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Estate Planning Presentation
What is a Living or Revocable Trust?
A Living or Revocable Trust is a document, which you prepare while still alive, which is revocable as long as you live. The Trust is a separate entity, which holds your assets (similar to a corporation). You transfer title on your assets into the Trust, but you retain complete control over the assets while you are alive and mentally competent. The Trust will not provide protection from creditors, but it will avoid Probate if funded before death.
What happens if I become incompetent and I am the trustee of my Trust?
Upon your incapacity or death, the successor Trustee (the person you named) steps into your shoes and manages assets for you. You name the successor Trustee in your Trust document; this person can be a friend, a relative, or a professional fiduciary.
Who needs a Revocable or Living Trust?
The major purpose of a Living Trust is to avoid Probate and transfer assets to your beneficiaries in a more timely manner. If your combined real and personal assets are in excess of $150,000, your estate will be subject to Probate and you should discuss implementing a Trust with a licensed attorney. Also, if you have minor children and do not want them to receive an inheritance all at once when they turn 18 or 21, or have a child with drug or alcohol problems, you should set up a Trust to protect them as well as the inheritance they will receive.
Is the Trust a public document?
No. A trust is not recorded, and therefore, not a public document. The Trust is, however, sent to the beneficiaries and heirs once it becomes irrevocable (upon the death of the person who established the Trust).
Will a Trust save my beneficiaries in estate taxes?
For a married couple with assets in excess of $5,000,000, a Trust may be written to take advantage of two exemptions of $5,000,000, rather than one exemption; this type of Trust is generally referred to as an "A-B Trust." With the changing estate tax laws, you may want to consider a "Disclaimer" Trust, which gives you more flexibility than the A-B Trust, but still takes advantage of two estate tax exemptions. You should discuss this with your attorney when you consult him or her about your estate plan.
Are there any fees involved in the administration of the Trust upon the death of the Settlor?
Yes. As with a Probate, an attorney should be consulted to comply with the laws of the State in which the decedent died. However, the fees for administering a Trust are generally lower than for a Probate, and are either based on the gross value of the estate or charged hourly.