WHY A LIVING WILL AND TRUST?
Is this something I really need?
More and more individuals are putting their assets into revocable living trusts, which are completely flexible and broadly adaptable arrangements for management, protection and distribution of a family’s assets. A living trust is created during your lifetime and is funded with most or all of your assets by simply re-titling the assets to yourself as trustee.
A living trust is LIVING in that it takes effect immediately. You continue to enjoy all the present benefits of your assets without any changes in your ability to control them. A living trust is revocable during your lifetime, which means that its terms are changeable and assets in the trust can be re-transferred to your name if desired without adverse tax consequences.
A living trust is a private agreement where the distribution of assets under the terms of the trust is not subject to the publicity given to wills in probate proceedings.The complete flexibility of a revocable living trust means that one can be drafted to suit your individual needs and family situation. When you create a living trust you can act as your own trustee, so there are no management fees or loss of control. You can change or modify the trust terms at any time, change beneficiaries, add or delete assets held by the trust without tax consequences.
A living trust does not complicate the management of your assets. While protecting your property within a living trust, you can do whatever you can do now with your assets and property. You can buy, sell, borrow, make gifts, etc. With a living trust you retain control over all your property and assets during your lifetime, and you determine distribution of your estate after your death. Since a living trust is revocable, it has no income tax consequences during your lifetime; no separate tax return is even filed, and all trust income is reported under your social security number.
With a living trust, you are also appointing someone else (a professional, a trusted friend, or a family member) to manage the assets in your trust for your benefit in the event of your incapacity (e.g., Alzheimer’s, a stroke, an accident, etc.) and, because the assets are in a trust, no court administered conservatorship will be required. Under a living trust, you have the successor trustee of your choice ready to step in and take over your affairs until you recover, or for the remainder of your lifetime.
Reduce Estate Taxes
For married couples, the estate tax liability which would otherwise be due at the death of the survivor can be greatly reduced or completely eliminated by proper planning. This is particularly important in states that impose their own estate tax, and do not provide the “portability” currently available under federal law. This planning can be accomplished in a living trust (although it can also be accomplished through wills, this would require a separate probate at the death of each spouse). How much can be saved depends on the size of the estate and the estate tax laws at the time of the surviving spouse’s death. At the same time, the trust can also insure that the estate of the first spouse to die will ultimately go to his or her children (or heirs) even though the surviving spouse is provided the lifetime economic benefit of all assets and has complete management and control over the entire trust.
A living trust allows you to AVOID PROBATE.Probate is a court procedure that is required if your assets are distributed without a will, under a simple will or under a will with a testamentary trust. In court probate proceedings, the court changes the legal ownership of your property when you die. During probate the court must determine the validity of your will and supervise the payment of all your debts and taxes as well as the distribution of your probate estate to the people you name in your will. This process may take six months to a year or longer and is a matter of public record.
Assets that you leave to your heirs by a will goes through probate, but property passed through a living trust does not. With a living trust you can avoid the delay in the distribution of your estate entirely; the assets of your estate can be distributed to your designated beneficiaries immediately upon your death.
Eliminate Guardianship Issues
With a trust, minor beneficiaries can have a trustee can manage and invest the trust funds free of the costs and restrictions that arise when a court must appoint and supervise a guardian of the property until the beneficiary comes of age.
Additionally, with a trust, you can continue the management of a beneficiary’s assets to whatever age you desire; certainly beyond age 18 (the age at which ALL guardianships must terminate).
The management of a beneficiary’s assets can include disbursement of assets and/or funds in increments, according to the directions you put in the trust (e.g., 1/3 distribution at age 25, 1/3 distribution at age 30, and the balance at age 35). Of course, the trustee can use any or all of the trust principal for the benefit of the beneficiary during this period. Also, if there is any question of management skills or capacity of the beneficiary, or to insure that your estate does not go to a son-in-law or a daughter-in-law, the trust can continue for the child’s lifetime and then pass to the child’s issue at his or her death. This will also keep your assets in your family rather than having them be subject to attachment by the state for medical treatment. You can protect the assets from any potential of dissipation of the entire estate while providing for the beneficiary’s needs, as determined by you. With a living trust these trusts are already in place at the time of your death and will begin immediately for the benefit and protection of your beneficiaries.
Avoid Probate Costs
When property passes through probate, you incur executor’s fees, attorney’s fees and court costs, all of which can be quite substantial depending on the size of your estate. These are fees generally set by state law and are usually based entirely on the size of the estate being probated rather than on the amount of time and work involved. There may also be additional extraordinary expenses of probate (i.e., tax returns, life insurance, etc.).
All of these fees and expenses can significantly reduce the estate to be distributed to your beneficiaries.With a living trust these fees and costs can be greatly reduced. Your assets are transferred immediately to your designated beneficiaries outside the court system and in accordance with the directions specified by you in the trust agreement. Costs of administration of a living trust are minimal and are generally based on the actual time and/or services required.
If you went to an attorney, especially an experienced attorney who specialized in estate planning, you could expect to pay from $1,500 to $4,500 as an individual and from $2,500 to $10,000+ for a married couple. Even the cut-rate or discount firms, with their “cookie-cutter” forms, would charge you from $700 to $1,500. With our system, you get the same quality estate plan as you would expect from an estate planning specialist for $500 for an individual and $750 for a married couple.
You can pay less on some other internet sites, but you will be “getting what you pay for”! Most of the internet options merely provide you with preprinted forms for your completion; the sites which do some merging of information still use just a “one-size-fits-all” prepackaged form. The only other site which gives you some minimal options for the completion of your estate plan uses a “bait and switch” by charging you separately for all of the necessary documents and then for the transfer of any real property; by the time you pay them for all of the extras, you are paying substantially more than our price but not getting the completeness and sophistication of our software. Don’t be fooled by our low price; remember, with our program you are getting all of the documents an attorney would prepare for you, with all of the detail an attorney would provide, without paying an attorney fee. You get this because you are using the same software that the attorney uses but with a custom interface designed for the non-attorney.
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