using your revocable living trust

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  • USING YOUR REVOCABLE

    LIVING TRUST

    Larry Deason and Shawn Garner Estate Planning and Elder Law Attorneys in Yuma Arizona

    Revocable Living Trusts Give People Making An Estate Plan Several Key Benefits

    Yet Despite These Positives, Living Trusts Are Not an Estate Planning Cure-All

    http://www.deasongarnerlaw.com/services/elder-law-medicaid-services/

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    One of the slightly unusual aspects of a revocable living trust is that in most situations you, the grantor, will also serve as the trustee and the beneficiary.

    One of the most effective tools available to people creating an estate plan today is a

    revocable living trust. Sometimes abbreviated as an RLT, or referred to as simply a living

    trust, revocable living trusts give people making an estate plan several key benefits. Yet

    despite these positives, living trusts are not an estate planning cure-all. To get a better

    understanding of what living trust do and what benefits they afford, you will want to

    better familiarize yourself with these important instruments.

    Trust Operation

    Like all trusts, living trust creates a legal entity that can own property. Someone who

    creates the trust is called a

    grantor, settlor, or trustor. You

    create a trust by creating a trust

    document, which is simply a

    written instrument that you sign,

    have notarized, and in which you

    include specific details.

    Those details you have to include

    state, for example, why you are creating the trust, who gets to benefit from the trust

    property, the conditions under which the trust must operate, who you appoint to

  • Copyright 2013. Using Your Revocable Living Trust Deason Garner Law Firm 3

    manage the trust while you are alive, and who will manage the trust after you have

    become incapacitated or to have died.

    The person you choose to manage your trust is called the trustee, while the people

    who benefit from the trust property are known as the beneficiaries.

    One of the slightly unusual aspects of a revocable living trust is that in most situations

    you, the grantor, will also serve as the trustee and the beneficiary. This means that the

    property you transfer to the trust will, even though its legally owned by the trust self,

    be under your control at all times. As trustee you will manage this property just like you

    would individually owned property, but also retain the ability to benefit or use that

    property as you see fit.

    The property the trust owns is known as the trust corpus. In order to create the trust

    corpus, you have to take some of your individually owned property and transfer it into

    the trusts name. This process is called funding, and depending on the type of property

    you want to transfer, the steps involved can range from the very simple to the very

    complex.

    Estate Taxes and Probate

    In 2013, the federal estate tax exemption limit

    was set at $5.25 million per individual. This

    means that if a person dies in 2013 leaving

    behind assets worth less than the $5.25 million

  • Copyright 2013. Using Your Revocable Living Trust Deason Garner Law Firm 4

    mark, that estate will not be subject to any federal estate taxation.

    Needless to say, because of the high exemption limit, and because couples can

    effectively combine their limit to shield $10.5 million in estate value from taxation, very

    few people have to worry about paying estate taxes.

    Because of this, revocable living trusts have become increasingly more popular. One of

    the downsides of a revocable living trust is that it does nothing to limit how much your

    estate would have to pay if it was subject to estate tax. However, because the limit is so

    high, this has mostly become a moot point.

    So, the main reason many more people have begun creating revocable living trust today

    is because they wish to avoid probate. Avoiding probate is one of the primary benefits

    revocable living trusts affords. When you create your trust, that trust can outlive you.

    After transferring your property into the trusts name, you have essentially created a

    legal entity that will continue to exist after you die. Because the trust is still around, and

    because your property is under the trusts name, you can direct the trust to transfer

    that property to your inheritors without having to go through probate.

    In other words, any property you transfer into the trusts name is property that doesnt

    have to go before the probate court after you die.

    To ensure that this non-probate transfer takes place as you want it to, you have to

    appoint a successor trustee. Just as you manage the trust property as trustee, the

    successor trustee will take over your management responsibilities after you die, or in

  • Copyright 2013. Using Your Revocable Living Trust Deason Garner Law Firm 5

    the event you become incapacitated. You can choose anyone you like to serve as a

    successor trustee, but the person or organization you choose will have the responsibility

    to manage trust property and see that it is transferred in the manner you stated when

    you created the trust document.

    Protecting Your Assets and Your Living Trust

    For many people, the issue of protecting their assets from creditors or litigation is not

    something theyve given a lot of thought. For others, creating an estate plan that

    focuses on asset protection is extremely important.

    Regardless of your desires or your long-term goals, you must understand that creating

    and using a revocable living trust will not provide you with any additional asset

    protection benefits than you might already have. Living trusts do not shield your

    assets from creditors. In order to better protect your assets, you and your attorney will

    have to discuss what options are available to you.

    Your Trust as a Piece of a Larger Whole

    Notwithstanding the significant benefits a living trust affords you, these devices are not

    suitable for everyone, or for every estate planning purpose. As weve already discussed,

    living trusts are not ideal if you need to reduce your estate tax exposure or want to

    protect your assets.

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    Like all estate planning tools, a living trust is only as good as you allow it to be. This

    means that you have to create your living trust in light of the other estate planning

    elements you create. You cannot accomplish all of your goals solely by creating a single

    tool. In order to get the most out of estate planning, you have to create a living trust as

    a part of a plan. Only by discussing your estate planning desires with an experienced

    attorney can you be sure that you will create a living trust, and a broader estate plan,

    that meets all of your needs.

  • Copyright 2013. Using Your Revocable Living Trust Deason Garner Law Firm 7

    About the Authors Larry Deason and his staff have been providing quality legal services for clients since 1971. Their mission is to assist people who are concerned about protecting their families from the devastating legal and financial impacts of disability, death, and taxes. Because he believes in the importance of an informed public, Deason spends considerable time educating consumers about Estate Planning issues. He writes a monthly Estate Planning column in The Sun, and he regularly conducts seminars on various Estate Planning topics. Deason and his staff believe that in many instances Living Trusts offer clients a proven and powerful tool for protecting their families from the expense and delay of probate, as well as a strategy for eliminating or minimizing federal taxes. Deasons firm is staffed with paralegals and consultants who are experienced and trained in a variety of Estate Planning areas. The aim of each member of the firm is to help clients accomplish their Estate Planning goals while taking the mystery out of the whole process. We take pride in knowing that our clients feel peace of mind once the planning process is completed. In 2008, Mr. Garner began practicing law in Yuma in the fields of commercial litigation and bankruptcy. In 2011, Mr. Garner switched his field of practice to exclusively estate planning because he found it more rewarding to help people avoid the costs and stresses associated with litigation more than trying to resolve disputes through litigation and court intervention

    Deason Garner Law Firm 242 West 28th Street, Suite A

    Yuma, AZ 85364 Phone: (928) 783-4575

    www.DeasonGarnerLaw.com

    Larry Deason

    Shawn Garner

    http://www.deasongarnerlaw.com/our-firm/attorney-and-staff-profiles/about-lawrence-deason/

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