Have you thought about the highly flexible "fixed-income" trust? Some advisers currently are recommending it. Here's the idea: Instead of the more usual trust that has income going to a man's wife for her lifetime, then to the children for a period of years, and finally outright to the children, the husband says to the trustee: "Pay a fixed sum to my wife each year - and if the income falls short of this liberal amount, then you may reach into the principal."
In effect, you tell the trustee to sell off some of the securities - if necessary - to obtain capital gains for your widow's use. If invading principal worries you, an adviser will likely point out that these days many persons, with the aid of good portfolio management, are able to dip into principal - and still see it grow. A trust of this type obviously gives the trustee a great deal of freedom in investing. It might also - at least in some family situations - head off an argument among beneficiaries over investment policy.
London's Irving Trust Co. points to yet another possible advantage. If the trust income is more than the fixed amount the widow is to be paid yearly, the excess can be put into principal. This is better than paying her more than she really needs - then having taxes bite it down, anyway.
Long-term estate plans and short-range monthly budgets get much attention. But what about the middle run? This is where the 10-year trust comes in. This idea, often neglected, is a money-saver that you should be aware of in any review of affairs.
It has some fine advantages. A 10-year trust permits you to:
Split income temporarily for tax purposes.
Get back the income-producing property after the trust expires.
Act as trustee, and guide the investment of the principal.
It also has some highly practical applications (school financing, within limits), and can be worked to fit snugly with retirement-income plans. And note: The drawbacks (inevitable... see: The 10-year Trust: For The Medium Haul