Georgia Wills, Trusts and Estate Planning Blog

Michael Jackson's Will Filed with Court Today

David Shulman of the South Florida Estate Planning Law Blog has posted an excellent, concise and very timely discussion of, and a link to, the Last Will and Testament of Michael Jackson. As I have posted before, we can show you a will after someone's death because it is a public record. Unlike many, however, as David points out, Mr. Jackson in this Will appears to have done it right: he had a trust (a private document) set up to hold his assets and this will transferred any property not otherwise ownedd by the trust but which was owned in the singer's individual name, to the trust, to be administered and distributed in accordance with the instructions left in the trust document. David's post continues below.

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Here is the link to Michael Jackson’s Last Will and Testament.

The will is what’s known as a “pour-over” will.  In other words, instead of the will itself disposing of all of his assets directly, it instead transfers all of his assets to the “MICHAEL JACKSON FAMILY TRUST” as amended and restated on March 22, 2002.  The terms of his revocable trust will govern the disposition of his property.  I assume that most of the assets will remain in trust for his children and their children, with significant distributions to other family members and charities.

However, I don’t know.  I’m only assuming.

A will is public and is filed with the court.  A trust is not.  There is no obligation to disclose the terms of the trust to the public.  Certain beneficiaries are entitled to copies of the trust however, and it’s possible that one of them might leak it at some later point in time.

The executors of the will [. . .] are John Branca, John McClain, and Barry Siegel.  Their primary responsibility will be to transfer the estate’s assets, that is the assets that were not already owned by the trust, to the trust.  The successor trustee (whoever that might be) is then responsible for managing the trust estate.

He did nominate his mother, Katherine Jackson as the guardians of his minor children.  In the event of the death, inability, or refusal to act of Katherine Jackson, he nominates, believe it or not, Diana Ross!

Those are the only details now.  It’s a short five page will.  Unless there is a subsequent will, or the trust somehow becomes public, this is all the information that will be public.

I’m actually impressed.  It seems that as irresponsible of a person as he was, he might have actually done this correctly.  [Compare this to the outcome of] Anna Nicole Smith.

SOURCE FOR POST: South Florida Estate Planning Law Blog

Living Trusts: Do They Protect Your Assets From Creditors?

The following is an article written by Phil Craig, an attorney in California:

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A surprising number of readers want to know
“Can a living trust protect my family’s assets from creditors
and lawsuits?”

I think there are some promoters out there that use this as a
pitch to get people to set up a living trust using their services:

“Transfer your assets to a living trust and hide them from your
creditors,” are the claims.

Sorry, that’s not the law.

Let’s have a quick review of a revocable living trust. Basically a trust is “a legal arrangement where property is held for the benefit of someone.” In other words, you “entrust” title to your assets to “someone” who is instructed to use and manage those assets per the terms of the trust document.

A trust is revocable if it contains language that allows you to
change your mind and terminate or modify it. In California, the
Probate Code specifically states that all trusts are revocable,
unless specifically stated otherwise.

A trust is called a “living” trust because it is set up by you
while you are living. If you set up a trust through your will,
it’s called a “testamentary” trust since it is created through
your last will and testament.

The right to revoke your trust means you can remove any asset from the trust title at any time you choose.

Since you have the right to revoke the trust, you are treated as the legal owner of the trust assets for purposes of income tax law or creditor collection law.

So, the general, basic answer to the question, “Will my revocable living trust protect my assets from my creditors?” is no. Since you can remove any asset at any time, your creditor can force you to remove the asset.

Now there are types of “irrevocable” trusts that can be used for protection of “spendthrifts.”

(That’s the fancy term for someone who can’t manage their own
property due to lack of sophistication, gullibility, or other
problems).

I know a family where one son spends money as soon as he gets it.

He gives it to friends, spends it on new toys, whatever. He just doesn’t have a healthy concept of money and can’t keep it. He is a classic “spendthrift.”

In his parents’ case, what they have done in their living trust is said, in effect, after they’re both dead, the spendthrift son’s share of the estate will be held in an irrevocable trust for his benefit.

He is to be given a monthly draw on the trust until he dies or until the money runs out.

In that case, the money in the “spendthrift trust” is sheltered from the son’s creditors since he does not, nor did he ever, own the assets held inside the trust.

Sure, the creditors can get his monthly draw once he gets it, but the main trust is sheltered for his benefit.

That is a classic and perfectly legal way of sheltering assets from the creditors of a “spendthrift” using a living trust (it can also be done using a testamentary trust).

Good luck and until next time,

Phil Craig

P.S. Feel free to forward this on to any friends.

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© Phil Craig, All Rights Reserved

http://www.LivingTrustSecrets.com

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Phil Craig is a licensed attorney and entreprenuer.
He started practicing law at age 25 in 1979.
He does not take on any more clients, but is
advisor to some of the biggest names in the internet
world. He shares his knowledge gained over the
last 25 years at his Living Trust Secrets newsletter site:
click here=========>http://www.LivingTrustSecrets.com

Avoid 7 common mistakes with trusts

Many people use revocable or living trusts in their estate plans.

Living trusts are very powerful planning tools you can use for all kinds of purposes. Trusts can avoid probate, protect your beneficiaries from their creditors or divorcing spouses and can provide for the family cottage, education for grandchildren or your favorite charities.

Many of these trusts are signed and then put away in a drawer or safety deposit box, not to be looked at again for years. This can result in an estate plan that does not work as intended.

Trusts, like any other tool in your shed, must be kept sharp. When a trust is part of your overall comprehensive estate plan, you should try to avoid the seven most common trust mistakes:

Mistake 1: Failing to title assets in the name of your trust

Mistake 2: Failing to update your trust

Mistake 3: Using form documents

Mistake 4: Choosing the wrong trustee

Mistake 5: Thinking your trust protects you from your creditors

Mistake 6: Thinking that assets in a revocable living trust escape estate taxes

Mistake 7: Forgetting your favorite charities.

If you have not put your assets into your trust, also called "funding" your trust, you have lost some of the benefits of your trust.

Any assets that are in your own name at the time of your death will need to be probated. However, any assets that are titled in the name of your trust at the time of your death will avoid probate and usually result in lower after death administration costs.

Generally, except for qualified retirement funds and certain annuities, all of your assets should be transferred into your trust during your lifetime.

A trust drafted as a qualified beneficiary for retirement funds and named as beneficiary of your qualified retirement assets preserves the "stretch out" of the distributions over the ultimate beneficiary's life expectancy.

Placing all of your assets in your trust means that all assets will be distributed according to the detailed instructions you leave in your trust. Having a trust without putting your assets into the trust is like buying a brand new car, but not filling it with gas: It looks great, but it does not go anywhere.

Your trust should be reviewed at least once a year to make sure it still meets your needs.

There are many changes that can trigger an update to your trust. There may be changes in your personal life such as births, deaths, mar riages or divorces. There may be financial changes in your life, such as job changes, retirement, the stock market going up or the stock market going down.

There also are tax and non-tax changes in the laws. Congress never fails to pass some sort of a tax act every year. There also are changes in your attorney's experience. The trusts I draft this year are better than the ones that I drafted in previous years as I learn and experience new things.

