Revocable Living Trusts – Some questions about whether it’s right for you

Leawood Revocable Living Trusts – Is it Right for You?

Below is a good short article from the Clarmont Sun on whether a revocable trust is the right legacy planning vehicle for someone.  It asks a bunch of questions, which it then answers.  In general, it is a good primer on the estate planning process and gets you to thinking about what is important in your overall legacy plan.

Kansas City estate planning attorneys

http://clermontsun.com/2015/06/11/is-a-revocable-%E2%80%9Cliving%E2%80%9D-trust-right-for-you/

Is a revocable (“living”) trust right for you?
June 11th, 2015 Author: Administrator Filed Under: Opinion
Q: What is a trust?

A: A right of property held by one party for the benefit of another, usually in writing.

Q: Who are the parties?

A: The person creating the trust is called the grantor (or sometimes the settlor, trustor or creator), and the other party is known as the trustee. A beneficiary receives benefits from the trust created by the grantor and administered by the trustee. The trust may, and usually does, provide benefits for more than one beneficiary. Sometimes, the same person may be grantor, trustee and a beneficiary.

Q: What is a revocable trust?

A: A revocable trust, commonly known as a “living” trust, is the most popular kind of trust. During the grantor’s life, the trust is “living,” and the grantor can add to it or subtract from it at any time, for any reason. The grantor may also amend, restate or revoke (cancel) the trust. When the grantor dies, the trust becomes irrevocable.

Q: What is the purpose of a revocable trust?

A: Probate avoidance is one major purpose. Others include privacy, more efficient administration of the grantor’s affairs after death, ongoing financial management of trust property, and ultimate disposition of the balance of trust property. For example, trusts are often created by parents for the benefit of their children. The trustee has discretion to pay the children’s college expenses and, if funds remain, pay the balance to the children as they mature.

Q: What is trust property?

A: The grantor transfers assets to the trustee, including cash, stocks, bonds, real estate, CDs, brokerage accounts, insurance policies and personal property. By doing so, the grantor converts “probate” property (governed by the will) to trust property (governed by the trust).

Q: What is probate?

A: “Probate” describes the process of proving a will. In each Ohio county, a probate court oversees the proving of wills, the gathering of assets, the payment of expenses and distribution of the balance to those named in the will. If there is no will, Ohio law governs the administration of a decedent’s estate. While it is sometimes slow and expensive, the probate court serves as an overseer to protect and safeguard the decedent’s beneficiaries.

Q: Will I save estate taxes by creating a revocable trust?

A: No, but Ohio repealed its estate tax on deaths after December 31, 2012. Under current law, unless your property (including trust property) is worth more than $5,430,000 in 2015 (adjusted for inflation in future years), federal estate tax will not apply.

Q: Will I save income taxes by creating a revocable trust?

A: “Probate” describes the proc

Q: What is probate?

A: No. A grantor is considered the owner of the income from the property that is held in trust and is reported on the grantor’s personal income tax return. Upon your death, the trust usually transfers its income to the beneficiaries. In turn, that income is taxed to the beneficiaries at their personal income tax rates.

Q: What are the advantages of a revocable trust compared to probate?

A: Privacy. A revocable trust is a private agreement between the grantor and trustee and is not subject to public scrutiny after the grantor’s death. Probate matters are reported to probate court after the grantor’s death and are open to public review.

Control. A trustee of a revocable trust has more independence, flexibility and control than an executor of a will because a trustee does not file reports and accounts with a court, although the Ohio Trust Code requires the trustee to provide mandatory financial reports to beneficiaries).

Lower Costs. A revocable trust avoids probate costs, which typically include court costs, appraisal fees, bond premiums, and executor commissions. Attorney fees are usually less.

Efficiency. The trustee may distribute trust property to beneficiaries soon after the grantor’s death.

Avoidance of Multiple Probate Proceedings. If real estate is owned in other states, a revocable trust may be used to avoid separate probate proceedings in those other states.

Q: What are the disadvantages of a revocable trust?

A: Initial Cost. Education, preparation and implementation of a revocable trust will be more expensive than creating a will.

Absence of Court Review. Because probate court does not oversee the administration of a revocable trust, the risk of error, whether intentional or unintentional, may be greater than the probate of a will.

Longer Statute of Limitations. A challenge to a revocable trust must be made within two years, whereas someone wishing to challenge a will must do so within three months.

Q: Who should prepare my revocable trust?

A: You should consult with a lawyer skilled in probate, estate planning and tax matters. Be wary of creating a revocable trust without consulting directly with a lawyer first.

Estate Planning Lawyers in Kansas City

Estate Planning is all about assurance. What estate planning is all about is finding the right devices to execute your basic requirements. What that really means is that we use the most innovative legal documents to properly execute your desires. We personalize each and every strategy so that you get exactly what you desire. We do this utilizing the most current tools so that we can prepare a personalized plan at the most affordable possible cost. Kindly call us today with any concerns.

The Eastman Law Firm is an estate planning law firm. We focus on estate planning so that you can be guaranteed that you are getting the most up to date strategies. We train thoroughly so that we can supply the specific right match for your desires and desires. We do not require everyone into a single mold. Instead, we attempt and ensure that everyone is treated with the most customized solution that best fulfills their needs.

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