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This information was provided by Richard H. Hallstrom, Attorney At Law, for Plan-My-Estate.com.
Trusts are one of the most basic and often used tools for estate planning. A properly drafted and funded Trust can save thousands of dollars. We have tried to provide some basic information about various types of Trusts here at this web site to help you understand the effect and advantages of having a Trust as part of your Estate Plan.
Trust Basics
Property and assets are owned by many types of legal entities -- individuals, partnerships, corporations and trusts. A trust is just a separate paper entity that is established by a property owner to leave assets to his or her beneficiaries. A trust is simply a "contract" between the property owner and the trustee.
There are many types of trusts in use. They are used for various reasons to acheive different goals. The role of your estate planning attorney is to determine what kind of trust is needed to achieve your desired goals. Some common trusts include:
Of all these Trusts, a Revocable Living Trust is one of the most popular and important Estate Planning documents in use today.
In addition to the various types of trusts, there are also various reasons why people have trusts. Some include: avoidance of probate, provide for minor children, reduce estate taxes, protect assets from creditors.
If you are considering having a Living Trust created for you or your family, we recommend that you first read this article about Estate Planning Fraud before you select who will assist you with your needs.
What is a Living Trust?
With a Revocable Living Trust, you transfer the title of any of your assets (such as a house) from yourself as an individual, to yourself as Trustee of the Trust.
Then you, as the Trustee of the Trust, manage the assets of the Trust for the benefit of the beneficiary, which is you. In this manner, you keep complete control over the assets.
Once you pass on, a Successor Trustee takes over the management of the asssets for the benefit of the beneficiaries that you named in your Trust. Your assets do not have to pass through
Probate because the assets are no longer titled in your name as an individual, but are now titled in the name of the trust.
Upon your death, the Successor Trustee simply transfers your assets directly to your beneficiaries without the need for court or attorney's fees or costs.
With a Revocable Living Trust you keep complete control over your assets and ensure that your assets
are passed to youe designated beneficiaries without delay or unnecessary costs.
Click here for Frequently Asked Questions about Living Trusts from the California State Bar Association.
Inheritance Protection Trust
In an effort to help protect the inheritance left to your children, we have developed the Inheritance Protection Trust. This is a variation of a typical Living Trust, however, we have modified certain provisions to protect assets left to minor children.
The typical living trust will leave assets to minor children and have these assets managed by a designated Trustee. Once the children reach the required age (ex.: 25 years old) the Trustee will then pay the remaining trust funds to the children. The children then own the trust funds and it becomes one of their assets. As a result, the funds are then vulnerable to creditors of the child. Also, if the child later marries, the funds can become property of the new spouse and can be taken in the event of a divorce.
With our Inheritance Protection Trust, when the child reaches the required age, rather than the Trustee tansferring the trust funds to the child outright and ending the trust, instead, the Trustee steps down and the child assumes the role of the Trustee and the trust continues. The child/trustee then has the power to use the funds for herself and/or her own children (your grandchildren). The child/trustee keeps the unused trust funds in the trust and the funds do not become part of her assets. Therefore, is gives protection from creditors or a divorced spouse and protects the inheritance that you left for your child.
Advantages of Having a Revocable Living Trust
Avoid Probate.
Distribute Your Assests to Your Beneficiaries Quickly.
Reduce or Eliminate Attorney's Fees and Court Costs.
Reduce or Eliminate Estate Taxes.
Avoid Conservatorship if you Become Incapacitated.
Provides Privacy of for Finacial Affairs and Decisions.
Inexpensive and Easy to Set Up.
Provide You Peace of Mind and Security.
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