Many people attempt to draft their own trusts by using forms found on the Internet or in legal software packages. Many attorneys also will use forms-based documents. When preparing a trust, the old adage "You get what you pay for" is very often true.

The forms-based trusts usually treat everyone the same. For example, many form trusts have the provision that your successor trustees take over if you become disabled in the opinion of two physicians. Most of my clients would rather have their family making this decision instead of non-family members.

Most forms-based trusts are also only will substitutes which provide upon your death that your property is distributed outright to your beneficiaries. For many, outright distributions are not the best protection for your beneficiaries. Many trust makers provide lifetime trusts for their children.

With lifetime trusts, your children have control over and have access to the funds for their lifetimes for their needs, but there are two key protections.

Firstl the lifetime trust protects the assets you leave to your children from your children's creditors.

And second, as long as the trust assets are not commingled with your children's marital assets, the assets generally would be protected from being considered as marital assets in the event of a divorce property settlement.

Many people choose their oldest child as their successor trustee. This may not always be the wisest choice.

When choosing a trustee, make sure the person that you are choosing has the skill and talents to manage your assets. If a child has a substance abuse problem, has poor money management skills or is married to a predator, it may not be the wisest choice to name him or her as your trustee.

You also may want to name multiple co-trustees to manage your assets during your disability or after your death.

You also could name a professional trustee such as a bank or trust company to be a trustee or co-trustee during your lifetime or upon your disability or death. These professional trustees are in the business of managing assets for a reasonable fee.

If you are not leaving the assets directly to a child as a result of substance abuse problems, poor money management skills, creditor issues or otherwise, an independent professional trustee making distribution decisions is often times better for family harmony.

Most revocable living trusts are not creditor protection devices for the trust maker. Most living trusts are drafted so you have full authority to change, amend, alter or revoke the trust and you have full access to the assets in the trust. If you have full access to your trust assets, so do your creditors.

Similarly, assets included in your revocable living trust are available or countable resources for Medicaid purposes.

Properly drafted and funded trusts for both you and your spouse can, however, protect your trust assets from your spouse's creditors and vice versa. A trust can also protect the assets you leave to your children from their creditors.

Many people think if they put assets in a revocable living trust, those assets will escape estate taxes. Upon your death, any assets in a revocable living trust are considered your assets in your gross estate for estate tax purposes.

In 2008, you can leave up to $2 million estate tax-free to your beneficiaries. However, you and your spouse can double the amount of assets that can be distributed estate tax free to your beneficiaries from $2 million to $4 million by using properly drafted and funded separate revocable living trusts.

About 89% of Americans donate to charities during their lifetime. However, only about 3% of Americans provide for charities after they are gone.

If you give regularly to a church or other favorite charity during your lifetime, your donations expire with you. These organizations that have depended upon your donations during your lifetime will no longer have those donations after you are gone, unless you provide for them. You may want to consider a bequest to your favorite charities after you are gone.

SOURCE: TheTimesHerald.com in an article written by Matthew M. Wallace, an attorney and CPA with the law firm of Matthew M. Wallace, PC, in Port Huron, Michigan.

The Gift of A Lifetime Trust

A Lifetime Trust is and extremely valuable benefit that only you can give to your heirs. By holding assets in a trust for the lifetime of the beneficiary, you ensure that the inheritance is protected from lawsuits, spouses upon divorce and estate taxes when the beneficiary dies.

Yes, inheritances are separate property in case of divorce! But the reality is that many beneficiaries commingle the inheritance placing it at risk in the divorce.

Yes, a beneficiary could take the inheritance and establish an asset protection trust. But, the reality is they will not do it and if they are wise enough to do it the cost could be $20,000 to $40,000! And will it work?

The Beneficiary can control the assets by becoming a Trustee at the age you choose. They can grow into this responsibility by being Co-Trustee for a given period before becoming sole Trustee.

This trust can be designed to be totally discretionary meaning the Trustee has absolute discretion in payment to the Beneficiary or based on the standards of health, education, maintenance and support.

The message is clear, a Lifetime Trust is a wonderful gift only you can give! And it lasts the lifetime of the one you love!

SOURCE: Vaughn DeKirby

Choose the Right Trust Plan for Your Will

All trusts aren't alike. When you put a trust in your will, it should be drafted precisely in order to satisfy your wishes and goals. Just any old boilerplate text or preprinted legal form won't do.

You may have one or more reasons to put a trust in your will (called a testamentary trust by lawyers). It can benefit your family, protect your money and save taxes. When the initial beneficiary dies (your spouse, perhaps), your trust can make certain other heirs chosen by you (say, children or grandchildren) will share the principal. Or you may want your favorite charitable organization to benefit. Quite likely you have other goals you want your trust to achieve.

You can set up a trust for just about any purpose. It's a remarkably versatile and flexible means to carry out your intent and assure the prudent management and eventual distribution of your assets. Let's look at some possibilities and benefits.

Types of Trusts
Testamentary trusts are often given various kinds of descriptive labels to identify their nature and purpose. Still, a trust can have multiple objectives.

• Marital trust. You can leave some of your estate to a marital trust for your surviving spouse's benefit. The trust assets will be free of federal estate tax in your estate because of a marital deduction, but they will be subject to estate tax when your spouse dies later. You can give your spouse the right to appoint the trust remainder to anyone. Or, if you prefer, you can use a "QTIP trust" so you can name the remainder beneficiaries.
• Family trust. Also called a bypass or credit-shelter trust, this provides lifetime financial support for your spouse. The trust assets can bypass the federal estate tax twice: first, at your death, when it qualifies for the unified estate and gift tax credit; second, on your spouse's death, when the remaining principal passes directly to your children or other beneficiaries you name. Many couples include both a marital trust and a family trust in their estate plans.
• Other trust types. An irrevocable life insurance trust is funded by the proceeds of life insurance on your life. A trust that benefits your family first and then distributes the principal to your favorite philanthropy is called a charitable remainder trust. Trust types go on and on.

Typical and Special Trust Provisions
Trusts usually last a long time. Just as you wisely choose the right kind of trust, you should include essential terms to assure flexibility and anticipate unpredictable circumstances.

Plan Carefully
Don't take chances—make sure your trust plans fulfill your beneficiaries' needs, allow prudent investment management and shelter the assets from unnecessary taxes. See an attorney who specializes in drafting wills and trusts. Equally important, name an experienced corporate trustee.

SOURCE: University of Georgia in an article written by Mary L. McCormack

Put Some Kick Into Your Estate Plan by Using Trusts

Are you looking for new ways to protect your family and your money? Would you like to cut estate taxes and probate costs, too?

Trusts can be the answer. They are remarkably versatile and can broaden your estate plan. While not magical, they can produce results that seem beyond belief.

The particulars are simple. A trustee chosen by you manages the trust assets, called the principal, and pays an income to those you want to support, your beneficiaries. Your will or a separate legal document is needed to establish a trust. When you create a trust, you are referred to as the grantor or donor.

