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Why a Living Trust?

What a Living Trust Means...

• Meaningful Family Estate Planning
• Maximum Control over Family Assets
• Privacy for Your Family
• No Probate
• No Conservators
• Medical/Financial Power-of-Attorney
• Smart Tax Planning

Living Trusts: How to protect your assets

When you die with assets in your name alone, "probate" is the process by which the title of assets is transfered to your heirs. Probate is a court-sanctioned and supervised procedure, and involves the various costs and delays typical of a court proceeding. Probate normally requires detailed paper work, filings, hearings, appraisals, personal representative fees, court fees, lengthy holding periods and the like, all of which can incur a substantial amount of time and resources to process.

Regardless of the size and value of a family estate, a Revocable Living Trust can address most family estate-planning needs, and provide the privacy, convenience, safety, and control that everyone wants.

What Would You Want for Your Family?
—Choose A or B...

No Attorneys No Court Control No Probate No Guardians No Conservators No Hassles	No Unnecessary Expenses No Unnecessary Taxes No Contest Clause Dual Federal Estate Tax Exemptions for Couples Totally Private and Family Controlled

Attorneys 1-2 Year Delayed Distributions Public Disclosure of Your Assets, Debts and Heirs Maximum Emotional Impact on Family	Court Appointed Guardians and/or Conservators Expensive Probate Fees Maximum Estate Taxes Easily Contested Totally Public and Court Controlled

The Primary Benefits of a Living Trust

In addition to avoiding probate with its inherent complexities and problems, including being subjected to self-serving individuals who are hired to conduct probate procedures, a living trust offers many other benefits.

The following is a partial list of reasons to consider a trust:

• Estate Tax Planning. When structured properly, a living trust can help maximize the full use and value of a married couple’s transfer/estate tax credits (exemption equivalent amounts) to help avoid or even eliminate unnecessary taxation. Improper transfer tax planning can be very costly and hazardous to an estate.
• Privacy for the Estate. By inherent design, a living trust is a private arrangement. Unless otherwise required by a formal order, an estate owner utilizing a living trust can maintain total privacy regarding all affairs of the family estate both during life and after death. Conversely, probate estates are a matter of public record which can exhibit
1. the assets of the estate,
2. the names and ages of the heirs including the amounts and times of asset dispositions incurred to them,
3. the debts of the estate, and
4. other sensitive information.
• Maximum Control. A living trust allows an asset owner to exercise prudent dispositive control over his/her estate that can be maintained even after death. A large sum of money suddenly acquired by an unsophisticated recipient may cause many more problems than it solves. An incremental, age-based allocation formula is an example of one of many methods that can be incorporated into a trust to exercise asset dispositive control. In fact, to the extent a beneficiary’s inheritance is held in a trust, it is protected from any creditor claims against that beneficiary – including divorce settlements (in all but two states). In addition, a decedent’s family loses primary control of the estate during probate – otherwise avoidable with a trust.
  
  

  State Probate

• Recipient of Insurance Proceeds. A living trust can be a great receptacle for life insurance proceeds benefiting minor children (unless estate tax issues would warrant the use of an Irrevocable Life Insurance Trust). If a minor child or grandchild becomes a recipient of life insurance, or any other asset for that matter, and no trust has been established before hand, then the probate court will create and supervise a statutory trust to receive and manage the life insurance proceeds, and any other assets, for the benefit of the minor child. Such obvious lack of planning can incur significant ongoing management and administrative fees over an dependent child’s account that could otherwise be easily avoided.
• Maximizing Stretch IRA Rules. IRAs (and other qualified retirement plans) can be payable to living trusts under the new “stretch-IRA” and “see-through” rules. Taxpayers can generally benefit their (unsophisticated) IRA beneficiaries by imposing limited withdrawal sanctions on IRA funds. That is accomplished by having IRA withdrawal rights payable to a living trust and therefore completely controlled by the terms of the trust. Without that control, an IRA beneficiary can demand and receive an immediate and full withdrawal of the IRA the day after the account owner’s death.
• Special Needs Children. Parents with an incapacitated child currently receiving SSI benefits have a special planning condition to consider. If a distribution from the parent’s will or trust is directly allocated to such a child, then a partial or even full disqualification of the governmental entitlement will likely occur. However, a properly drafted Special Needs Trust contained within a living trust can provide funds to benefit that child under a statutory standard and therefore not disqualify the child from receiving future SSI benefits.
• Business Continuation. Transferring the management duties of a closely held family corporation or other limited liability entity(s) is often a concern for the owners. A post-mortem management structure in such case should always be arranged in conjunction with a family trust. That will allow the trustee to be the effective manager of the family corporation where corporate interests have been allocated to children or grandchildren. When a closely held business interest is held in a trust, the courts will not be meddling in the managerial operations because it was not subjected to probate in the first place. In addition, a living trust can be an ideal entity to serve as a succeeding general partner of a family limited partnership and trustee of a charitable trust.
• Deterrent to Contestations. A living trust seems to be much more impervious to contests against an estate than a will. We have had enough several first hand experiences to verify this fact. We have seen our own trusts hold up perfectly in litigated situations caused by a disinherited or disgruntled child. Wills are frequently contested often incurring undesirable end results.
• Avoids the Joint-Tenancy-Survivorship Trap. A living trust, because of its probate avoidance abilities, precludes the necessity to own property jointly with another person in order to avoid probate. If a parent recasts personal property ownership into a joint-tenancy-with-right-of-survivorship (JTWROS) deed (or any asset/account) with a child, then the control of that property has been forfeited. Each respective tenant in a JTWROS ownership arrangement can be deemed to own 100% of that property for the purposes of satisfying a creditor of that respective tenant. In other words, if the donee/child gets sued, the parent could end up losing the property to a judgment. In addition, JTWROS held property between spouses also forfeits any beneficial tax planning otherwise available with the unified transfer tax credit planning available with a Marital A/B Trust.

The Operations of a Living Trust

In simple terms, a living trust is an agreement between the "trustor" (the person who owns the assets to be transferred to others in the event of death - - also called the "settlor/grantor") and the "trustee." The two agree to enter into a contract wherein the trustor transfers title of assets to the trustee so that s/he can manage, and eventually distribute, those assets on behalf of the beneficiaries of the trust. Remarkably, with a living trust, one person or a married couple can be (and wear the hats of) all three parties—trustor, trustee, and beneficiary—at the same time.

When the trustor/trustee dies, the successor trustee (originally appointed by the trustor) immediately assumes the office and duties of the trustee without the need of any outside approval or supervision to act. The ability of the successor trustee to take title of assets occurs by operation of law through the legal, binding agreement of the trust.

Unlike a will, probate court supervision is not required to accomplish the legal titling of assets to the successor trustee. After the death of the trustor, the trust becomes irrevocable—meaning it cannot be altered or amended—and the successor trustee will continue to manage, or immediately disperse, the trust assets to the beneficiaries per the instructions in the trust. It’s that simple!