Is there anything bad about a living trust?
Though you may hear different, No! There is nothing bad about a Living Trust. It is a traditional and well-proven planning tool that has been used in one form or another for over 400 years. Any problems that people have with a properly-prepared Living Trust have nothing to do with the Trust itself. The problems usually occur when property or assets are left out of the Trust because of a failure to change title(s) and ownership to the Trust. Other problems may occur with "boiler plate" type Trusts or poorly prepared Trusts. Once the Trust is funded completely, your Living Trust should be easy to maintain. The only reason for not having a Living Trust is if your total estate value falls below the minimum limits of Probate in your state. Even at the lower estate values, if there are minor children, a Trust can be used relative to guardianship of the minor's person and estate. Also a well prepared Trust will include power(s) of attorney and also give you the ability to make care and life support choices ahead of time and provide for your wishes and desires in the event of incapacity.
Can I change my Living Trust?
Yes, you can, and you should if your family situation changes. In order to change your Trust, do not write directly on the Trust document itself (unless it is an emergency or life-threatening situation). Rather ask your attorney to make an amendment (which you will sign and have notarized). Amendments are usually simple, and it should not take your attorney long to write up an amendment.
Can I appoint one of my children as the Trustee for my Living Trust?
Yes, you can, in fact this is what we have witnessed most families do. Usually you remain the Trustee during your life and your children take over at your death or incapacity (if you have named your children as Successor Trustees and in your Power(s) of Attorney). You cannot name a minor child as a Trustee and there are special requirements for non-citizens, however.
My spouse is incapacitated. What should I do?
First of all, take care of your spouse. Then, notify the insurance company, your spouse's employer, find the Trust document(s), notify your attorney, find out what your insurance covers, have the doctor document your spouse's condition, apply for benefits, become familiar with your finances, put together a team of advisors (which may have been mentioned in the Trust), keep records, take care of taxes and accounting, and keep the successor trustee informed. There are many other things to be done and you should call your attorney for advice.
How do I fund my trust?
You place your assets into your trust by changing the name on all of your titled assets (i.e. savings accounts, money markets, stocks, mutual funds, CDs, bonds), and your fixed assets such as real estate, into the name of your Living Trust. This is a very important step that must be done for your assets to truly avoid the Probate process. It is usually simple to accomplish and very, very important.
What about adding other persons on my acounts, deeds, etc.?
It is usually not a good practice to add another person on the title of your property or your accounts (this includes your parents and children). It could cause you and your family some very serious problems-- possibly defeating the purpose of your Living Trust or exposing you to a lawsuit. Most people add other persons to their accounts to either avoid Probate or to feel secure that their children could take care of things should they become incapacitated. The LIVING TRUST enables you to accomplish this by simply naming a responsible adult child or person to act as your Trustee at your death or as your Power of Attorney in the event of incapacity. Should your Trustee go through a divorce, bankruptcy or litigation, their affairs will not affect your assets or interfere with their responsibilities to assist you, due to the fact that your Trustees do not have title to any of your assets placed in Trust. Their only role is to act as a fiduciary looking out for your benefit. In any event, they would not come into play as Trustees until your death or incapacity. You would be your own Trustee until then.
My spouse has passed away. What do I do?
First, take care of funeral arrangements. Then, find the Trust document, contact your attorney to review the Trust document, order death certificates, take care of ongoing bills and final expenses, put together a team of advisors (may be mentioned in the Trust), take an inventory of assets, and determine their current value, do tax planning, apply for benefits, pay the bills, make special gifts, and keep things organized for your successor trustee. In the back of all of our Trusts we have partial instructions and guidance for those who will be taking over and settling the Trust.
Does transferring property into a Living Trust cause a reappraisal of the property so that property taxes are raised?
Absolutely Not! Most State laws or local codes specifically state that a transfer into a Revocable Living Trust does not cause a reappraisal or revaluation of the property for tax purposes.
What if I am incapacitated?
Your successor trustee will take control of your finances. This person will be responsible for overseeing your care, for notifying your attorney, have your doctor document your incapacity, look after minors, become familiar with your finances, apply for benefits, put together a team of advisors, notify your bank, and take care of record-keeping and accounting.
| Are Living Trusts legal in every state?
Actually, Living Trusts are legal in any country using English Law. Every state in the union recognizes the Living Trust, and you may usually move from state to state with very little modification to your trust. Some states prefer certain wording of specific documents, but they do not invalidate the documents you have in your trust. If your residence state should change, simply call The Estate Services Group and we will do our best to assist you in making the necessary changes to your Trust.
If I have a Living Trust do I also need a Will?
Yes, you will need a "Pour Over Will", which "pours over" into your Living Trust, at your death, any assets you forgot to put into the Living Trust. Those forgotten assets do not have to go through Probate (unless they are over your allowable State probate guidelines), but will go directly into your Living Trust. All of The Estate Services Group's Family Living Trusts contain a "Pour Over Will".
Do I have to file a special tax return for a Living Trust?
No, you continue to file a 1040 as you always have, using your social security number. A Living Trust, being revocable, does not need a tax identification number and does not file a tax return of its own until after the death of the Trustor(s). As we have stated, it also does not trigger a reassessment for property tax.
Can a Living Trust be contested like a Will?
Usually not, but like anything, and especially in our litigious society, anyone can sue anybody at any time. Our Living Trusts contain language that makes it almost impossible to successfully contest, even by an heir. In layman's terms, it states that "if an heir is not happy with their share of the assets and wishes to contest the trust, they will receive nothing!" A former spouse also cannot break a trust, so long as all assets are properly funded into the trust and were not in a contested state.
When will I need to update my Living Trust?
It is a good idea to review your Living Trust at least once a year with the professional or attorney that set it up for you. As a general rule, you should change your Trust anytime it is no longer what you want. Any major changes in your family, such as marriage, divorce, death, birth, etc., could justify a change in your Trust. If your Successor Trustee(s) or Guardian(s) can no longer fulfill the responsibilities, you should make changes accordingly. As long as you are capacitiated you retain the power to make changes at any time to the heirs or successors of your Living Trust by simply entering an amendment to your Trust. Reasonable and customary changes to your Trust are provided by the attorneys of The Estate Services Group, if we prepared your Trust, at an extremely affordable annual rate of only $79.95 a year .
Wouldn't joint tenancy be just as good a way to avoid probate?
NO! Joint tenancy with a child or children, could avoid probate, but what if your child was involved in a nasty divorce and the spouse is awarded a potion of your home? What if the joint tenant is sued or gets involved in an auto accident without sufficient coverage? What if there are taxes due that apply to the other joint tenant and the IRS leins your home to satisfy the judgment? Most of our attorneys do not usually recommend holding your property in JOINT TENANCY.
What is the difference between a Living Trust and a Living Will?
A Living Trust is a tool implemented for the family to avoid probate and maintain family privacy whereas a Living Will is an instrument written to spell out final wishes relative to life support and end of life medical care. In many attorney's opinion, a good and thourough Living Trust will have a Living Will (if used in your State) as one of its elements.
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