Why Would You Use Trusts Today?
A trust can be either revocable or irrevocable. A revocable living trust agreement allows you to amend or cancel the trust at any time, in case you change your mind. On the other hand, if you put a trust arrangement in your will, it will become irrevocable upon your death.

You can set up a trust for anyone for just about any purpose. Here are some typical trust arrangements.

• Family trust. You can create a trust in your will—known as a testamentary trust—for the benefit of your spouse, children and other family members. In a typical family trust, a husband and wife set up a trust in their wills for the surviving spouse's benefit. Each directs that after his or her death, the trust shall continue for the support of their children until the children attain a certain age, say 25 or 30. Then the trustee is to turn over the principal to the children.
• "QTIP trust." The acronym stands for qualified terminable interest property. Although the surviving spouse receives lifetime income from this trust, he or she may not have the power (other than certain limited rights) to determine the beneficiary of the remaining trust assets upon the survivor's death.
  
  The intent is generally to allow more control in a second marriage situation where the goals are to provide maximum financial support for the surviving spouse, but still ultimately pass the trust principal to children of the prior marriage.
• Living trust. You might decide to create a trust for your own benefit, a trust that will remain operative while you are living. It logically is called a living, or inter vivos (Latin for "between living persons"), trust. In this case, you direct the trustee (which can be yourself or a professional trustee of your choice) to look after the trust assets, pay you the income and counsel you about the investments. You are to be kept fully informed about all transactions. You can reserve the right to amend or revoke the trust, to add or withdraw assets, and to approve investment changes. The trust can continue after your lifetime for the benefit of your family or others, and the trust assets avoid the costs and delays of probate.

A Versatile Tool
If you'd like to make a gift to our organization or another charitable organization, but you first must satisfy your own family's financial needs during your lifetime and after, a trust can be the ideal solution.

Trusts let you have it both ways—pass assets to your heirs with the least amount of tax and make a gift to us. Often trust arrangements will accomplish much more, including professional investment management and the assurance that your wishes will be fulfilled.

SOURCE: University of Georgia in an article written by Mary L. McCormack

A Living Trust Could Be the Key to Your Estate Plan

There seems to be quite a bit of discussion these days on the subject of a living trust as an estate planning tool. But what is a living trust? What are its advantages? And how can a living trust fit into your estate plan? Here are some answers.

A living trust is an arrangement you create during your lifetime to provide for yourself and your family both before and after your death. It has built-in flexibility that can work very well with your overall estate plans. Though there are many advantages to using this estate planning tool, it is not a substitute for a will.

Looking at Both Sides

• Reduction of probate costs. Although you can enjoy the use of the assets you place in a trust during your lifetime, a living trust removes those assets from your estate for probate purposes. Therefore, you save the probate and administration costs you would incur if those same assets were distributed by the terms of your will.
  
• Speedy distribution of trust assets. By establishing a living trust during your lifetime, you are setting up a method of managing and distributing your assets. Because a living trust escapes the probate process, the plan of distribution you describe is set in motion immediately at your death. There are none of the delays that occur under distribution by will.
  
• Flexibility of planning. Another advantage of a living trust is the overall flexibility it provides. Most living trusts are revocable. This gives you the freedom to amend, add to or even completely revoke the trust agreement as you wish.
  
• Freedom of control. Living trusts give you the freedom to name both the beneficiaries and the trustee. Most likely you will name yourself as the trustee during your lifetime and maintain the right to appoint and select successor trustees and beneficiaries. You also control the income and principal and how much of it you wish to use during your lifetime.
  
• Investment management. You may choose to appoint a professional trustee such as a bank trust department or trust institution; some charitable organizations also will serve as trustees. This frees you from the worry of the day-to-day management of assets, yet you still may direct investment goals, including instructing your trustee to change investment strategies.
  
• Confidential trust terms. One of the most favorable aspects of a living trust is the privacy it allows. Unlike a will that is open to the public after you are gone, no one needs to know the contents of your trust, except your beneficiaries.
  
• Charitable contributions. Charitable contributions may be made easily with a living trust. Once your needs and those of your family are met, trust assets can be distributed to University of Georgia.
  
• Tax savings. A living trust may be drafted to make the most of estate tax advantages afforded under federal law. After your lifetime, the value of the assets distributed immediately to us completely avoids estate tax.

Keep in mind that there's no income tax charitable deduction when you create a revocable trust, and the level of income is not guaranteed. The trust's assets can be invested in highly rated securities, of course, but the yield is dependent upon economic and market conditions. From your standpoint, these drawbacks may be more than offset by your right to retain control of the trust terms and investments.

A living trust generally is not a stand-alone estate planning document. It is advisable to have a pour-over will to capture any assets not transferred to your revocable trust, since it is difficult to get every asset into a trust.

A living trust gives you flexibility while you receive income from your assets during your lifetime, and it can provide asset management after your death.

SOURCE: University of Georgia in an article written by Mary L. McCormack

Should You Create a Joint Trust?

If you're married, perhaps you and your spouse are thinking about setting up living trusts. If so, you might ask, "Can't we have just one living trust for the two of us?" Is a joint trust a good idea?

How a Joint Trust Works
First, don't confuse a joint living trust with jointly owned property. A joint trust is created by a single document that manifests your and your spouse's respective wishes about the disposition of your respective property placed in the trust. As to joint ownership, there are various forms, but the most familiar is joint tenancy with rights of survivorship, by which the share of the deceased joint owner passes automatically and outright to the surviving joint owner.

With a joint trust, community property and separate property of both spouses may be transferred into the trust and retain their character as community or separate property. Both spouses benefit from the trust during their joint lifetime. When one spouse dies, the entire trust continues for the benefit of the surviving spouse.

Estate Tax Advantages
A joint trust is most commonly used in community property states, where most of the property in the trust is characterized as community property.¹ In some cases, there can be significant estate tax advantages to this type of arrangement.

Typically, the terms of such a joint trust are somewhat like this: When the first of the couple dies, the trust splits into Trusts A and B. The assets allocated to Trust A qualify for the federal estate tax marital deduction and include the survivor's share of the community property and the survivor's separate property, if any.

Example: Fred and his wife, Jean, have $5 million of community property in a joint trust. When Fred dies, normally one-half, or $2.5 million, would be allocated to Trust B, intended eventually to bypass Jean's taxable estate. However, this would generate estate tax in Fred's estate on the excess over a tax-free allowance $2 million in 2008. So, assuming Fred made no prior gifts, the excess of $500,000 will be allocated to Trust A. Result: Trust A will wind up with $3 million and Trust B with $2 million, both fully exempt from federal estate tax in Fred's estate.

However, the potential estate tax advantages must be weighed against many other factors and issues created by joint trusts.

Which Is Better?
Needless to say, arriving at a decision between a joint trust versus separate trusts is relatively complex. If you reside in a community property state, you and your advisor may wish to seriously consider a joint living trust. (One cautionary note: You may live in a community property law state, but perhaps the majority of the property you plan to place in the trust is characterized as separate property. In this case, separate trusts should be considered.)

