INSIDE FINANCE
Whom Do You Trust? Is the Answer a Trust?


By Robert M. Jaffe, MBA, AAMS
May 27, 2005

Many of you may remember that long before Johnny Carson became America’s bedtime companion, he was host of the grammatically incorrect, TV hit show “WHO Do You Trust?” As investment advisors, we often have to pose a similarly sensitive question to our clients, and in planning your financial future, you should ask yourself.

Here’s an example that just might strike a familiar note. Dear old Aunt Harriet, your favorite, dies and leaves you sole heir to an eight-figure estate. You had no idea she had that kind of wealth, and, through the tears, realize that this will make a meaningful change in your life. Once her estate is settled you will have some very important decisions to make. How will you invest this windfall? What exactly do you want to accomplish? You’ve been living a perfectly comfortable life; have a fine family, immediate and extended; things have been relatively uncomplicated. Why, they may ask, didn’t Aunt Harriet provide for them too? You’re no spring chicken and family members may look to you, indeed expect you to share your newly minted fortune.

Investment advisors may not offer legal advice, but we certainly are obligated to look at the big picture, which in this example requires thinking beyond investment choices. What if you were to join Aunt Harriet sooner than you plan? What would happen to all that money? It could easily be squandered by your surviving loved ones. Now, that’s not to say that you have bred irresponsible children and grandchildren, but, nevertheless, do you wish to enable them to freely blow it or build for their future?

You might arrange to hold the principal in trust while allowing the beneficiary to spend the income generated. Then pursuant to your wishes, the principal could be distributed in equal shares, at 10-year intervals, or at designated ages.

Here’s where I must bow out and refer you to a Trust and Estates attorney of your choice. He or she will give you the professional advice appropriate to your situation and those of your intended beneficiaries. The key here is that a trust will dissuade those whom you trust, or not as the case may be, from cashing in irresponsibly, at least to the extent you designate.

Please Email bob@cfsias.com with your questions.

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INSIDE FINANCE will appear regularly, addressing financial matters of interest to our readers. Any questions? Email bob@cfsias.com

Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member NASD/SIPC. Cambridge and CFS are not affiliated.

The preceding article is for informational purposes only and should not be used as the primary basis for an investment decision. Indices mentioned are unmanaged and cannot be invested into directly. Past performance does not guarantee future results. All examples given are hypothetical and do not reflect actual investments. The views expressed in this article are those of the author and are not necessarily those of Cambridge. Bob Jaffe is Managing Director of CFS Investment Advisory Services, LLC in Totowa and has been a Clifton resident since 1984. Active in community affairs, Bob is Past Board Chairman of the North Jersey Regional Chamber of Commerce and a member of its foundation board. He serves as a commissioner on the Clifton Rent Leveling Board and the Committee for Individuals with Disabilities. He is Vice President of the Clifton Rotary Club. Representatives of Cambridge do not offer tax or legal advice. Consult a professional for your personal situation.