A
Living Trust is sometimes the keystone to an estate plan. It contains
instructions for your own care if you become disabled and designates whom your
beneficiaries will be upon your death. When you create a Living Trust, you are
referred to as the Grantor(s) and during your life you will usually be the
Trustee(s) and the life-time beneficiary or beneficiaries of all your asset
that you transfer into the Trust. A Living Trust is also a port-mortem planning
tool. In addition, when you create a Living Trust you designate who your
beneficiaries are upon your death. Your Living Trust also spells out the
details of how much support your beneficiaries are to receive through your
trust and at what age(s) they are to receive distributions from the Trust.
Moreover, your Living Trust is a private document and is intended to keep your
financial affairs private and to carry out your wishes efficiently without
judicial involvement. However, your Trust can only achieve these objectives if
your Living Trust is properly funded. Unfortunately, some people have
paid thousands of dollars for a Living Trust, which would carry out their
estate planning needs; however, the Trust owns no property. When this
occurs, post-death probate of the decedents estate will be necessary to
transfer assets, such as a primary residency, checking accounts, etc., into the
Trust.
A
Revocable Living Trust can be modified and amended to match your estate
plan
whenever you desire. Amendments to a Revocable Living Trust must be
done
through written instruments that comply with all of the legal
requirements for
amendment or revocation of a Living Trust. A Revocable Living Trust
should only
be modified, amended or revoked after consulting with a competent legal
adviser. Your attempts to revoke or modify your estate plan may not be
legally effective and may result in confusion and costly litigation.
In
addition, when you are contemplating changes that you would like to
make to
your existing estate plan, whether it involves only a Last Will &
Testament
or also a Revocable Living Trust, it is of paramount importance that
you do not
write your desired wishes on the existing documents.
If
you are contemplating changes to your current estate plan, please call this
office for assistance in amending, modifying, or revoking of your existing
legal instruments found within your estate plan. Or, if you have an estate plan
created by another lawyer, or a Trust Mill, but don't understand what the
documents say or mean, please call this office and we will be happy to assist you
to make sure your current estate planning documents match your goals and
desires. Simply put, it is my desire to help you with your estate
planning goals. To that end, it is this office's practice to meet with past
clients every five years to their estate plans and their new financial
situation. In addition, review of legal documents are also important to see
whether laws have changes that affect your existing estate plan and need to
taken into account in updating your current estate plan.
Generally,
it is prudent too transfer all tangible personal property into the trust, so
that furniture, household items, etc. are not subject to probate. This is
easily facilitated with a simple Bill of Sale and a Comprehensive Transfer
Document that assigns all property to the trust, which is presently owned or
acquired at a later date. Real property must transfered with more formality and evidenced by recorded documents.
Tax-favored
assets on which recognition of income has been deferred such as IRAs and other
types of retirement plans are generally treated differently in the estate
planning process than other assets. Generally, with tax-favored assets
the grantor(s) of the Living Trust retain ownership of these assets and the
spouse, other individuals, or the Trustees of the Trust are designated as a
beneficiary, depending upon the desired plan of distribution and tax planning
considerations. Some Trusts may have advanced language including conduit
provisions in the event that the Trustees are designated as beneficiaries.
When
you create a Trust you are the Grantor(s) and are typically the Trustee(s)
during your lifetime. When the Grantor(s) are the Trustee(s) of the Living Trust,
the Trust will not need to apply for and receive a taxpayer identification
number for income tax purposes. Your Trust will designate who the Successor
Trustee(s) are in the event you become incapacitated or if you pass away. Your Successor Trustee(s) will serve
and administer the terms of the Trust after you pass away.
If
a Primary Trustee becomes incompetent and no other primary trustee is available
to take over management, then the named Successor Trustee(s) may take over
management of the Trust according to the terms of the trust agreement. This
firms suggests that your Trust requires that two doctors sign affidavits
stating that the Trustee is incompetent to act. Typically, the statements of
the doctors must be served upon the Trustee who is allegedly incompetent to
act. If the person who is allegedly incompetent gives written notice to the
Successor Trustee(s) who obtained the doctor’s certificates that he or she
disagrees with the doctors, then the original Trustee remains in power unless
he or she is removed by a court. Generally, if the original Trustee does not
give written notice of disagreement, the Successor Trustee(s) should take
copies of the doctor’s affidavits, the Declaration of Service, and a copy of
the Certificate of Trustee Authority and Power to banks or other institutions
or individuals holding assets. These documents will give the Successor
Trustee(s) the authority to take over management of all trust assets.
Thus, the Living Trust is useful method to provide for yourself in the event
that you become incompetent during life. Having your estate planning done
brings a wonderful peace of mind.
The law firm of Spencer Evans assists individuals and families
in preparing for the future by working with them to accomplish their estate
planning goals. In addition, if a Successor Trustee(s) would like
professional assistance if incapacity occurs, contact this office for help with
necessary arrangements.
SPENCER EVANS
ATTORNEY AT LAW, PLC
PLANNING FOR SUCCESSION SM
(623) 505-0565
se@spencerevans.com