If you reside in a noncommunity property state, each spouse's wishes and property usually are dealt with more efficiently by separate trust agreements. Ultimately, the right answer depends on your state laws and your personal circumstances. Whichever course you choose, it is imperative that your selected executor and trustee are experienced in dealing with separate and community property, and that they take all the necessary steps to maintain the original character of the property.

Your living trust will have legal and tax consequences. Equally as important, the structure of that document will have an impact on you and your beneficiaries in many other ways. Seek the counsel of an attorney who specializes in estate planning. And, of course, our organization's trust and estate planning professionals are available to assist you in exploring your options in developing this very important financial planning document.

¹ Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

SOURCE: University of Georgia in an article written by Mary L. McCormack

Discover the Flexibility of Living Trusts

A living trust is just what its name implies—a trust you establish while you're living. Living trusts can be "revocable" or "irrevocable," and there are unique characteristics to each. Although it's not normally intended to completely replace a will, a revocable living trust can be an effective way to maintain control of property during your lifetime—and a private way to dispose of it after your death.

Revocable Living Trusts
The benefits of establishing a revocable living trust—one that allows you to change the terms at any time—are many. Here are some of the most important advantages.

• Professional management. You may not have the ability or the time now to act as your own trustee and manage your assets the way you want. A professional trustee will do that for you. You can then observe how your trustee manages your money and continually make clear to him or her exactly what you want done with your money during and after your life.
• Probate avoidance. At your death, the revocable trust will become irrevocable. Then the assets in your living trust will bypass the expense and delay of probate. Transfers will not be public, so your privacy will be preserved.
• Asset protection. A trust will protect beneficiaries from others (protecting children's inheritances, for example, from divorced spouses).
• Control of terms. You may select the location of your revocable trust, thus choosing the law that will govern its operation and the interpretation of your trust instrument. By choosing the law of one state over another, it may be possible to do things that you cannot do under the laws where you are domiciled.

The Irrevocable Charitable Trust
If you are interested in making a major charitable gift but feel you can't give up the income from your assets, consider an irrevocable charitable remainder trust. Eventually UGA will receive what's left of the trust after your lifetime (and that of another beneficiary, if you wish), but in the meantime you'll benefit in these ways.

• Tax savings. If you transfer long-term appreciated assets to a charitable trust, you'll receive an income tax deduction based on your age and the fair market value of the assets on the day you set up the trust. Plus, the transfer is not subject to up-front capital gains tax.
• Lifetime income. Every year, the charitable trust pays you (or your beneficiary) either a fixed income (with the annuity trust) or variable income (with the unitrust) You make the choice when you set up your trust.

See how a charitable remainder annuity trust can benefit you.

See how a charitable remainder unitrust can benefit you.

Find Out More

SOURCE: University of Georgia in an article written by Mary L. McCormack

Living trusts, revocable or irrevocable, offer you assurances you may never have thought were available. As you plan how you want to manage your assets or transfer them after life, be certain to review with competent counsel the unique benefits and obligations of each plan.

A Living Trust? You Don't Need to Be Rich

The term "trust fund" conjures up images of mansions, yachts and huge fortunes. But once the province of the very rich, trusts have found themselves into the lives of many families who've never thought of themselves as wealthy.

Trusts come in myriad forms, but for middle-class families, the living trust is popular because the person creating the trust can enjoy lifetime benefits. You can deposit assets in your own trust and ask the trustee to manage them prudently and pay the income to you, so you have more time for hobbies, travel and family.

Later, there are other important advantages. The property in a living trust that survives you can avoid the costs, publicity and delays of probate and speed property distribution to your spouse or other beneficiaries. If you choose, the trust can continue for their benefit in order to provide sound investment management and reliable financial support.

What Is a Living Trust, Anyway?
Unlike a trust you might establish by will, a living trust is set up by a written agreement between you and the trustee, and it takes effect immediately.

While you can be your own trustee, you may prefer to name a professional trustee to manage the trust assets, keep good records, pay you a regular income and—should you become incapacitated—pay your household and medical bills.

A living trust can be revocable or irrevocable. The advantage of a revocable trust is that you don't give up control—you can amend its terms or even cancel it whenever you wish. On the other hand, you may want to put some of your assets in an irrevocable trust so you can achieve other significant goals.

For example, you could set up a charitable remainder trust to pay yourself a dependable income for your lifetime and then distribute the remaining principal to our organization. The substantial, current income tax savings as well as future estate tax savings of this kind of trust magnify its appeal.

Your Estate Plan, Too
A revocable living trust can be an important part of your estate plan. It's an ideal vehicle for holding title to real estate outside your home state. You can make your life insurance payable to your trust. And the trust can include a credit shelter trust provision to help minimize estate taxes and other provisions to make gifts to family and charitable beneficiaries.

Along with your attorney, we can show you how a living trust can blend your personal needs, estate plans and philanthropic intentions.

SOURCE: University of Georgia in an article written by Mary L. McCormack

Five Benefits of a Living Trust

Living trusts are flexible estate planning tools that can offer you many advantages, five of which are mentioned below:

1. Revocable. Because the needs of family members may change over time, a living trust normally allows you to modify trust provisions or change the beneficiaries.

2. Private. A living trust avoids the costs and delays of probate—the state-sanctioned system that oversees the administration of your estate. Because a living trust is not subject to public scrutiny, your beneficiaries and the specific amounts or percentages they receive remain confidential.

3. Continuous. Assets put in a living trust stay under the control of the trustee, until you choose differently. When the trust is established, you can name a successor trustee who will carry on financial responsibilities in the event of your incapacity or death.

4. Flexible. You may add other assets to the trust during your life. The living trust can be especially useful if you own real estate in another state by eliminating the need to have a separate probate proceeding in the other state.

5. Professionally managed. Though not exclusive to living trusts, banks are generally well prepared to act as trustee. Also, some attorneys are willing to take on the task. Through prudent investing, these individuals can help make the most of your trust's assets and ultimately deliver more money to your beneficiaries.

A living trust is a remarkable financial and estate planning tool. To secure the plan best suited to your individual needs, be sure to consult an attorney who is knowledgeable about the features and benefits of living trusts.

SOURCE: University of Georgia in an article written by Mary L. McCormack

Getting Started: The Revocable Living Trust

The subject of a living trust as an estate planning tool generates quite a bit of discussion. A living trust is an arrangement you create during your lifetime to provide for yourself and your family both before and after your death. It has built-in flexibility that can work very well with your overall estate plans. Though there are many advantages to using this estate planning tool, it is not a substitute for a will.

Looking at Both Sides

• Reduction of probate costs. Although you can enjoy the use of the assets you place in a trust during your lifetime, a living trust removes those assets from your estate for probate purposes. Therefore, you save the probate and administration costs you would incur if those same assets were distributed by the terms of your will.
• Speedy distribution of trust assets. By establishing a living trust during your lifetime, you are setting up a method of managing and distributing your assets. Because a living trust escapes the probate process, the plan of distribution you describe is set in motion immediately at your death. There are none of the delays that occur under distribution by will, and you can be sure your assets ultimately will benefit the charitable institution(s) that mean so much to you.
• Flexibility of planning. Most living trusts are revocable. This gives you the freedom to amend, add to or even completely revoke the trust agreement as you wish.
• Freedom of control. Living trusts give you the freedom to name both the beneficiaries and the trustee. Most likely you will name yourself as the trustee during your lifetime and maintain the right to appoint and select successor trustees and beneficiaries. You also control the income and principal and how much of it you wish to use during your lifetime.
• Investment management. You may choose to appoint a professional trustee such as a bank trust department or trust institution. This frees you from the worry of the day-to-day management of assets, yet if you remain as co-trustee, you still may direct investment goals, including instructing your trustee to change investment strategies.

