What is a Trust? - A legal document that, like a will, contains your instructions for what you want to happen to your assets when you die. But, unlike a will, a living trust avoids probate at death.

Union Bank offers the service of being a Trustee of your trust.

Living Trust - A trust that becomes operative during the lifetime of the settler.

Testamentary Trust - A trust established by the terms of a will.

Charitable Trust - A trust created for the benefit of a community, ordinarily without a definite beneficiary.

Insurance Trust - A trust composed partly or wholly of life insurance policy contracts.

Guardianships: [Top]

What is a Guardian? - Appointed by a court to care for the property of a minor or an incompetent.

Executor: [Top]

What is an Executor? - Nominated in a will and appointed by a court to settle the estate of an individual.

Corporate Trustee: [Top]

What is a Corporate Trust? - A trust created by a corporation, for example a trust to secure a bond issue.

Retirement Plans: [Top]

• Traditional IRA

If an accountholder has earned income and is not an active participant of an employer sponsored Qualified Retirement Plan - the $3,000 maximum contribution is totally deductible on their tax return. The benefit of the tax deduction is that it lowers the taxable income for the year, therefore, lowering the income tax liability for the year.

Funds are available to accountholders at anytime, but if the accountholder is not 59 1/2 or does not meet certain exceptions, they could be assessed the 10% premature distribution penalty by the IRS on the amount withdrawn. The accountholder will pay taxes on the amount withdrawn.

• Roth IRA

The accountholder must have earned income and is allowed the maximum nondeductible contribution - $3,000. The earnings on the contribution accumulate tax-free and penalty free as long as the 5 year waiting period has been satisfied and qualifying distribution rules have been met.

Assets held in Roth IRA are not subject to age 70 1/2 required minimum distributions.

Traditional IRAs may be converted or rolled over to a Roth IRA without an IRS premature-distribution penalty, but will be subject to full taxation. The law provides that for conversions accomplished in 1998, the taxes can be paid over a four year period, however after 1998, the amount of the conversion is fully taxable the year of the distribution.

• Education IRA

A retirement account established for the benefit of each child under the age of 18 which allows a maximum nondeductible annual contribution of $2,000. The earnings on the contribution accumulate tax-free.

Distributions will be considered tax-free as long as the funds are used for qualifying post-secondary tuition, fees, books, supplies and basic room and board charges.

All three types of IRAs can be Self-Directed IRA. A Self-Directed IRA offers a wide range of investments for funding your IRA. This gives you more flexibility in risk and yield. In all other aspects, Self-Directed IRAs are the same as any other IRAs.

What Investments are available for a Self-Directed IRA? - You may choose from a variety of investments including deposit instruments, stocks, bonds, government securities, mutual funds, and money market funds.

Retirement Plans for Small Business: [Top]

Simplified Employee Pension (SEP) Plan - Any employer, whether a corporation, partnership, or a self-employed individual, may establish a SEP even if there are no other employees. You may contribute up to 15 percent of compensation or $40,000 (2002), whichever is less. A SEP allows self-employed individuals and businesses to fully deduct their eligible SEP contributions.

SIMPLE Plan - SIMPLE is a new salary reduction arrangement available to employers and employees. SIMPLE contributions are deposited into a segregated IRA called SIMPLE IRA.

What are the benefits of a SIMPLE? - Besides providing you and your employees with a more secure retirement, SIMPLE offers generous tax advantages. Employee elective deferrals and employer matching contributions are tax deferred to the participant and tax deductible to the employer. Earnings in the account also grow tax deferred. And, SIMPLE eliminates some of the tedious requirements and procedures connected with other qualified plans.

Please call (870) 460-6400 and ask for our Trust Department if you have any questions or need any of these services.

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