physically. The donor can endorse the stock by signing it at a bank or brokerage firm in the presence of a guarantor. The certificate itself may also have a place for a signature, most often on the back portion of the certificate.
There are also websites that specifically sell stock and/or investment trust funds that donors may buy and gift to people. In some cases, there may not be a physical copy of the stock, since many choose to own them electronically. In cases such as these, the physical securities are stored in brokerage accounts. In order to give the stock, the owner must gather all the information about the brokerage account, contact the recipient’s broker, and arrange an electronic transfer.