Building an enduring legacy can be a matter of 'trust'

Seventy percent of all efforts to pass on wealth to future generations fail, according to The Williams Group. Defining what a family's legacy will be is critical to bettering those odds. And that includes addressing the financial aspects of the legacy plan.

"When it comes to estate planning, clients will frequently make use of trusts," says Brandon Buckingham, vice president of Advanced Marketing for Prudential Annuities. "Trusts can help protect assets, direct how those assets will pass at death and minimize estate taxes."

Buckingham adds that when funding a trust, "an annuity can work as a powerful tool by helping provide long-term tax benefits for both the trust and its beneficiaries."

Those tax benefits would be welcomed because, as Buckingham notes, trust income is subject to compressed tax brackets. In 2015, ordinary income of more than $12,300 will be taxed at the top rate of 39.6 percent. In addition, many trusts will be hit with a 3.8 percent Medicare surtax, making the effective tax rate on trust income 43.4 percent.

"Funding a trust with an annuity can provide tax deferral, control over the timing of taxes and tax-free rebalancing," says Buckingham. In other words, it can help minimize those tax hits.

Want more information? Read a legacy planning article in IRI Insight. Want to speak to Brandon? Contact Lisa Bennett.

Annuity products are long-term investments designed for retirement purposes.

Annuity contracts contain exclusions, limitations, reductions of benefits and terms for keeping them in force. Your licensed financial professional can provide you with complete details.

Prudential Financial, its affiliates, and their financial professionals do not render tax or legal advice. Please consult with your tax and legal advisors regarding your personal circumstances.

The Prudential Insurance Company of America and its affiliates, Newark, NJ, Each is solely responsible for its own financial condition and contractual obligations.

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