If you wish, you can give your trustee broad powers and allow the trustee to make the decisions, do all the paperwork and collect the dividends and interest and credit them properly. You would receive periodic and detailed accounting statements, including year-end data for tax purposes. Should you suffer a prolonged illness, your trustee could even pay your medical and household bills.

• Confidential trust terms. A living trust is private. Unlike a will, no one, other than the beneficiaries, needs to know the contents of a trust.
• Charitable contributions. Once your needs and those of your family are met, trust assets can be distributed to charitable organizations like UGA.
• Tax savings. Although all the assets in a living trust are subject to estate taxes, a living trust may be drafted to make the most of estate tax advantages afforded under federal law. After your lifetime, the value of the assets distributed immediately to a charitable institution completely avoids estate tax.

Some Final Thoughts
Keep in mind that there's no income tax charitable deduction when you create a revocable trust, and the level of income is not guaranteed. The trust's assets can be invested in highly rated securities, of course, but the yield is dependent upon economic and market conditions. From your standpoint, these drawbacks may be more than offset by your right to retain control of the trust terms and investments.

A living trust generally is not a stand-alone document. It is advisable to have a pour-over will since it is difficult to get every asset into a trust.

A living trust gives you flexibility while you receive income from your assets during your lifetime, and it can provide asset management after your death.

SOURCE: University of Georgia in an article written by Mary L. McCormack

Make a Living Trust in Georgia

What is a living trust?

A trust is an arrangement under which one person, called a trustee, holds legal title to property for another person, called a beneficiary. You can be the trustee of your own living trust, keeping full control over all property held in trust.

A "living trust" (also called an "inter vivos" trust by lawyers who can’t give up Latin) is simply a trust you create while you’re alive, rather than one that is created at your death under the terms of your will.

Do I need a living trust in Georgia?

The main advantage of making a living trust is to spare your family the expense and delay of probate court proceedings after your death. But do you really need a trust?

Georgia does not use the Uniform Probate Code, which simplifies the probate process, so it may be a good idea for you to make a living trust to avoid Georgia’s complex probate process.

In Georgia, if I make a living trust, do I still need a will?

Yes, you always need a will. A will provides a backup plan for any property that doesn’t make it into your trust. For example, if you acquire new property and don’t add it to your trust before you die, that property won’t pass under the terms of the trust document. You can use a will to name someone to inherit property that you haven’t left to a particular person or entity in your trust.

If you don’t have a will, any property that isn’t transferred by your living trust or other method (such as joint tenancy) will go to your closest relatives as determined by Georgia state law.

Can writing a living trust reduce estate tax in Georgia?

It depends on the kind of trust you create. A simple probate-avoidance living trust has no effect on federal estate tax. However, more complicated living trusts, such as an AB trust, can greatly reduce the federal estate tax bill for married people who own a lot of valuable assets. (Most people, though, don’t need to worry about federal estate tax — through 2008, it affects only estates worth more than $2 million.)

How do I make a living trust in Georgia?

To make a living trust in Georgia, you:

• Create the trust document, which says who will inherit trust property and names you as trustee (the person in charge).
• Sign the document in front of a notary public.
• Transfer your property, such as your house and car, to your name as trustee of the trust.

SOURCE: Nolo

Should You Make a Run on the Bank? How the Indy Mac Bank Collapse Affects You

The following article is by author and Family Wealth Planning Institute founder Alexis Martin Neely:

First of all, let me start by stating this as loudly and clearly as I possibly can. DO NOT PANIC!

If you are an IndyMac depositor, there is no need for you to line up at the bank as many others have done and demand the return of your money. This is a pure waste of your time and only contributes to the unnecessary drama and fear-mongering happening out there.

IndyMac bank has been put under the control of the federal government and deposits are insured by the Federal Deposit Insurance Corp. (or FDIC).You should read this from the FDIC to IndyMac depositors to determine what you will need to do to submit a claim for your funds.

As long as you had less than $100,000 in the bank, all of your deposits should be fully covered by the FDIC insurance. In some cases, like if you have a properly drafted and funding living trust, you may qualify for even more insurance coverage.

This is exactly the type of situation where you want to contact your Personal Family  Lawyer™ to make sure you've done everything right to maximize the protection of your assets.

In fact, Personal Family  Lawyers™ throughout the country are providing trust reviews for a limited number of non-customers at no charge. Contact your local Personal Family  Lawyer™  to determine whether you can get on the calendar for a free FDIC-coverage review of your estate plan.

There's no need for you to start withdrawing deposits from other banking institutions either. Your mattress is NOT the safest place for your money.

Here's what you should do to make sure your money is as safe as possible.

1. Use the FDIC online calculator to determine the amount of insurance coverage on your accounts. If you need help with this (it is a bit complicated), contact your personal lawyer for guidance.
2. Maximize your FDIC insurance coverage! A properly drafted and funded trust can get you a whole lot more insurance coverage than an account owned in your name.
3. If you have more than $100,000 in cash accounts, talk with your personal lawyer about how you can protect the excess in case your bank fails too.

More than anything, do not panic. Be proactive and get the information you need to be smart. And, don't act from fear.

______________________________________

In Georgia, contact Stephen M. Worrall, your neighborhood Personal Family  Lawyer™ in Marietta and metropolitan Atlanta, at 770.425.6060 or email him at info-blog@georgiafamilylaw.com

How Living Trusts Avoid Probate

Here's the lowdown on basic probate-avoiding living trusts.

Ask people why they work hard and save their money, and often you'll hear that it's not only because they want to raise their own standard of living; they want to leave something behind for their children, too. Understandably, they don't want a big chunk of that money to be used up for probate lawyers' fees.

That's where living trusts come in. They don't save you a penny while you're alive, but after death they can eliminate the need for probate -- and probate fees. (Probate involves inventorying and appraising the property, paying debts and taxes, and distributing the remainder of the property according to the will.) When you make a living trust -- a device in which you hold property as a "trustee" -- your surviving family members can transfer your property quickly and easily, without probate. More of the property you leave goes to the people you want to inherit it.

Types of Living Trusts

The two most common types of living trusts are:

1. a basic living trust (for an individual or couple), which avoids probate, and
2. an AB trust, which both avoids probate and saves on estate tax.

This article discusses basic, probate-avoidance living trusts.

Unless you expect to owe federal estate tax at your death or your spouse's, a basic living trust to avoid probate is probably all the trust you need. (Fewer than 2% of estates -- those worth more than $2 million -- owe estate tax.)

