What is Probate?
Probate is the legal process where the representative of an estate distributes property of the decedents. If the total value of your personal property or the total value of your real estate is less than the state guideline, a claiming successor can take title of the assets you own and generally not have to go through the probate process. The probate process, if contested, may be expensive and time consuming. The main expenses are attorney, executor, appraisal, and court filing fees. Probate may take 9 months to 2 years to complete and may become a tremendous burden for your loved ones.
What to Expect in Probate
Some probate cases have taken much longer than 2 years to be completed. Meanwhile, your beneficiaries must wait until the process is complete before they are entitled to receive their share from your estate. If you owe money on property, they may also have to maintain payments to assure that the assets are not lost.
Does Adding My Child on Title with Me Avoid Probate?
Yes, however, adding your children on title as joint tenants means that they are then co-owners of your property. This means that you need their permission to sell or mortgage your property. It also means that your property could be subject to the claims of their creditors. You may create unneeded liability and tax consequences upon your children. Finally, when you add your child on title as a joint tenant, you may be liable for gift tax, and if your child dies before you, your family may have to prove that your house should not be probated in their estate settlement.
How Does a Living Trust Avoid Probate?
You create, own, and control the Living Trust during your lifetime and transfer the title of your assets to your Trust. Since you manage the Trust and no longer personally own your assets, your estate does not have to go through Probate when you die.
Who Controls My Trust Assets?
You do, or at your own choosing, you can name someone else to manage it, or for a fee, you can have our offices, an attorney or a professional trust administrator manage it for you. If you choose to manage your trust, as the Trustee, you manage your Trust assets for your own benefit during your lifetime. You continue to use your assets just as you were doing before setting up your Trust. You can call our offices to inquire about fees for us to manage the Trust on your behalf.
Can I Change the Terms of My Trust?
Yes. As the Trustor, you retain the right to change any of the terms of your Trust as long as you are capacitated.
What If I Buy or Sell Assets?
If your assets change, you can easily keep track of them in your Trust. Often times, there is no need for a lawyer to accomplish these changes. After your Trust is completed, all future purchases can simply be made in the Trust name.
If I Have a Trust, Do I Need a Will?
Yes, but only a very special type of will called a "Pour-Over Will." The Pour-Over Will acts as a safety net to put any assets that were inadvertently left out of the Trust into the Trust.
Will My Trust Reduce Inheritance Taxes?
Yes. If the net value of your estate, when you pass away, is more than $2,000,000, federal inheritance taxes must be paid. If you are married, an "A/B" Trust will allow you and your spouse to pass up to $4,000,000 to your heirs without any inheritance tax, saving you a minimum of $258,000 in potential inheritance taxes.
Is a Trust Right for Me?
Many people answer this question with an emphatic YES! If you want to avoid probate, reduce the possibility of Conservatorship or Guardianship, secure privacy for your family and save money on taxes, maybe you should answer yes too. Join The Estate Services Group today.
| What are estate taxes?
The federal estate tax is a tax on the net value of your estate (your assets less your debts) at the time of your death. This is also known as the death tax. Some states have their own death taxes in addition to the federal tax. This tax is expensive and starts at 37% and can quickly go up to 55%. In 2005 top tax rate is 47%, 2006- 46%, 2007-45%, 2008-45% and 2009 45%. In 2010 it is repealed. Everyone should think about planning ahead.
Can I sell assets or add new assets to my Living Trust?
Yes, you can. You can sell assets and add new assets yourself without requiring a change of the Trust. In essence, you can do anything you want with your property while it is in the Trust. You retain complete control over your assets as long as you are capacitated. When you purchase a new titled asset, you simply purchase it in the name of your Trust.
How can I save on estate taxes?
You may use any of these methods to save estate taxes. You can give away some of your assets now to people or organizations who will eventually inherit them after you die. You may get an Irrevocable Life Insurance Trust, a Charitable Remainder Trust, a Charitable Lead Trust or you could set up your own Private Charitable Foundation. You can set up a Personal Residence Trust. You can create a Grantor Retained Annuity Trust (GRAT), or a Grantor Retained Unitrust (GRUT). You can establish a Family Limited Partnership. You can set up an Asset Protection Trust. You can establish a Land Trust. Details for all these can be obtained from your lawyer who sets up your Living Trust.
How do we end our Living Trust?
When you die and all the assets in the trust are distributed, the trust will end. If you retain assets in the trust after your death for distribution to your heirs over a number of years, the trust will remain active until such time as your instructions dictate the end of the trust or all assets are finally distributed. This could take a few years, or decades. It depends on how you express your wishes in the trust.
Does a Living Trust provide any protection from Income Taxes or Litigation?
No, it does not. A Living Trust is a Revocable Trust and may be dissolved by you at any time. It does not provide any protection for your assets against lawsuit or tax attachment. You do not have to file a separate tax return for your Trust while you are alive. It does provide unique protection in other areas. If liability protection is a concern, you should contact your atttorney and talk about other effective alternatives which may be used to protect your assets from attachment.
Should I use a corporate trustee?
A corporate trustee could be a bank trust department or a trust company that specializes in managing Trusts. If you have no family or friends, or if they do not get along, or live in distant areas, or if you generally have no one you can trust, you might consider using a corporate trustee or talk to someone in our Trust Administration division (ESTCO).
Can a Living Trust buy and sell assets in the trust?
Yes, you actually do business in the name of your trust. You can buy, sell, trade, or give away your assets the very same way you do now. It all depends on you, the Trustee. You have complete control of your assets and can do anything with them after the trust is formed that you could do before the trust was formed.
Who can I name as my beneficiary?
You can name any person or organization as your beneficiary. That means you can name your spouse, your children, other individuals, your Living Trust itself, a charity or foundation as your beneficiary. If you have pets, you can even set something up for them.
What is meant by an A-B Living Trust?
An A-B Living Trust is a Trust for married couples. It provides for an individual statement of your separate assets and allows you to double your Estate Tax exemption at the second spouse's death from $2,000,000 currently to $3,500,000. This provision can be incorporated into your Family Trust.
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