Host: What other protections does a trust give?
William Conway: Well, beyond the protection of the assets for the surviving spouse in the circumstance surviving spouse remarries and if that remarriage is unsuccessful, so there is protection against that spouse s subsequent divorce. There's also protection of course, as we mention against asset of disinheritance of the children, but beyond that there are some protections that only trust give or afford and that is asset protection.
Sometimes, as people are engaged in certain activities, perhaps, someone is a physician or perhaps someone is in some other profession that might cause them to be sued. The assets that would be left by one spouse to another and subsequently, when those assets are left to the children, can be asset protected from the ravages of law suit and the reason that is the case is because a trust or the assets of the trust don t actually belong to the beneficiary in that case of surviving spouse. Since, they actually don t belong to the beneficiary and because there are subsequent beneficiaries of the trust meaning usually, the children of the marriage, the effect of that would be that a litigant who might be trying to pursue a law suit against the surviving spouse will even if successful, not be able to reach the assets in the trust. So, it provides a substantial and beneficial amount of asset protection for the surviving spouse. In addition, as I mentioned, that protection can be moved on a generation. So, if there is an obstetrician who is one of the children or if there is a real estate developer who is one of the children, these assets could be protected from creditors that might emerge or from within the divorce, they may subsequently have. Then of course, there is the additional protections that a trust affords to avoid federal taxation to be able to utilize the full amount of the federal exemption, sometimes what we call, making sure that we are using the coupon.