How much will KissTrust be worth?

  1. The principal factors that determine the ultimate value of a KissTrust are:

    • whether or not early distributions are allowed before trust maturity
    • length of time the trust is allowed to grow
    • whether the tax-deferred annuity option is selected, so that the growth is tax-deferred
    • the rate of return on the selected investment alternatives
    • tax return preparation costs and tax liabilities if the after-tax mutual fund option is selected
    • whether the KissTrust benefit is withdrawn as a lump sum or as a monthly payment

    Assume a parent contributes $10,000 to a variable annuity KissTrust for their baby and it grows at an annual rate of 10.185% percent until the child is 65. Even if the Beneficiary took a lump sum distribution and paid taxes on the full amount (most would annuitize at maturity and continue to enjoy tax-deferred growth), there would still be a $3.1 million nest egg after taxes.

    Under these same conditions, $10,000 invested at the same rate of return for the same period of time, but in a mutual fund KissTrust taxable at a combined federal and state income tax rate of 25%, would yield just $1.4 million at maturity.

    Also, the KissTrust benefits can continue past age 65 if the Beneficiary elects an annuitized payout. If the benefit is taken as a monthly payment over 30 years and invested more conservatively (5% annual return), the annual benefit over 30 years would be worth $90,138, and the Beneficiary would avoid paying the large tax bill that would result if the trust was distributed as a single lump sum.

    See for yourself what the KissTrust benefits might be in your case by using one of the KissTrust calculators.

  2. Yes.  The numbers are based on 65 years of tax-deferred growth assuming 10.185% returns which is only 80% of the S&P long term historical average.

    See for yourself how the projected values grow year by year.

