The revocable living trust is the central document of most modern estate plans. “Revocable” means it can be amended or revoked at any time. “Living” means it has been funded i.e. assets have been transferred to the trust, and title is now in the trust, no longer owned by you personally. This enables incapacity care, if needed, without conservator ship or a guardian, and it accomplishes probate avoidance for those assets. It governs the disposition of the family wealth after death of either or both spouses, and can reduce estate taxes. A funded or living trust is a private arrangement. It allows the use of the probate court only as a last resort, rather than in the first instance.
Trusts have many advantages beyond incapacity care, probate avoidance, and tax avoidance. In the area of testamentary distribution of assets after death, a trust can accomplish more than a simple will. One can have “stepped” distribution, such as one third to the children at age X, one half of the balance at age Y, and the balance at age Z. This can be useful for younger children or spendthrifts, or to protect assets from being distributed too early to a child whose marriage is in danger.
Also some trusts may have provisions for distribution only at the discretion of the trustee or trustees. This can protect assets which would stop state aid to a disabled child or be recovered by the state if given directly to such a beneficiary. Discretionary trust provisions can also be helpful if a beneficiary has drug, gambling or alcohol dependency issues.
Personal Asset Trust provisions protect your children, and even help to “Divorce Proof” your children’s inherited assets.
Recent developments in estate planning have added “Legacy Continuation” to the traditional trust objectives. The IRA Inheritance Trust offers maximum income tax stretchout for non-spouse beneficiaries to compound the IRA investments, tax deferred, over a much longer period of time, yet maximizing protection and flexibility. This is an exciting new tool! Call for details!
We have also used trusts for single or married people in the early stages of Alzheimer’s disease to insure their care and protect their assets. Trusts are very flexible. They are tailored to your needs. You have a choice of the structure of your estate plan.
There have been many changes in estate tax laws and regulations in the last few years. If you have not reviewed and updated your estate plan recently you may be out of date. IT IS CRITICAL TO KEEP CURRENT. A review is very worth while!
As Oliver Wendell Holmes, Jr. said “Put not your trust in money — but put your money in trust!”
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