How Do You Set Up A Total Return Trust?
The setup of a total return trust (or unitrust) is the choice of many who desire to provide a constant level of support for a beneficiary. Payment is made based on a fixed percentage of the principal. When interest rates are above the fixed rate, it adds to the principal. If interest rates go below the fixed rate of payout, the principal is reduced. Yearly payments fluctuate according to the rise and fall of interest rates, but the payout to the beneficiary remains at the fixed percentage. Determine which kind of legislation governs the setup of a total return trust in your state. One type allows the trustee the option to convert an income-only trust into a unitrust (or total return trust). The payout is based on a set percentage of the trust. The other type allows the trustee to transfer principal to income or income to principal to adjust the amount of income available for distribution. Some states have both options. Choose a total return trust to give the trustee the power to invest
