{"id":35,"date":"2014-07-22T01:11:44","date_gmt":"2014-07-22T01:11:44","guid":{"rendered":"https:\/\/www.hometownestateplanning.com\/?p=35"},"modified":"2014-07-22T01:33:05","modified_gmt":"2014-07-22T01:33:05","slug":"why-you-should-consider-trust-planning","status":"publish","type":"post","link":"https:\/\/www.hometownestateplanning.com\/?p=35","title":{"rendered":"Why You Should Consider Trust Planning"},"content":{"rendered":"

Why You Should Consider Trust Planning<\/strong><\/p>\n

By Richard E. Phillips<\/strong><\/p>\n

\u00a0<\/strong>\"stock-photo-9598917-estate-planning[1]\"<\/a><\/p>\n

When most people think about estate planning (if they think about it at all), most people believe their best or only option is a will combined with some joint tenancy or transfer-on-death arrangements for their financial accounts.\u00a0 However, there is a superior method to estate planning that\u2019s existed for several hundred years and allows you to peacefully and privately transfer your wealth after you die to your loved ones.\u00a0 This method is an estate plan built around a revocable living trust.<\/p>\n

Like a will, a trust is a legal document which addresses how your estate will be administered and disposed of after you die.\u00a0 However, there is an important difference.\u00a0 A will is a testamentary document by you that does not take effect until after you pass away.\u00a0 Until then, it does nothing for your estate.\u00a0 Furthermore, after you die, the will must be qualified publicly before your local probate court as part of a potentially very expensive government administration.<\/p>\n

Unlike a will, a trust is a private contract between you as creator of the trust and the one who is re-titling your assets into the name of your trust (very important!) and you as the manager of the trust assets.\u00a0 The trust is effective immediately upon you signing your trust agreement and will successfully manage your estate upon your incapacity or death, so long as your assets remain titled in the name of your trust or the trust is designated as a beneficiary of your assets.<\/p>\n

The main advantages of estate planning through a revocable living trust over other basic estate planning options are the following:<\/p>\n

    \n
  1. Avoids probate.<\/li>\n
  2. Privacy.<\/li>\n
  3. Incapacity Management.<\/li>\n
  4. Maximizes Death Tax Exemptions.<\/li>\n
  5. Flexibility.<\/li>\n<\/ol>\n

    Avoids probate.\u00a0 Since a trust is a private contract which determines the terms of how its assets are to be managed upon your incapacity and death, there is no need to have a third party bureaucratic entity administering your estate.\u00a0 The main reason for the probate process is to change title to property from a dead person\u2019s name to that person\u2019s living beneficiaries.\u00a0 With a trust, however, you already retitled your assets during your lifetime out of your individual name and into the name of your trust.\u00a0 Thus, when you die there are no assets owned in your individual name.\u00a0 Therefore, your estate has no reason to go through probate.<\/p>\n

    Privacy.\u00a0 Because a trust is a private document which is administered privately, there is no need of the public process of probate.\u00a0 No need to have your assets sold at a public estate auction nor will your loved ones be bothered by people looking to take advantage of your estate because they could review your will at the probate court.<\/p>\n

    Incapacity Management.\u00a0 If you have only a simple will drafted, but you become incapacitated during your lifetime, who will handle your financial affairs for you?\u00a0 If you don\u2019t have an appropriate power of attorney document in place for such a contingency, there would have to be a guardianship proceeding, known as \u201cliving probate,\u201d where the court (not you, not your family) decides who will manage your affairs for you.\u00a0 With a trust, however, you can appoint the person who not only will manage your estate after you die, but also in case of your mental incapacity.<\/p>\n

    Maximizes Death Tax Exemptions.\u00a0 Death taxes have been a plague on transferring wealth for decades.\u00a0 But the fallout from possible death taxes worsens when a family estate plan does not take this issue into account.\u00a0 Every individual is entitled under the law to exempt up to a certain amount of his or her estate after death from the federal death tax.\u00a0 Most couples, however, unwittingly forfeit the use of the first spouse\u2019s death tax exemption by either electing to use the unlimited marital deduction at the first spouse\u2019s death or deciding that it\u2019s best to own joint property in both their names as joint tenants with right of survivorship.<\/p>\n

    Unfortunately, when a couple owns property together as joint tenants with right of survivorship (or tenancies by the entirety with right of survivorship), the right of survivorship provision applies immediately and transfers the entire property interest into the surviving spouse\u2019s estate.\u00a0 Thus, the first spouse to die\u2019s death tax exemption will not apply to those assets no longer in his or her estate.\u00a0 A trust, however, is a very flexible agreement that can allow the property of the trust to be allocated between both spouse\u2019s estates and maximize the use of both spouse\u2019s death tax exemptions.<\/p>\n

    Flexibility.\u00a0 As you have read, a trust is a versatile and flexible document.\u00a0 This flexibility is further apparent in how it can work with your transfer-on-death (TOD) accounts in leaving a lasting legacy to your children and grandchildren.<\/p>\n

    For example, suppose you have two adult children.\u00a0 One is very responsible, but the other is financially irresponsible.\u00a0 Typically, most parents designate their children individually as the beneficiaries of their financial accounts without considering how they can protect the wealth they\u2019re leaving from a child\u2019s creditors or future ex-spouse.\u00a0 Instead, you can establish trusts in your revocable living trust agreement for each of your children (and potentially grandchildren) which take effect on the surviving spouse\u2019s death.\u00a0 The share you leave to each child resides in the trust created for them and protects the assets which reside in the trust from that child\u2019s creditors or ex-spouse.\u00a0 It just depends on the terms you want drafted.\u00a0 Therefore, you designate your trust as the beneficiary of your TOD accounts instead of the children in their individual names.<\/p>\n

    You can provide peaceful wealth preservation for your family and you don\u2019t have to a Rockefeller or a Gates to afford this type of planning or take advantage of what this kind of estate planning offers your loved ones.<\/p>\n","protected":false},"excerpt":{"rendered":"

    Why You Should Consider Trust Planning By Richard E. Phillips \u00a0 When most people think about estate planning (if they think about it at all), most people believe their best or only option is a will combined with some joint tenancy or transfer-on-death arrangements for their financial accounts.\u00a0 However, there is a superior method to … Continue reading Why You Should Consider Trust Planning<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[29,31,30,32],"class_list":["post-35","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-estate-planning","tag-estate-planning-options","tag-revocable-living-trust","tag-trust-planning"],"_links":{"self":[{"href":"https:\/\/www.hometownestateplanning.com\/index.php?rest_route=\/wp\/v2\/posts\/35","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.hometownestateplanning.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.hometownestateplanning.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.hometownestateplanning.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.hometownestateplanning.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=35"}],"version-history":[{"count":1,"href":"https:\/\/www.hometownestateplanning.com\/index.php?rest_route=\/wp\/v2\/posts\/35\/revisions"}],"predecessor-version":[{"id":36,"href":"https:\/\/www.hometownestateplanning.com\/index.php?rest_route=\/wp\/v2\/posts\/35\/revisions\/36"}],"wp:attachment":[{"href":"https:\/\/www.hometownestateplanning.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=35"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.hometownestateplanning.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=35"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.hometownestateplanning.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=35"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}