June 26, 2014   Trusts

4 Reasons Why a Living Trust is Preferred over a Will

By Vickie Schumacher
Many consumers and professionals now prefer an estate plan that uses a revocable living trust over a will as the primary estate planning document. Here are four reasons why:  A properly prepared and funded revocable living trust plan avoids probate at death, including multiple probates if you own property in other states. A will must go through probate to be verified and enforced, and if you own property in more than one state, your family could face multiple probates, each one according to the laws in that state. Avoiding the cost of probate is often a factor when choosing a living trust, but many people are just as interested in avoiding the court process altogether, along with its delays, lack of privacy, loss of control and emotional stress.  A properly prepared and funded li...
July 3, 2014   Trusts

Common Misconceptions about Living Trusts

People often hear things about living trusts from friends, family members and the media, and just assume they are true without taking the time to check them out. Here are some common misconceptions—and the facts.   1.      A living trust is expensive. A well-drafted living trust will have a higher initial cost than a will. But when comparing costs the true cost of a will should include the costs of probate when you die, the costs of a conservatorship if you become incapacitated and the costs of a guardianship if you leave assets to a minor child. There may be some costs associated with transferring your assets to your trust when you set it up, but there are frequently similar costs associated with properly titling assets when a will is used as the primar...
March 20, 2014   Trusts

Five Common Mistakes with Living Trusts

A properly prepared and funded living trust has many benefits, including avoiding court interference at death and incapacity. But people often make mistakes that prevent their trusts from working the way they intended. Here are five of the most common ones: Not having a properly prepared document. Too many people try to save money by using online or do-it-yourself forms, or choosing an attorney with the lowest price. If the documents are not properly prepared, you have wasted your money. Your trust may not work the way you intended or, worse, you could be left with no valid plan at all. It’s best to go with a local, experienced estate planning attorney who will be able to provide you with well-written documents and valuable counsel. Finding the right attorney may take some time, but...
March 18, 2014   Trusts

Four Things a Living Trust Does Not Do

There are so many benefits of a revocable living trust that people sometimes think it will do everything they want. Here are four things a living trust will not do. It does not control medical decisions. A living trust is not the same as a living will. Although the names are similar and they are both legal documents, they do very different things. A living trust lets you keep control of your assets. A living will lets you keep some control over medical decisions, but it is very limited—it only lets others know how you feel about life support in case of terminal illness. A better document is a health care power of attorney (also called an advance directive or health care proxy). This lets you give legal authority to another person to make all health care decisions for you if you are u...
October 21, 2008   Trusts

Grantor Trusts Revisited

By Daniel Capobianco, Esq.
On April 17, 2008, Revenue Ruling 2008-22 was issued -- adding substantial clarity to an issue that is often raised in drafting sophisticated estate plans -- how to create a “defective” grantor trust without causing the trust to be included in the grantor’s estate. The Ruling addressed whether there would be estate tax inclusion where the grantor of an irrevocable trust retained the power to substitute assets under §675(4)(c). The editorial team at WealthCounsel followed up immediately with an update to provide language that should come within the “safe harbor” of Revenue Ruling 2008-22. After analyzing the Ruling, this article briefly describes what this author believes are the “...
January 17, 2014   Trusts

How Do I Evaluate a Corporate Trustee?

By Vickie Schumacher
A corporate trustee is a bank trust department or trust company. Its employees can help you build, manage and protect your wealth when you put your assets in a trust.   There are several benefits of having a corporate trustee involved with your trust.Experience. Managing trusts is their business. They are familiar with all kinds of trusts, tax and estate planning strategies, and the legal responsibilities of a trustee.Professional asset management. Generally, a professional who has more time, resources and experience can achieve better results than an individual.Regulation. They are regulated by both state and federal agencies. Also, most courts consider them to be experts and expect a higher degree of performance than from an individual.Reliability. They won’t become ill or die...
October 3, 2012   Trusts,   Estate Planning

How to Transfer More than $5 Million to an Irrevocable Spousal Access Trust

By James G. Blase, CPA, JD, LLM
Background   Many clients are scrambling to implement significant gifting plans and trusts prior to year-end, when the current $5 million lifetime gift tax exemption and $5 million generation-skipping transfer tax exemption are both scheduled to sunset, with the lifetime gift tax exemption potentially being reduced to its previous $1 million level. For many married couple clients, the goal is to double the amount of this current gift, to up to $10 million, again either outright or in trust.   Reciprocal Trusts   It is of course a simple matter for one spouse to establish a $5 million irrevocable spousal access trust (or “SAT,” for short) for his or her spouse, and for the other spouse to establish a $5 million trust or trusts for the benefit of the chil...
January 25, 2012   Trusts

Ins and Outs of Trusts

By Gary B. Garland, J.D., CELA
Some of the public does not know what a trust is. Others think it is merely for the rich. Many others have come to me and said something like “I need a trust,” as if it is aspirin or some panacea. What most of the public (and most non-estate planning attorneys) don’t realize is that there are roughly 65 different types of trusts, some more broad than others, some quite specialized, and many share similar features. This brief overview should be a simple reminder for the seasoned practitioner, or a starting point for those new to the wonderful world of trusts.First, let’s start with the basics – the Trust has three “points” – a Grantor (Settlor, Trustmaker), a Trustee, and one or more beneficiaries. The Grantor creates the trust, the Trustee ca...
August 30, 2013   Trusts

Is a Living Will the Same as a Living Trust?

By Vickie Schumacher
This is confusing to many people, and quite understandably so, because the names are so similar. But these are very different documents and they do very different things.   A living trust is for financial affairs. It is similar to a traditional will because it gives instructions for the disposition of your assets after you die. But, unlike a traditional will, a living trust also provides instructions in the event you become incapacitated before you die. After a living trust has been established, you transfer your assets to it by changing the titles and beneficiary designations of your assets to your trust. This keeps you, your family and your assets out of the courts if you become incapacitated and avoids probate after you die.   A living will is for medical affairs. It is a docu...
December 6, 2013   Trusts

Is a Trust in a Will the Same as a Living Trust?

By Vickie Schumacher
Many people hear or see the word “trust” in estate planning and think they are all the same. But there are different kinds of trusts for different purposes, and they perform differently.   For example, an irrevocable trust is frequently used in tax planning. Generally speaking, once an irrevocable trust is established, you cannot change it or remove assets that have been transferred into it. These include charitable trusts, life insurance trusts, asset protection trusts, grantor trusts, qualified personal residence trusts and others.   A testamentary trust is created after you die by a provision in your will. This is a “trust in a will.” It can be used in tax planning or to manage assets for minors or other beneficiaries. Common estate planning trusts used...
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