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February 17, 2010     Sioux County Index-Reporter
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February 17, 2010

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Top 10 trust questions by MERLIN MEYER Peoples Bank PRESIDENT When the financial markets hit a rough patch -- as they have for perhaps a year or so -- safety of assets becomes a para- mount concern for many. As a result, we've seen a marked shift in the kinds of questions that we're asked about trusts and their role in wealth management. Here is a compendium of what is on the minds of our clients and their benefi- ciaries. How safe are trust investments? Each trust in our care is managed in accordance with an investment plan that matches the desires of the trust's creator and the needs of the beneficiaries. The trust managers use a disciplined process of diversifica- tion, sometimes called asset allocation planning, to balance investment risks and rewards. Does that mean the value of trust assets can't go down? No, it does not. Trusts are subjected to the same market forces as any other investment account. There's no point in sugarcoating it -- when the bot- tom falls out of the market, it falls out for everyone. How much income will a trust pro- vide? Each trust will define how income is to be measured. In a traditional trust, "income" means collected interest and dividend payments. With that approach, as interest rates and dividend yields rise and fall, income changes with them. Changes in asset values -- growths in stock prices, for example -- accrue to the remainder beneficiaries. Some trusts today take alternative approaches, defining income as a per- centage of trust assets or as a fixed dollar amount every year or as a dollar amount adjusted for inflation -- there are many alternatives to consider. How much tax does a trust save? Taxes are usually a secondary consideration in trust planning. A living trust established for the benefit of the grantor and spouse, for example, will not have any effect on taxes whatsoever. A trust that provides for a surviving spouse may avoid fed- eral estate tax -- but so would an outright bequest to the spouse. When philanthropy comes into the pic- ture, there may be important tax savings associated with charitable trusts. These can include savings in gift, estate and capital gains taxes, for example, as well as income tax deductions. However, charitable trusts are irrevocable, long-term commitments. So why do people create trusts, if not to save taxes? Trusts provide a structure for family financial protection; they deliver financial resources to multiple beneficia- ries over a span of time. No two trusts are exactly alike, as each trust is individually tailored to meet the specific needs of its grantor and his or her family. Still, trusts can be categorized by their primary functions and characteristics. Trust approaches that may be of interest to you include: Revocable, living trust. The trust you set up for yourself, a living trust provides investment management for your assets and financial protection for you in the event of your disability. Living trusts also may avoid probate and, therefore, provide the family with uninterrupted financial protection and an element of financial pri- vacy at the death of the grantor. Charitable trust. A charity may be given an income interest or a remainder interest in a trust. To secure income, estate and gift tax advantages, a charitable trust must be irrevocable. Special needs trust. Lifetime financial protection may be provided for a disabled individual. Can I be my own trustee? Yes, you can be the trustee of your trust, or you can have a trusted family member be the trustee. But that's not a course we would recommend. Some very important reasons to let us be trustee of your trust are: To gain access to unbiased, profes- sional management of your assets. To have someone available to stand in your financial shoes should illness or incapacity strike. To provide financial support for your loved ones during your lifetime and beyond. How are you compensated as trustee? We charge an annual fee for serving as trustee, expressed as a percentage of the assets under management, rather than charging a commission on transactions. Our fee, therefore, rises and falls with the value of the trust -- the better you do, the better we do. Please ask for a copy of our fee schedule to learn more. Ira bank fails, what happens to the trust accounts? Unlike bank deposits, which become assets of the bank on its balance sheets, the assets of trust accounts are held completely separate from a bank's own assets. If a bank fails, the creditors of the bank have no access to trust department assets. The bank cannot borrow against the value of trust assets, nor can it lend the assets themselves for any purpose. In the unlikely event of a bank failure, its trust accounts would be transferred to a healthy bank under the supervision of government regulators. Am I wealthy enough to have a trust? Most trust clients don't think of them- selves as "rich." However, they do have significant investment assets that will ben- efit from professional management -- per- haps from the sale of a business, an