Estate Planning Newsletter

• Transferring Property to its Rightful Owner
  A constructive trust is a remedy imposed by the court when a person has wrongfully attained property. The court basically takes the property away from the wrongful owner and puts it in trust for the rightful owner. In the estate... Read more.
• Marital Deductions & Non-Citizen Spouses
  A QDOT is a specific type of marital deduction trust that is designed to ensure that non-citizen spouses will eventually pay any taxes that may be due upon distribution of the principal from the trust, even if the surviving spouse... Read more.
• Life Insurance Benefits
  There are numerous uses for life insurance. Some are obvious; others are very creative. Some of the most common uses include paying estate taxes, estate administration, inheritance equalizing and many others. Estate Taxes... Read more.
• Valuing an Interest in a Company for Estate Tax Purposes
  In 2001, Congress passed legislation incrementally increasing the amount exempt from federal estate taxes and completely eliminating estate taxes in the year 2010. However, the legislation contains a “sunset” provision... Read more.

• Charles Chrin’s son fires back in legal dispute with late father’s fourth wife
• Before the death of a spouse, here’s how to prepare a financial plan for living alone
• 6 Reasons Why You Need An Estate Plan
• Two Key Estate-Planning Documents You Need
• How To Turn Your Estate Plan Into A Legacy Plan

Trusts: Revocable & Irrevocable

Unlike a will or some other types of trusts, which take effect upon the death of their creator, a “living trust” or “inter vivos trust” comes into effect during its creator’s lifetime. The creator of a living trust is referred to as a trustor or settlor.

Characteristics of a Revocable Living Trust

A revocable trust is one that:

• Is created by the trustor while the trustor is alive
• Gives the trustor the power to revoke the trust while still alive

Purpose

Living trusts have two main purposes that typically cannot be accomplished by wills:

• Avoiding probate
• Providing for management of a person’s estate if the person becomes incapacitated

Role of the Trustee

When a living trust is created, a trustee must be chosen as well. The trustee is often the trustor himself/herself, although the trust should also name a successor trustee who is someone the trustor believes is responsible and can manage a trust. If the trustor becomes incapacitated, typically the trustee is given authority to care for and make decisions about the property subject to the trust.

The trustor can generally designate himself/herself as trustee, although certain types of trusts require that someone else be the trustee.

Characteristics of an Irrevocable Trust

An irrevocable trust is one that:

• Is created by the trustor while the trustor is alive
• Does not give the trustor any power to amend or revoke

There are two basic forms of irrevocable trusts:

• Temporarily irrevocable – It would only be irrevocable for the amount of time specified by the trustor, such as 5 years or 10 years
• Permanently irrevocable – May not be changed or amended for the duration of the trust

Why Have an Irrevocable Trust?

An irrevocable trust allows for removal of property from the trustor’s taxable estate for estate and gift tax purposes and allows for use of the annual gift & estate tax exclusion as part of a gift-giving program. It also simultaneously prevents beneficiaries from exerting any control over the property.

© 2018 NextClient.com, Inc. All rights reserved.