Probate-Avoidance Living Trusts

A basic living trust allows property to avoid probate and to quickly and efficiently pass to the beneficiaries you name, without the hassles and expense of probate court proceedings. A married couple can use one basic living trust to handle both co-owned property and the separate property of either spouse.

Creating a Trust

To create a basic living trust, you make a document called a declaration of trust, which is similar to a will. You name yourself as trustee -- the person in charge of the trust property. If you and your spouse create a trust together, you will be co-trustees.

Then you transfer ownership of some or all of your property to yourself in your capacity as trustee. For example, you might sign a deed transferring your house from yourself to yourself "as trustee of the Jane Smith Revocable Living Trust dated July 12, 20xx." Because you're the trustee, you don't give up any control over the property you put in trust.

In the declaration of trust document, you name the people or organizations you want to inherit trust property after your death. You can change those choices if you wish; you can also revoke the trust at any time.

After You Die

When you die, the person you named in the trust document to take over -- called the successor trustee -- transfers ownership of trust property to the people you want to get it. In most cases, the successor trustee can handle the whole thing in a few weeks with some simple paperwork. No probate court proceedings are required.

SOURCE: Nolo

Trusts: An Overview

Trusts are estate-planning tools that can replace or supplement wills, as well as help manage property during life. A trust manages the distribution of a person's property by transferring its benefits and obligations to different people. There are many reasons to create a trust, making this property distribution technique a popular choice for many people when creating an estate plan.

Creation of a Trust

The basics of trust creation are fairly simple. To create a trust, the property owner (called the "trustor," "grantor," or "settlor") transfers legal ownership to a person or institution (called the "trustee") to manage that property for the benefit of another person (called the "beneficiary"). The trustee often receives compensation for his or her management role. Trusts create a "fiduciary" relationship running from the trustee to the beneficiary, meaning that the trustee must act solely in the best interests of the beneficiary when dealing with the trust property. If a trustee does not live up to this duty, then the trustee is legally accountable to the beneficiary for any damage to his or her interests. The grantor may act as the trustee himself or herself, and retain ownership instead of transferring the property, but he or she still must act in a fiduciary capacity. A grantor may also name himself or herself as one of the beneficiaries of the trust. In any trust arrangement, however, the trust cannot become effective until the grantor transfers the property to the trustee.

Example: A grantor transfers money to a bank as trustee for the grantor's children, with the bank instructed to pay the children's college expenses as needed; the bank carefully manages the money to ensure there are funds available for this purpose. The children do not have control of the funds and cannot use the funds for any other purposes.

Testamentary and Living Trusts

Trusts fall into two broad categories, "testamentary trusts" and "living trusts." A testamentary trust transfers property into the trust only after the death of the grantor. Because a trust allows the grantor to specify conditions for receipt of benefits, as well as to spread payment of benefits over a period of time instead of making a single gift, many people prefer to include a trust in their wills to reinforce their preferences and goals after death. The testamentary trust is not automatically created at death but is commonly specified in a will and so as a will provision, the trust property must go through probate prior to commencement of the trust.

Example: A parent specifies in her will that upon her death her assets should be transferred to a trustee. The trustee manages the assets for the benefit of her children until they reach an age when the parent believes they will be ready to control the assets on their own.

A living trust, also sometimes called an "inter vivos" trust, starts during the life of the grantor, but may be designed to continue after his or her death. This type of trust may help avoid probate if all assets subject to probate are transferred into the trust prior to death. A living trust may be "revocable" or "irrevocable." The grantor of a revocable living trust can change or revoke the terms of the trust any time after the trust commences. The grantor of an irrevocable trust, on the other hand, permanently relinquishes the right to make changes after the trust is created. A revocable trust typically acts as a supplement to a will, or as a way to name a person to manage the grantor's affairs should he or she become incapacitated. Even a revocable living trust usually specifies that it is irrevocable at the death of the grantor.

Transferring Assets

Irrevocable trusts transfer assets before death and thus avoid probate. However, revocable trusts are more popular as a means of avoiding the probate process. If a person transfers all of his assets to a revocable trust, he owns no assets at his death. Therefore, his assets do not have to be transferred through the probate process. Even though the grantor of the trust died, the trust did not die, so the trust assets do not have to be probated. However, trusts avoid probate only if all or most of the deceased person's assets had been transferred to the trust while the person was alive. To allow for the possibility that some assets were not transferred, most revocable living trusts are accompanied by a "pour-over" will, which specifies that at death, all assets not owned by the trustee should be transferred to the trustee of the trust.

Example: Mark sets up a revocable trust, which states that on his death, his assets should be distributed to his children in equal shares. Mark transfers his house to the trust, but does not transfer some rental real estate he owns. At Mark's death, the trust can distribute the house outside of the probate process, but the rental real estate will have to be probated. Based on the will, the probate court will order the rental real estate be transferred to the trustee, who will then distribute it according to the terms of the trust.

Successor Trustees

Although a grantor may name himself as trustee of a living trust during his lifetime, he should name a successor trustee to act when he is disabled or deceased. At the grantor's death, the successor trustee must distribute the assets of the trust in accordance with the directions in the trust document. In many states, certain people must be notified at the death of the grantor.

SOURCE: FindLaw

What is a Revocable Living Trust?

Much has been written recently regarding the use of "living trusts" (also known as a "revocable trust" or "inter vivos trust") as a solution for a wide variety of problems associated with estate planning through wills. Some attorneys regularly recommend the use of such trusts, while others believe that their value has been somewhat overstated. The choice of a living trust should be made after consideration of a number of factors.

This brief summary is intended to provide a framework of basic knowledge regarding "living trusts" in general, in order that you might determine whether you should pursue a discussion of this technique further with your attorney.

The term "living trust" is generally used to describe a trust (a) which you can create during your lifetime and (b) which you can revoke or amend whenever you wish to do so. You can also create an "irrevocable" living trust, but that is permanent and unchangeable and is almost exclusively done to produce certain tax results beyond the scope of this summary.

A "living trust" is legally in existence during your life, has a trustee who is currently serving, and owns property which (generally) you have transferred to it during your life. While you are living, the trustee (who may be you) is generally responsible for managing the property as you direct for your benefit. Upon your death, the trustee is generally directed to either distribute the trust property to your beneficiaries, or to continue to hold it and manage it for the benefit of your beneficiaries. Like a will, a living trust can provide for the distribution of property upon your death. Unlike a will, it can also (a) provide you with a vehicle for managing your property during your life and (b) authorize the trustee to manage the property and use it for your benefit (and your family) if you should become incapacitated, thereby avoiding the appointment of a guardian for that purpose.

SOURCE: American Bar Association

Estate Planning: Revocable Living Trusts

Although revocable living trusts have been around for many years, recently they have become popular and are being promoted as the solution to a variety of financial and estate planning objectives. Numerous free educational seminars promoting the advantages of using a living trust are being sponsored by financial planners, attorneys, and trust officers as the best solution to estate planning problems.

A revocable living trust can be an excellent tool for handling some types of financial affairs, but it is not an appropriate choice for everyone. Before deciding to set up a living trust, be sure it is the best tool for your situation and your objectives.

What is a Revocable Living Trust?