inheri- tance, a large retirement plan distribution, or a portfolio accumulated over a lifetime of saving. If that describes you, you should consider trust benefits. Can I change my mind about my trust? Many people begin with a revocable trust, which can be amended or terminated at any time. That way, they can give the trust idea a "tryout" to see how they like it. How can I learn more about trusts? Make an appointment to meet with one of the trust professionals at Peoples Bank trust department at your earliest conve- nience. We will be pleased to tell you more. 2008 M.A. Co. All rights reserved Save on ATM fees (NAPSA) - ATM fees can really add up. A recent survey found that Americans spent about $4.2 billion on these sur- charges in 2007 and will spend an esti- mated $4.4 billion in 2008. Since finan- cial institutions and ATM owners started surcharging in 1996, these fees, which are used to cover the cost of providing and maintaining ATMs, have steadily climbed. The current average ATM fee is $1.78, with the most common fee being $2. Some banks charge as much as $3. With 99 percent of financlal institutions charging ATM fees, they can be hard to avoid, but not impossible. To help you save money, here are a few tips: Only withdraw money from your own financial institution's ATM so you're not hit with a surcharge. If you regularly have to withdraw money from a machine that will charge you, take out more money less often ($400 once every two weeks instead of $200 a week) so you save a transaction fee.w Switch to a financial institution that offers a large number of surcharge-free ATMs. For example, many credit unions in the country now have access to the nation's largest network of surcharge-free ATMs. The benefits of joining a credit union don't stop with ATM access. Credit unions are not-for-profit cooperatives, which means they are economic democ- racies and work for their members' best financial interests. Because credit union profits go back into the credit union, cred- it unions typically have higher interest rates on investment products and lower rates on loans. And contrary to popular belief, nearly anyone can be a credit union member. In fact, according to a recent survey, one in three Americans is a credit union mem- ber. Community-chartered credit unions' memberships are defined by geographic regions rather than by employers or asso- ciations and anyone living or working in the region can generally become a credit union member. For more information, visit www. Cut cell phone costs to save money If you've been looking for ways to cut back your household budget, it might be time to talk cell phones. More than 160 million of us own one, and mobile phone users spend more than $143 billion each year on service, according to CTIA, the wireless trade association. But experts say prepaid cell phone ser- vices might help you take control of that spending and take the sting out of fluctuating monthly bills. According to the non- profit Telecommunications Research and Action Center, switching to pre- paid services can produce one of the most dramat- ic savings for cell phone users. And, as economists have been advising, mov- ing from a credit to cash mentality can be a good cost-control idea that helps ensure consumers can afford the lifestyle they are leading. Here are some tips for finding value and simplic- ity in a mobile phone ser- vice: 1. Pay as you wish. Prepay customers don't receive a bill. Instead, they purchase minutes up front, then the cost of calls sent or received are deducted from their account balance. Because costs are paid in advance, prepaid cellular services require no cred- it check, no contract and no monthly charges. And now, most prepaid wireless providers let you pay for service by minute, day or month. Knowing exactly how much you are spend- ing on your mobile phone service is helpful. 2. Choose a phone that will last. The aver- age U.S. cell phone is replaced every 18 months, according to the EPA, and replacement-phone sales average more than $100 million every year. The lesson here: Consider pur- chasing a durable phone that can withstand dust, shock, drops and spills. 3. Take advantage of unlimited calls. If you're a heavy user, look into prepaid wireless plans that offer unlimited ser- vices, such as unlimited text messaging, unlimited mobile to mobile calling and unlimited night and weekend calling, or let you make unlimited local and nationwide long-distance calls for a fixed monthly price. 4. Cut your costs in half. Eliminate your land- line service altogether and go all mobile. According to a recent study by the Pew Research Center, approximately a quarter of all landline phone users in the U.S. say they are very likely or somewhat likely to convert to being only cell phone users. 5. Save your minutes. With walkie-talkie servic- es, customers don't have to use their cellular minutes. Instead, they can connect at the push of a button with push-to-talk service. We're the One for all your financial needs. Bankers who care. Bankers who are there when you need them. Bankers who serve their customers and communities. Join the growing number of your friends and neighbors now enjoying the convenience, service & products designed with you in mind.