    Age
    Beginning of the Year Balance

    Annual Yield

    End of the Year Balance
    0
    $         2,500.00

    $           254.63

    $       2,754.63

    1
    $         2,754.63

    $           280.56

    $       3,035.18

    2
    $         3,035.18

    $           309.13

    $       3,344.32

    3
    $         3,344.32

    $           340.62

    $       3,684.94

    4
    $         3,684.94

    $           375.31

    $       4,060.25

    5
    $         4,060.25

    $           413.54

    $       4,473.78

    6
    $         4,473.78

    $           455.65

    $       4,929.44

    7
    $         4,929.44

    $           502.06

    $       5,431.50

    8
    $         5,431.50

    $           553.20

    $       5,984.70

    9
    $         5,984.70

    $           609.54

    $       6,594.24

    10
    $         6,594.24

    $           671.62

    $       7,265.86

    11
    $         7,265.86

    $           740.03

    $       8,005.89

    12
    $         8,005.89

    $          815.40

    $       8,821.29

    13
    $         8,821.29

    $           898.45

    $       9,719.74

    14
    $         9,719.74

    $           989.96

    $     10,709.70

    15
    $       10,709.70

    $        1,090.78

    $     11,800.48

    16
    $       11,800.48

    $        1,201.88

    $     13,002.36

    17
    $       13,002.36

    $        1,324.29

    $     14,326.65

    18
    $       14,326.65

    $        1,459.17

    $     15,785.82

    19
    $       15,785.82

    $        1,607.79

    $     17,393.60

    20
    $       17,393.60

    $        1,771.54

    $     19,165.14

    21
    $       19,165.14

    $        1,951.97

    $     21,117.11

    22
    $       21,117.11

    $        2,150.78

    $     23,267.89

    23
    $       23,267.89

    $        2,369.83

    $     25,637.72

    24
    $       25,637.72

    $        2,611.20

    $     28,248.92

    25
    $       28,248.92

    $        2,877.15

    $     31,126.08

    26
    $       31,126.08

    $        3,170.19

    $     34,296.27

    27
    $       34,296.27

    $        3,493.07

    $     37,789.34

    28
    $       37,789.34

    $        3,848.84

    $     41,638.19

    29
    $       41,638.19

    $        4,240.85

    $     45,879.04

    30
    $       45,879.04

    $       4,672.78

    $     50,551.82

    31
    $       50,551.82

    $        5,148.70

    $     55,700.52

    32
    $       55,700.52

    $        5,673.10

    $     61,373.62

    33
    $       61,373.62

    $        6,250.90

    $     67,624.52

    34
    $       67,624.52

    $        6,887.56

    $     74,512.08

    35
    $       74,512.08

    $        7,589.06

    $     82,101.13

    36
    $       82,101.13

    $        8,362.00

    $     90,463.13

    37
    $       90,463.13

    $        9,213.67

    $     99,676.80

    38
    $       99,676.80

    $      10,152.08

    $   109,828.88

    39
    $     109,828.88

    $      11,186.07

    $   121,014.96

    40
    $     121,014.96

    $      12,325.37

    $   133,340.33

    41
    $     133,340.33

    $      13,580.71

    $   146,921.04

    42
    $     146,921.04

    $      14,963.91

    $   161,884.95

    43
    $     161,884.95

    $      16,487.98

    $   178,372.93

    44
    $     178,372.93

    $      18,167.28

    $   196,540.22

    45
    $     196,540.22

    $      20,017.62

    $   216,557.84

    46
    $     216,557.84

    $      22,056.42

    $   238,614.25

    47
    $     238,614.25

    $      24,302.86

    $   262,917.11

    48
    $     262,917.11

    $      26,778.11

    $   289,695.22

    49
    $     289,695.22

    $      29,505.46

    $   319,200.68

    50
    $     319,200.68

    $      32,510.59

    $   351,711.27

    51
    $     351,711.27

    $      35,821.79

    $   387,533.06

    52
    $     387,533.06

    $      39,470.24

    $   427,003.31

    53
    $     427,003.31

    $      43,490.29

    $   470,493.59

    54
    $     470,493.59

    $      47,919.77

    $   518,413.36

    55
    $     518,413.36

    $      52,800.40

    $   571,213.77

    56
    $     571,213.77

    $      58,178.12

    $   629,391.89

    57
    $     629,391.89

    $      64,103.56

    $   693,495.45

    58
    $     693,495.45

    $      70,632.51

    $   764,127.96

    59
    $     764,127.96

    $      77,826.43

    $   841,954.40

    60
    $     841,954.40

    $      85,753.06

    $   927,707.45

    61
    $     927,707.45

    $      94,487.00

    $1,022,194.45

    62
    $ 1,022,194.45

    $    104,110.51

    $1,126,304.96

    63
    $ 1,126,304.96

    $    114,714.16

    $1,241,019.12

    64
    $ 1,241,019.12

    $    126,397.80

    $1,367,416.92

    65
    $ 1,367,416.92

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    Whether attributed to Einstein, Benjamin Franklin or a nameless economist, it's true that "Compounded growth is ... the most powerful force in the universe!"

  3. Tax-Deferred Annuity Option

    No. If the KissTrust is invested in a tax-deferred annuity, the assets grow tax-deferred, and under current IRS rules, the KissTrust does not require a yearly tax return.

    As long as the KissTrust assets are invested in a tax-deferred annuity and no distributions are made from the trust, no taxable events are incurred.  Distributions from the trust generate taxable income for the Beneficiary, depending on how assets are withdrawn.

    After-Tax Mutual Fund Option:

    A trust is required to pay taxes once its annual taxable income exceeds $600, and a federal income tax return is due if the trust has any income at all. Virtually all mutual funds will produce taxable income thus; necessitate the annual filing of tax returns for the trust.

    Filing annual trust income tax returns and paying income taxes is almost unavoidable with the mutual fund option.  The cost and administrative issues might significantly affect the trust's ability to grow.  KissTrust also provides an optional service to prepare the necessary tax returns the trust will generate using the after-tax mutual fund option.  Please contact us for more details.

    So while Grantors are welcome to invest KissTrust assets in the after-tax mutual fund option, the tax-deferred annuity option will generally outperform over time.