A revocable living trust is a legal arrangement by which legal title to property is transferred from personal ownership into the legal ownership of the trust. The revocable living trust is just what the name implies: a trust that can be changed or terminated at any time during the individual's life.

The person creating the trust is called the grantor, settler, or trustor. The grantor must actually change the title of ownership for each asset that will be placed in the trust from his or her name to that of the trust. All too often individuals go to the expense of setting up a trust but fail to change the title of assets. Only assets that are solely owned can be placed in the trust. That is, assets held as joint tenants and rights of survivorship (non-probate assets) cannot be owned by the trust unless the joint ownership is severed.

The trustee manages the assets according to the directions of the trust document for beneficiaries identified in the trust agreement. The trustee can be the person setting up the trust (the grantor), a family member, friend, a corporate entity (such as a bank or trust company), or a combination of these. As the trustee, the grantor can maintain full control of the trust until his or her death or incapacity. When the grantor dies or becomes incompetent, legally incapacitated, or resigns, a successor trustee identified in the trust agreement takes over. The successor trustee has legal responsibility for administering the trust prudently and for the beneficiaries. The trustee keeps the beneficiaries reasonably informed. It is advisable to name more than one successor trustee in such event that the first successor may die or become incapacitated. The successor trustee should be some one you trust and someone with financial management expertise.

The trust agreement is a legal document that contains instructions to the trustee regarding (1) management of the trust assets, (2) who is to receive distributions from the trust, and (3) what happens to the trust if the person creating the trust becomes incompetent or dies. The trust agreement provides instructions for the termination of the trust and the distribution of assets to the beneficiaries. The trustee can do only what the trust agreement specifies.

Beneficiaries of the trust are named by the grantor and can be the individual who formed the trust, friends, family members, and charities such as religious organizations, colleges, universities, or hospitals. To determine whether or not a living trust would fit into your financial planning goals, consider the advantages and disadvantages of a living trust.

Advantages of a Living Trust

A living trust is an effective tool for handling your financial affairs if you become incompetent. In the trust agreement, you may name yourself as trustee and also name a successor trustee. The successor trustee handles your financial affairs if you are unable to do so. The trust agreement tells how and who is to determine that you are incompetent and gives directions for the management of financial affairs, which the successor trustee must follow. Please notice that the successor trustee deals only with finances. A successor trustee does not have the power to make your health care decisions. In accordance with Florida Statues Chapter 765, you may also designate a health-care surrogate who will make those decisions if you are unable to do so.

A living trust avoids probate. Assets held in a living trust do not go through probate. The trustee already has legal title to the trust assets and can transfer title, without probate, to the beneficiaries named in the trust agreement. In addition to avoiding the time and expense of probate, the use of a living trust may reduce the risk of a will contest, and provides privacy of your financial affairs at death.

Disadvantages of a Revocable Living Trust

Cost. It costs more and takes more time to set up and fund a living trust than it does to prepare a will. Fees usually must be paid to the trustee if you cease to be your own trustee.

There are no significant tax advantages to a revocable living trust. For death-tax purposes, you own the property in the trust and at your death it is included in your taxable estate. In general, under current law estate taxes are an issue when the value of your estate exceeds the following amounts.

Year	Amount
2005	$1.5 million
2006	$2 million
2007	$2 million
2008	$2 million
2009	$3.5 million
2010	Estate tax repealed
2011	1 million

The tax bite is big for estates in excess of the exclusion amount - 47%. If the current tax law continues in 2011 the exclusion amount will drop back to $1 million and the excess will be subject to a 50% tax rate.

Setting up a Revocable Living Trust

If after reviewing the advantages and disadvantages, you decide a revocable living trust will meet your needs, have a trust agreement prepared. The trust agreement is a very important document. It requires that you carefully think through how you want your finances managed, how you want your property distributed during your life and who is to receive it following your death.

Transfer your assets from your name to the trust's name. When you create a living trust, your assets are transferred to the trust. New real estate deeds are needed to transfer the real estate from the grantor to the trust. (In the state of Florida there are both advantages and disadvantages to transferring your homestead to a living trust, which your attorney will discuss with you.) In addition, new titles are required on bank accounts, stocks, bonds, and other property so they become trust assets.

Have a pour-over will prepared. Even with a revocable living trust you still need a will. A pour-over will, says that anything you own at death passes to the trust. This will take care of any assets that may not have been titled to the trust.

Summary

Before establishing a revocable living trust, think about your objectives. Discuss ways to meet these objectives with your estate-planning professionals. There are several planning alternatives that you may be able to use to accomplish your objectives.

If you decide a revocable living trust is appropriate for you, consult with an attorney specializing in estate planning and trusts. Remember, costs for setting up a trust varies. Before selecting an attorney talk to more than one and compare credentials and cost. Be sure that all new assets are properly titled and become part of the trust. And, remember, you may revoke your living trust at any time.

SOURCE: University of Florida Extension Service

How Do I Know If I Need A Trust?

Like many people, you might think that having a living trust is not necessary for you or your family. Perhaps you think that your total net worth is too small, or that there is no reason to be concerned because you have written a will. Ask yourself the following questions:

Will anyone take care of you if you were seriously ill or incapacitated?

1. Do you have children or other dependents?
2. Do you and your spouse or significant other carry life insurance?
3. Do you own your own home or other property?
4. Do you want to set aside funds for retirement?
5. Do you need to provide for your children or grandchildren's educations?
6. Do you expect to inherit other assets?
7. Do you own real estate or other income producing assets?
8. Do you own a family or closely held business?
9. Do you travel frequently?

If you answered “Yes” to any of these questions, you should consider having a living trust to protect and properly transfer your assets, and to avoid the costly and unintended consequences of probate. Please contact our office for a consultation if you would like to find out more about protecting and preserving your family’s financial future.

SOURCE: LawWithASmile.com...Swerdloff Law Firm

Living Trusts vs. Wills

What is a Will?
A will is a document, which controls the passage of your property upon your death. A personal representative named in your will manages the property in your estate. The personal representative pays any bills of the estate and distributes the property directly to the beneficiaries designated in your will.

If you have minor children, an important function of a will is to name a guardian to care for your children upon your death. You should inform the person you intend to name as guardian of your intention and obtain their acceptance of this important responsibility.

What is Probate?
Probate is the court-supervised process which transfers your assets at your death to the beneficiaries set forth in your will, and in the manner prescribed by your will. At your death, the person named in your will as executor files a petition with the court. After notice is given and a hearing is held, your will is admitted to probate and an executor is appointed. The Executor files a full inventory of the assets held in your name alone at your death. Probate continues until your estate is ready for distribution and the court approves the final distribution of your estate.

Sometimes people think that because they have access to all the bank accounts, it is not necessary to probate the will. This can cause serious problems.

Probate can take more time to complete (6-12months) then the distribution of your trust following your death.

What is a Living Trust?

The concept of the revocable living trust (usually referred to as a “revocable trust” or “living trust”) is similar to a will in that it directs the distribution of assets at the time of your death, but it does so without the involvement of probate court. Your assets are held, administered and distributed in accordance with the terms of the trust by your appointed trustees.

