1. What is your approach to asset allocation?
We use specific asset allocation guidelines to help each client balance risk and maximize reward in pursuit of investment objectives. Amounts allocated depend on your tolerance for risk and volatility, and what you wish to accomplish ... building wealth, preserving purchasing power, or generating income. These sometimes-conflicting goals and needs require clear definition and ongoing assessment to ensure asset allocation remains well-balanced and effective.
2. What is your approach to diversification?
Broad diversification is a primary focus of every portfolio. We begin by identifying an appropriate asset allocation to meet long-term needs. We then assemble stocks (or equities) that provide long-term growth and reflect your preferences (for example, a need for income). Stocks represent a cross section of industries and companies identified as top performers by our in-depth analysis. Fixed income investments (bonds) lend stability to your portfolio. They produce current income and can help offset stock-portfolio volatility. To spread your risk, bonds recommended for your portfolio will feature a range of terms and maturity dates, and will be tailored to your tax situation. All bonds purchased on your behalf are rated A or better by Standard & Poor's or Moody's.
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1. What is a trust?
A trust is a legal entity that holds property or assets. The person who creates the trust is called a grantor, donor, or settlor. Those who benefit from the trust are known as beneficiaries. Beneficiaries can be individuals, groups of people, or an organization.
2. How does a trust work?
A trust holds assets or property that will benefit the trust's beneficiaries. Trusts can pay income to beneficiaries or transfer property or assets (usually at a grantor's death). Trusts help grantors and beneficiaries gain tax advantages.
3. What are the types of trusts?
There are two basic types of trusts — those that provide for beneficiaries after the grantor's death (testamentary) and those that provide during the grantor's lifetime (inter vivos). A testamentary trust is a trust created by a will and usually becomes effective at the grantor's death. For example, parents may provide for an incapacitated child after their deaths by leaving money in trust for the child's lifetime.
An inter vivos trust is in effect during the grantor's lifetime. For example, parents may provide income for their children through a trust.
Inter vivos trusts may also be revocable or irrevocable, depending on a grantor's needs for flexibility or tax advantages.
4. Who controls the trust?
Based on the grantor's wishes, an individual, a business entity, or a combination of both may manage the trust and its assets. The managing person or entity is known as a trustee. Many grantors designate a professional trustee, such as Trust Company of Connecticut, A Division of NewAlliance Bank. Professional
management brings with it the advantages of investment and financial expertise, and objectivity. In the case of Trust Company of Connecticut, A Division of NewAlliance Bank,
these advantages are supplemented by attentive personal service.
5. What financial objectives can a trust help me achieve?
Estate liquidity — A life insurance trust produces benefits that are income and estate tax-free upon the death of the grantor.
Trust beneficiaries can use the trust proceeds to pay estate taxes or to purchase assets from the estate. Charitable giving — A charitable
trust permits tax-advantaged transfer of property or assets which ultimately will be donated at the grantor's death. The grantor may continue
to enjoy the property or assets during his or her lifetime. Protection of children — A spendthrift trust helps parents provide for young or
incapacitated children. Trust proceeds are paid to beneficiaries in small amounts at regular intervals. Tax reduction — A bypass trust allows
married couples to shelter more of an estate from estate taxes. At the death of the first spouse, the surviving spouse receives income from the trust.
At the second spouse's death, trust assets pass to beneficiaries free of tax.
6. How do I establish a trust?
Establishing a trust requires a legal document. The trust document will spell out your objective — for example, charitable giving — and
name the trustee and beneficiaries. In some cases, your state of residence may require that you file your trust with the state. If you desire,
Trust Company of Connecticut, A Division of NewAlliance Bank, can assist you in drawing up your trust document and explain more about the process.
7. What does the trustee do?
The trustee is legally obligated to manage the trust in a manner advantageous to beneficiaries. The trustee's duties, as well as the beneficiaries access to the
trust funds, will be spelled out in the trust. A simple or mandatory trust requires the trustee to distribute income to beneficiaries; a complex
or discretionary trust extends the trustee discretion over principal and income to be distributed. Generally, trustees are paid for their services,
and this also is stipulated in the trust document.
8. Are trusts just for the super rich?
No. Even moderately affluent individuals and couples may want to consider establishing a trust. Deciding if a trust makes sense depends on many
factors including your financial objectives, your age, your assets, and your tax situation. If you would like to find out more about how a trust
can benefit you, you're invited to contact us.
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Services offered are not insured by the FDIC, are not deposits of, or other obligations of, or guaranteed by, NewAlliance Bank or any of its affiliates and are subject to investment risk, including the possible loss of the principal amount invested.
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