How Income Trusts Can Fund Your Retirement and Why They are a Good Idea

  • Estate Planning
how income trusts can fund your retirement and why they are a good idea | estate and probate legal group

We all know that the stock market can be volatile and we often think it is just part of investing. While all investments are a risk, some portfolios have a lower possibility of risks. You may not have heard of Income Trusts – but they are something you should be familiar with.

What are Income Trusts?

An income trust has more stable and moderate earnings to produce income. The trusts are designed to distribute income regularly, allowing you to give to your beneficiaries now or after you’re gone.

If a company decides against selling public stocks on the stock market, it may set up income trusts to fund its business.

There are several factors that an investment trust must follow:

  • must hold diversified assets
  • issue 90% of their income to investors
  • focus on industry-specific investments (real estate trusts cannot invest in energy as a royalty trust does)

Some types of income trusts are:

  • Royalty Trusts – these create revenue by investing in energy resources such as natural gas or oil wells.
  • Investment Trusts – also known as mutual funds- are companies that invest in a diversified collection of stocks and bonds.
  • Real Estate Investment Trusts – REITs invest in personal mortgages and commercial real estate
  • Business Trusts – invest in just one company instead of numerous diversified assets.

These trusts are set up to generate income for you by holding profitable assets.

Pros and Cons 

As with anything, there are good and bad points to investing in income trusts.


  • The government does not tax you on the money in the trust, but you must claim the revenue received as income
  • You can diversify among numerous reliable companies
  • These typically incur less risk


  • This investment is still a risk
  • When interest rates increase, expenses increase – which may lower investors’ distribution
  • It’s hard to determine the actual income that may be generated

Having a solid investment portfolio is one part of your estate plan. A complete estate plan will ensure that your will, healthcare directive, retirement portfolio and investments all work together. Having an experienced estate planning attorney on your side will help you plan for your future and the future of your loved ones.

Do You Need to Talk to An Oak Brook Estate Planning Attorney?

Talk to an experienced estate planning attorney to prepare for your future and the future of your beneficiaries. Contact us at the Estate and Probate Legal Group today at 630-864-5835.

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