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An Accumulation Trust is a type of trust that allows the income generated by the trust assets to be accumulated within the trust rather than immediately distributed to the beneficiaries. Instead of receiving regular income payments, the income is reinvested, giving the trust assets the potential to grow over time. The accumulated income is typically distributed to the beneficiaries at a later date or upon reaching certain conditions specified in the trust document.

Deciding whether to use an Accumulation Trust in your estate planning depends on your unique circumstances and goals. Here are some factors to consider:

Long-term asset growth: If your goal is to preserve and potentially increase the value of the trust assets for the future, an Accumulation Trust can be a suitable option. Allowing the income to accumulate within the trust can provide the opportunity for the assets to grow over time.

Beneficiary financial management: Consider the financial responsibility and capability of your beneficiaries. If you have concerns about their ability to handle a significant sum of money or want to ensure that the funds are used for specific purposes, an Accumulation Trust can help manage the distribution of assets in a structured manner.

Protection against creditors: By retaining the income within the trust, it may receive greater protection from potential creditors. If you anticipate any creditor issues for your beneficiaries, an Accumulation Trust can help safeguard the trust assets.

Tax considerations: Consult with a qualified tax professional to understand the potential tax advantages or implications of using an Accumulation Trust in your specific jurisdiction. Depending on the applicable tax laws, retaining income within the trust may offer certain tax benefits or strategies for managing the tax liability effectively.

Flexibility and control: An Accumulation Trust provides you with the flexibility to determine the conditions or events that trigger the distribution of accumulated income to the beneficiaries. This allows you to maintain control over when and how the income is distributed, aligning with your intentions and objectives.

We can evaluate your individual situation and provide personalized advice and we can help you determine if an Accumulation Trust is appropriate for your estate plan and assist you in creating the necessary legal documentation. To schedule an appointment, call us at 410-721-1660 or fill out our contact form and we will be in touch to get that scheduled.