How can the trust be invested? Who decides?

  1. KissTrust provides you with two choices.  You can decide!

    Option 1 - Tax-Deferred Annuity Choice

    Nationwide’s, The BEST of AMERICA® America's FUTURE Annuity® II

    • Over 80 funds to choose from
    • Start with as little as $400
    • Includes Asset Allocation

    Option 2 - Taxable Mutual Fund Choice

    American Century Investments Funds

    • Over 35 funds to choose from
    • Start with as little as $50

    Fidelity Advisor Funds

    • Over 90 funds to choose from
    • Start with as little as $50
  2. It is often suggested you should purchase the mutual fund with the lowest expenses. This is based on the misperception that all mangers are equally adept at managing money so if you pay less you will automatically realize a higher total return merely because you are paying less in management fees. Well, if this were true successful investing would be really simple, and everyone would just buy Vanguard, or T Rowe Price funds that historically have some of the lowest management fees. However, the reality is that the funds with the lowest expense ratio are very often not the best performing funds. The best and easiest ways to judge a fund family’s overall ability to manage investments is to examine their world allocation funds. These funds contain foreign and domestic stocks, as well as foreign and domestic bonds; this type of fund covers the entire spectrum of basic investments. A look at 3, 5, and 10 year annualized performance shows us that for example Vanguard and T. Rowe Price Funds fall far short of being in the top 100, nor do they even come close to the index (average) for this category.(1) The top performing fund in this category for 3, 5, and 10 year annualized performance have an expense ratio that is nearly double that of Vanguard, and T Rowe Price yet still out performs both Vanguard and T. Rowe. Therefore, we see that even with mutual funds, the cheapest is not always the best, but the real question is value and performance.

  3. Designed to make the job of managing the trust assets quick, easy and simple, asset allocation is an asset allocation method that automatically allocates the trust's investments based on the Beneficiaries’ age and rebalances the trust’s portfolio semi-annually. This is provided to every KissTrust at no additional cost.  Asset Allocation is the easiest way to insure the assets are fully invested and well diversified over the life of the trust.

     

    Model

    Age

    Aggressive

    		 0 – 25

    Moderately Aggressive

    		 26 – 39

    Capital Appreciation

    		 40 – 49

    Moderate

    		 50 – 54

    Balanced

    		 55 - 59

    Moderately Conservative

    		 60 – 64

    Conservative

    65 +

    Research has demonstrated that properly allocated portfolios will produce higher investment yields over time.

    "…Asset allocation explains more than 90 percent of portfolio performance…" Journal of Financial Planning

  4. Simply stated ...the advantage of tax-deferred growth and market rate returns.

     

    The advantages of tax-deferred growth is why we save for our own retirement in tax-deferred 401(k) and IRA plans. Since such retirement plans can only be funded with earned income, they are not viable options for trusts. Certain government bonds provide tax-deferred, but do not produce the higher returns possible with stock market investing.

    By investing KissTrust assets in a variable annuity, growth potential is maximized and there are no annual tax filings required. This keeps the operational costs of the trust lower.

    KissTrust utilizes a specially designed Nationwide Life Insurance Company variable annuity, The BEST of AMERICA® America's FUTURE Annuity® II.

  5. While we offer mutual funds as a KissTrust investment option, they are not the recommended choice. Assuming the same portfolio of underlying funds, when the investment time frame is greater than 15 years tax-deferred investing always wins out.

    The chart below clearly demonstrates the advantage of tax deferred investing over other types of accounts.
    Mutual Funds
    Tax Free Bonds
    Tax Deferred
    Beginning Balance
    $      5,000.00
    $        5,000.00
    $            5,000.00
    Number of Years
    65
    65
    65
    Before Tax Yield
    10.000%
    4.250%
    10.000%
    Tax Rate
    15%
    0%
    25.000%
    Effective Yield
    8.500%
    4.250%
    10.000%
    Projected Value
    $1,004,391.40
    $74,802.16
    $2,451,853.63
    Less Tax
    $                 -
    $                   -
    $        612,963.41
    Projected Value After Tax
    $1,004,391.40
    $74,802.16
    $     1,838,890.22
    Less Tax Return Preparation ($125 annually)
    $      8,125.00
    $                   -
    $                       -
    Net Projected Value
    $ 996,266.40
    $74,802.16
    $1,838,890.22

  6. Each KissTrust created will have:

    • An Oversight Trustee; and
    • A person selected by the Grantor to serve as the Family Contact.

    Oversight Trustee

    The role of the Oversight Trustee is to actively administer the trust and monitor the credit quality of the insurance company issuing the annuity.  The Oversight Trustee is provided by KissTrust at no additional expense to the Grantor or Beneficiary.

    Family Contact

    The Grantor may serve as the Family Contact or appoint anyone he or she wishes to serve as the Family Contact. The Family Contact is an important point of contact for your child's KissTrust, but can be changed at anytime by the Grantor.  Eventually, the KissTrust Beneficiary can assume the role of Family Contact (once the age of majority has been reached - 21 in most states).

    In addition to being the Family Contact person for your child's KissTrust, the Family Contact would also contact KissTrust, Inc. (the trust administrator) in the unfortunate event of the Beneficiary's disability (as defined by the Social Security Administration guidelines) or death.  View the roles and responsibilities of the Family Contact.

  7. You, another family member, or even a trusted friend may serve as the Family Contact.

    • The Family Contact's job, while important, is straightforward:
    • They receive annual reports from the Oversight Trustee or the investment provided during the accumulation period;
    • They may, if you choose, to have online access to the KissTrust, and
    • If you choose, he or she may direct the investments until the child obtains the designated retirement age that you set. (REMEMBER you can simply use the default asset allocation models - which are designed to automatically allocate the KissTrust assets.)

  8. No.  There is no specific background or financial experience required for the Family Contact. This is one of the advantages of the KissTrust, it has been designed to operate "hands-free" without your ongoing oversight. However, those who wish to be more "hands on" have the option of self-directing the investments.