All of us wish to provide
financial security for our loved ones after our death, but we are often
uncertain about the best way to do it.
A carefully considered estate plan will help you assess your goals and
identify the best methods to achieve them.
To that end, you may wish to consider the benefits of a revocable Living
Trust. The marketing of revocable
Living Trusts has given rise to a proliferation of misinformation about their
benefits. Such a trust is an important
tool in estate planning. However, it is
not appropriate for everyone.
What is a revocable Living
Trust? A revocable Living Trust is
created during lifetime, can be amended or terminated during the creator's
lifetime, and is irrevocable upon death.
A trustee is appointed to receive and hold legal title to property and
to thereafter administer the assets of the trust. Typically, the creator of the trust is the initial trustee. Just as in a Will, beneficiaries are named
to receive the trust assets upon the death of the creator. The purpose of the Living Trust is to
administer assets during one's lifetime and to dispose of them upon death. Therefore, the Living Trust will constitute
the estate plan and is intended to be a substitute for a Will. However, a simple "Pour-Over Will"
may be needed if the grantor of the trust acquires assets after the trust is
created and does not transfer them to the trust for whatever reason. Moreover, parents with minor children must
execute a Will in order to designate a guardian in the event of the grantor's
It is important to
understand that revocable Living Trusts by themselves do not avoid or reduce
estate tax, nor is a revocable Living Trust needed to dispose either of assets
held in joint tenancy or of third party beneficiary contracts, such as life
insurance policies, IRA accounts, pension and profit sharing plans, etc. In addition, if the grantor's estate does
not exceed the $100,000.00 statutory minimum for a small estate, and the estate
does not include solely owned real estate, the benefits of a revocable Living
Trust could be minimal.
Some of the main reasons for
having a revocable Living Trust are as follows:
avoidance - A Living Trust can be more convenient and can save the cost of
administrator/executor's fees and attorney's fees;
- While a Will is a public document that, upon filing as required by law, can
be read by anyone, a Living Trust is not required to be filed in the public
management without court adjudication of incompetency - If a grantor becomes
disabled due to mental or physical deterioration, a Living Trust may eliminate
the need to seek the appointment of a guardian of the grantor's estate;
Will contests - the validity of the Living Trust may be more difficult to
contest than a Will.
Estate planning necessarily
involves more than a Will to dispose of assets upon death. It requires careful examination of your
values, goals, and needs, as well as your assets and the various forms of
ownership available to you. It may be
appropriate to include a revocable Living Trust in your plan. Please contact our office for more
information on how to best choose an estate planning package that is right for
you and your family.