In addition a revocable trust may provide for your care and the management of your assets during your lifetime in the event of disability.

When you create the trust and transfer assets into the trust you are known as the Grantor. You name a trustee, frequently yourself, and the ‘Trustee’ is the person who holds and manages the trust assets in accordance with the terms and provisions set forth in the Trust instrument. The ‘Beneficiary’ is a person(s) for whose benefit the trust was created. It is created and operational while you are alive and it can be revoked or changed at any time by the person who created the trust.

How does the Revocable Living Trust work?

Once the trust agreement is drafted, property is transferred into trust. This is accomplished by changing the title or ownership records of the property to the name of the Trust. However, if you are serving as the Trustee, you maintain full control over your assets, since the Trustee has the responsibility of holding and managing the trust assets. This transfer of assets is called funding the trust. Probate may be required if property is not re-titled in the name of the trust.

During the lifetime of the Grantor, the Trustee administers the trust for the benefit of the beneficiaries. You will typically name yourself as the primary beneficiary to receive the income or principal distributions from the trust, but you may also name other beneficiaries to participate in trust distributions during your lifetime.

Will a Revocable Living Trust avoid probate?
Yes. It’s a major benefit of having a revocable living trust. It avoids probate because the trust owns the property and the trust survives your death. It is possible to avoid probate altogether by transferring all your property in the name of the trust. This allows the property to be distributed quickly upon your death while avoiding the costs and delays of probate.

Are there any other benefits to a revocable living trust?
You mean other than saving certain taxes and probate? Yes, some of the other benefits include:

1. Keeps details of your estate private. The revocable living trust is not part of the public record and remains confidential. Probate record is a public record and everyone has access to your property records and your will.

2. Ownership of property is transferred to yourself as trustee of the trust for the benefit of named beneficiaries therefore giving you full control of your assets while you are alive and competent.

3. Should you become incapacitated Living Trust Arranges for a successor trustee to manage your property thus avoiding being placed under a court appointed guardian if you become unable to manage your affairs.

What are some of the Drawbacks of a revocable living trust?
1. More initial legal fees than required to draft a will. Although will preparation may cost less, it is subject to probate. Creating a living trust is not just the drafting of the agreement but also includes the retitling and transfer of property into the trust. Since a living trust avoids probate it avoids that expense. Therefore, a trust is usually much less expensive than the combination cost of a will and probate.

2. If you hire a professional trustee (you don’t have to), you may be required to pay an annual fee to the trustee. As with a personal representative in a will, the court will order payment from your estate to your personal representative for preparing documents, tax returns, transfers of property and other costs associated with will administration. Moreover the court will also order your estate to pay the fees of the attorney, which could more than what you will pay for getting the Living Trust.

3. Creditors’ can claim against your trust property longer than they can against a will. In probate, creditors must make their claim within 90 days after the notice to be able to collect or all claims are barred. If there is no probate, your property is not protected against claims by creditors for old bills until expiration of the statute of limitations.

SOURCE: LawWithASmile.com...Swerdloff Law Firm

Living Trust FAQ

An introduction to living trusts -- a popular way to avoid probate.

What is a living trust?

A trust is an arrangement under which one person, called a trustee, holds legal title to property for another person, called a beneficiary. You can be the trustee of your own living trust, keeping full control over all property held in trust.

A "living trust" (also called an "inter vivos" trust by lawyers who can't give up Latin) is simply a trust you create while you're alive, rather than one that is created at your death under the terms of your will.

Different kinds of living trusts can help you avoid probate, reduce estate taxes or set up long-term property management.

Do I need a living trust?

The big advantage to making a living trust is that property left through the trust doesn't have to detour through probate court before it reaches the people you want to inherit it. In a nutshell, probate is the court-supervised process of paying your debts and distributing your property to the people who inherit it.

The average probate drags on for months before the inheritors get anything. And by that time, there's less for them to get: In many cases, about 5% of the property has been eaten up by lawyer and court fees.

Still, not everyone has to worry about probate, and some people don't need a living trust at all.

How does a living trust avoid probate?

Property you transfer into a living trust before your death doesn't go through probate. The successor trustee -- the person you appoint to handle the trust after your death -- simply transfers ownership to the beneficiaries you named in the trust. In many cases, the whole process takes only a few weeks, and there are no lawyer or court fees to pay. When all of the property has been transferred to the beneficiaries, the living trust ceases to exist.

Is it expensive to create a living trust?

A basic living trust isn't much more complicated than a will, and you probably won't need to hire a lawyer. With a good self-help book or software program, you can create a valid Declaration of Trust (the document that creates a trust) yourself. If you run into questions that a self-help publication doesn't answer, you may need to consult a lawyer, but you probably won't need to turn the whole job over to an expensive expert. 

Is it a hassle to hold property in a living trust?

Making a living trust work for you does require some crucial paperwork. For example, if you want to leave your house through the trust, you must sign a new deed, showing that you now own the house as trustee of your living trust. This paperwork can be tedious, but the hassles are fewer these days because living trusts have become so common.

Is a living trust document ever made public, like a will?

No. A will becomes a matter of public record when it is submitted to a probate court, as do all the other documents associated with probate -- inventories of the deceased person's assets and debts, for example. The terms of a living trust, however, need not be made public.

Does a living trust protect property from creditors?

No. A creditor who wins a lawsuit against you can go after the trust property just as if you still owned it in your own name.

Generally, after your death, all property you owned -- including assets held in a living trust -- is subject to your lawful debts. For example, if your house is held in trust and passes to your children at your death, a creditor could demand that they pay the debt, up to the value of the house. Ownership of real estate is always a matter of public record, so creditors can always find out who inherited real estate. It can be more difficult for creditors to know who inherits other property, however (because a trust document, unlike a will, is not a matter of public record), and they may not bother tracking it down.

On the other hand, probate can also offer a kind of protection from creditors. During probate, known creditors must be notified of the death and given a chance to file claims. If they miss the deadline to file, they're out of luck forever.

If I make a living trust, do I still need a will?

Yes, you do -- and here's why:

A will is an essential back-up device for property that you don't transfer to yourself as trustee. For example, if you acquire property shortly before you die, you may not think to transfer ownership of it to your trust -- which means that it won't pass under the terms of the trust document. But in your back-up will, you can include a clause that names someone to get any property that you haven't left to a particular person or entity.

If you don't have a will, any property that isn't transferred by your living trust or other probate-avoidance device (such as joint tenancy) will go to your closest relatives in an order determined by state law. These laws may not distribute property in the way you would have chosen.

Can a living trust reduce estate taxes?

A simple probate-avoidance living trust has no effect on taxes. More complicated living trusts, however, can greatly reduce the federal estate tax bill for people who own a lot of valuable assets.

One tax-saving living trust is designed primarily for married couples with children. It's commonly called an AB trust, though it goes by many other names, including "credit shelter trust," "exemption trust," "marital life estate trust" and "marital bypass trust." Each spouse leaves property, in trust, to the other for life, and then to the children. This type of trust can save up to hundreds of thousands of dollars in estate taxes, money that will be passed on to the couple's final inheritors.

SOURCE: FindLaw and Nolo