A Living Estate Trusts Overview
Living estate trusts are not only for the rich, any more. In fact, it is becoming the most used estate planning tool. A living estate trust is a legal arrangement dealing with an estate while he or she is still alive. This arrangement will outline who will get a person's assets after they pass away.
Trusts are made for several reasons: One, anyone who has over $100,000 is subject to probate without one. This can lower the total of the inheritance by as much as 4% when you consider the legal fees. A trust protects against that. An estate trust also provides protection against estate taxes and conservatorship. It does this by fully utilizing every individual's Unified Credit under The Estate Tax Credit, a law passed by Congress, which provides exemption for $2 million in estate taxes. This exemption doubles if a married couple has a trust with an "A-B Provision" in place. This means that the trust splits into two separate trusts with an exemption of $2 million apiece. It also provides proof as to who gets what in a mixed family; step-children can be assured of an inheritance that may not be provided for them otherwise, since they are not blood relatives. How it Works A Living estate trust can be set up with little effort and needs no maintenance. It is best to set up an estate trust under the guidance of a lawyer. Also, you will need to decide who will be trusted to execute the trust when the time comes. The person who wants the trust is called the Grantor or Trustor. The person who is named in the trust as the controller of the assets is called a Trustee and those who will receive the assets, upon the time of death of the Trustor, are called the Beneficiaries. After the death of the Trustor, the Trustee will contact the Beneficiaries and parcel out the estate as listed in the estate trust. No outside legal intervention is needed. In fact, the courts have no control what so ever over any property that is placed in the trust. Anything can be included as an asset in the estate trust, such as any personal savings accounts, bonds, real estate, personal property, life insurance, and stocks. The estate trust can also be made to go into effect if the Trustor is deemed mentally unstable, like if he was to go into a coma, become institutionalized, or if mental capacity is compromised by a disease such as Alzheimer's. |
