First American Bank Trust & Investments

The Facts About Living Trusts

Imagine being able to put all your financial affairs in order long before dying, knowing that your bereaved relatives won't have to set foot in probate court or haggle over large legal fees. And if you become unable to manage your affairs, you'd never have to worry about losing control to a court-appointed guardian. If this sounds appealing you may want to consider a living trust.

Living trusts can be either revocable, that is, you can terminate the trust at any time, or they can be irrevocable, which means you give up any right of termination. Generally speaking, irrevocable trusts are used when you want to make a gift of income to someone. This may result in estate, inheritance and income-tax savings, as you no longer own the property. Most people, however, prefer to retain control and use of their property during their lifetime. A revocable trust permits this while providing many advantages. Your lawyer will prepare a trust agreement to be signed by you as the creator of the trust. It must then be accepted by the trustee selected by you - perhaps First American Bank Trust & Investments Department. At the time the trust agreement is completed, you may place property in the trust, cash, stocks, bonds, real estate or all of the property you own. Additional property can be added by you during your lifetime or upon your death. The trustee has the job of safekeeping the property, collecting income, giving complete written reports to you from time to time, investing and reinvesting the property with or without your help, as you decide, preparing trust tax returns, and paying the income to you or others as you direct.

A Living Trust Can Provide The Following Advantages:

• Provide investment management for your property. Each asset is evaluated periodically to determine its soundness and whether it continues to meet your objectives.
• Pay funds to you and others you choose. If you become sick or disabled, the trustee can pay your bills directly, hire people to take care of you, and provide any additional funds you may need from your trust. You can name beneficiaries to receive funds during or after your lifetime.
• Reduce probate expense and avoid delays. The trust can go on after your lifetime for the benefit of your spouse or children. The assets of the trust need not be turned over to your estate for probate proceedings, and so your affairs remain a private matter.
• Reduce taxes. Tax benefits of a living trust may be substantial. In a joint living trust, property may pass directly to your children and avoid taxation in the estate of the last spouse to die.

An individual trustee not only lacks experience but can get sick, die or move away. Only a professional, full-time trustee should be entrusted with the important task of administering your living trust.

Call 1-800-289-6140 for an appointment to find out how a living trust can benefit you.

Investment Management

Perhaps after reviewing the information about Trust accounts, you have decided that you actually do not need a Trust right now. However, perhaps you do not know too much about investments, you are tired of clipping coupons, doing the record keeping on your stocks, bonds, certificates of deposits, or other assets, and you would like someone to take over your investments.

An agency account is a simple relationship in which you hire someone, such as First American Bank Trust & Investments Department, through a written letter of instructions (agency agreement) to assume responsibility for certain specified duties regarding your investments. You turn over to us securities, cash, real estate - any or all of these as you choose. We will manage them according to your instructions. Additional assets can be added or withdrawn at any time, and the relationship may be terminated in writing whenever you wish.

There are usually two different arrangements available:

Investment management (discretionary)

We provide complete administrative and custody services that include accounting, record keeping and income collection duties for your investments, tax reporting of income to assist you in preparation of your individual income tax return at year's end, plus safekeeping facilities. We also provide investment management and advice for your assets, and you additionally turn over the decision making to us under guidelines previously established.

Investment management (non-discretionary)

We offer you all the above services, but you retain the right to make the final decision on buying and selling.

Some of the investments you can take advantage of in your agency accounts include stocks, bonds, certificates of deposit, mutual funds, U.S. Treasury securities, limited partnerships, and real estate.

The Trust Department can purchase stocks and bonds for you at a discounted commission rate through our discount brokerage service. We also offer U.S. Treasury securities through the weekly auctions or open market at a reasonable fee.

We offer a variety of mutual funds through many different fund families, such as Federated Securities Corporation, Goldman Sachs, Janus, Franklin, and SEI. These no-load funds can be purchased through the Trust & Investments Department. Individual stocks may be purchased with a commission of $.06 per share, or a minimum of $20.

An agency account would be ideal for someone who does not have the time to properly manage his/her own investment portfolio. Let a professional in our Trust & Investments Department provide you with personal service.

Call 1-800-289-6140 for an appointment to discuss the investment agency account today. You will find our discount-brokerage fees reasonable, and your account can be tailored to fit your individual needs.

Employee-Benefit & Retirement Plans

Whether you are an individual, a self-employed sole proprietor or a corporation owner, you should be planning for retirement. First American Bank Trust & Investments Department has a retirement plan to meet your needs. We provide an account for your annual contributions, allow for any type of investment of funds, perform accounting, record keeping and income collection duties, and prepare all reports required by the IRS to assure that your plan is in compliance with regulations.

We have a prototype plan which you can adopt and thereby avoid the normal costs for drafting an individual plan. Our plans are always kept up to date and amendments are made to the prototype each time regulations are changed.

We offer a variety of mutual funds through many different fund families, such as Federated Securities Corporation, Goldman Sachs, Janus, Franklin, and SEI. These no-load funds can be purchased through the Trust & Investments Department. Individual stocks may be purchased with a commission of $0.06 per share, or a minimum of $20.

The following are some of the various plans available.

Self-directed IRA

If funds have built up in your IRA and you would like to diversify investments, a self-directed IRA could be just the Plan for you. You can transfer all your IRA funds into this account and select from any investment alternative acceptable under IRS regulations, including stocks, bonds, certificates of deposit, mutual funds, real estate, limited partnerships and gold eagle coins. You are responsible for investment decisions in your IRA. You may work with your stock broker in choosing investments for the IRA account or you may invest through the bank's discount brokerage service if you do not need investment advice. No investment advice is available for the self-directed IRA due to the extremely low annual fee.

HR-10 Plan

As a provision of the 1984 tax law changes, HR-10 Plan accounts are now subject to the same reporting requirements as corporate plans. We have a simplified Plan available for adoption by a self-employed individual which offers the same services as the self-directed IRA above. The Trust Department takes care of the preparation of Form 5500 on an annual basis. The individual makes his own investment decisions for the HR-10 Plan. If the self-employed individual has employees, the trustee prepares reports for the participants of the Plan annually.

Qualified Retirement Plans

Significant tax deductions are available to corporations for contributions to qualified retirement plans. Our Trust department offers prototype Profit Sharing Plans and Money Purchase Pension Plans which the corporation may adopt without incurring additional costs. In addition to the services described for IRAs and HR-10 Plans, the trustee also prepares annual participant statements and Form 5500s for the Plan. The Plan is always kept up to date for regulation changes. The Plan Administrator may choose whether or not he wishes investment advice.

For more information on a retirement plan tailored to your individual needs, call 1-800-289-6140 for an appointment. We'll be glad to discuss our services with you.

Self-Directed IRAs

If funds have built up in your IRA and you would like to diversify investments, a self-directed IRA could be just the Plan for you. You can transfer all your IRA funds into this account and select from any investment alternative acceptable under IRS regulations, including stocks, bonds, certificates of deposit, mutual funds, real estate, or limited partnerships. The minimum balance on a self-directed IRA with the Trust & Investments Department is $50,000.

We offer a variety of mutual funds through many different fund families, such as Federated Securities Corporation, Goldman Sachs, Janus, Franklin, and SEI. These no-load funds can be purchased through the Trust & Investments Department for your self-directed IRA.

Another great benefit is the ability to purchase individual stocks for your IRA with a very competitive commission of $0.06 per share, or a minimum of $20 per trade.

Call 1-800-289-6140 for an appointment to find out how a self-directed IRA can benefit you.