Estate Planning Frequently Asked Questions
A trust is a contract where one person (Settlor) transfers property to another person (Trustee) for the benefit of a third person (Beneficiary.) NOTE: The law allows you to be all three! Example: X transfers property to Y, to manage for the benefit of Z. If the creator of this arrangement sets it up during his or her lifetime, it is called a living trust. If the creator retains the right to dissolve this trust, it is a revocable living trust. A living trust avoids probate. This is the most advertised advantage of a living trust; and may result in great savings. A living trust avoids publicity. Estates which pass through probate with a will are public record. Anybody who wants to can see it.
Yes, a “pour over” will is drafted along with the trust; it acts as a safety net. If you forget to put your assets into the trust, the will directs that those assets be transferred into your trust from a probate estate.
No, the law doesn’t require a corporate trustee. You, your spouse or children may be the trustee. However, in some cases, a corporate trustee is advisable.
Yes, a living trust can save a great deal in estate taxes for a married couples if their assets are in an amount that would otherwise be subject to death taxes.
Yes, in many cases, by transferring certain assets to your beneficiaries from your trust after your death, the beneficiaries will receive the benefit of a “step-up” basis that will save income taxes on the sale of those assets.
No, but to avoid probate you may want to transfer all of your assets into the trust. Assets sometimes not transferred into the trust are personal checking accounts and automobiles. These can be transferred to your heirs by simply using the Uniform Non-probate Transfers Act.
Yes, these trusts are just as effective for a single person, in many cases, as they are for married persons.
Yes, because you can still avoid the problems of probate. On an estate of $300,000 probate fees (for attorney and court) can be as high as $18,000. Trusts can be set up for any size estate, and the cost of doing is normally dramatically less than potential probate costs.
No, it has been in existence for hundreds of years. As consumers become more educated on estate plan issues, it has become a more common estate planning tool.
Yes, (a) The A-B Trust; (b)The Marital Deduction Trust;(c) The Self-Declaration Trust; (d) The InterVivos Trust (means living trust in Latin).
No, the law allows all this. However, lenders may want to see a copy of the trust, and may have policies that apply.
No, the living trust doesn’t act as a shield to protect you from creditors.
Many attorneys are not knowledgeable about living trusts because they don’t practice estate planning. It may have been that you told the attorney you only wanted a will, the least expensive plan initially (but possibly the most expensive in the long term).
A living trust can be either revocable or irrevocable. Revocable means that you can cancel or change its terms, giving you flexibility to meet future changes and needs. Irrevocable, of course, means that it cannot be changed and is therefore inflexible.
The majority of consumers don’t know anything about a living trust. Most people don’t plan for the future; they are hesitant to discuss what happens at their death.
They are (a) The creator of the trust, most times referred to as the settler or the grantor; (b) The manager of the trust, called the trustee; (c) The beneficiary; this is you and the others who now, or in the future, benefit from the trust.
No, the will doesn’t avoid probate. All the assets passing through the will go through probate. Once again, probate may be expensive, lengthy and open to the public. The majority of people want to avoid it. You can avoid the problems of probate with a revocable living trust. Remember proper planning can save a lot of $$$$.
If the surviving spouse is the trustee, he or she may have the right to sell or buy or transfer any of the assets. The surviving spouse may be given freedom to do whatever he or she sees fit with the assets in the trust.