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This is one of the most widely held misconceptions about estate planning. There is a federal estate tax that is a major factor for some multimillionaires. Yes, there are trusts that are used by these high net worth individuals to mitigate their estate tax exposure.
However, the revocable living trust is in a different category, and this type of trust would not be used by someone that is concerned about the estate tax.
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No, if you establish a living trust, you would act as the trustee. Technically, the trust would own the assets, but you would have complete control of the trust. And of course, the trust can be revoked at any time if you ever change your mind.
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When you create the trust, you name a trustee to succeed you after your passing. This can be someone that you know personally, or you could utilize a professional fiduciary. Trust companies and the trust departments of banks provide trustee services for a fee.
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Yes, you can alter the terms in any way that you see fit, and you can change the trustee and/or beneficiary designations.
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This is actually one of the major advantages that living trusts provide. Probate is a costly, time-consuming, and public legal process that takes place under the supervision of a court.
When a will is used as an asset transfer vehicle, it would be admitted to probate, and a lengthy procedure would ensue. On the other hand, when assets are transferred through the terms of a living trust, the probate court is not involved at all.
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You can name a disability trustee in the trust agreement, and this individual or entity would assume the role if it ever becomes necessary.
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This is another one of the prime benefits. The trust can include a spendthrift clause, and it would become irrevocable after your death. Your beneficiary would not be able to directly access the principal, and their creditors would be in the same position.
Creditors can reach assets after they have been distributed, but you can account for this as well. In the trust agreement, you can instruct the trustee to distribute limited assets on an incremental basis over an extended period of time.
The beneficiary would presumably utilize the distributions before any legal actions could gain traction. Plus, their ability to spend extravagantly would be limited.
You could provide larger, lump sum distributions when the beneficiary reaches certain age thresholds. In a nutshell, the distribution structure is entirely up to you.
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Yes, you and your spouse can use the same living trust, and this can be a very sensible choice for many people. It all depends on your inheritance planning goals, but if you intend to leave everything to one another for the most part, a joint living trust can be ideal.
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We Are Here to Help!
If you are going through life without an estate plan, today is the day for action. A living trust can be the right choice for a wide range of people, but it is just one of the tools in the estate planning toolkit.
We can gain an understanding of your unique situation and make recommendations. When you decide to go forward, we will work with you to create a custom crafted plan that is ideal for you and your family.
You can set the wheels in motion right now if you give us a call at 219-865-2285, and you can fill out our contact form if you would prefer to send us a message.
