Estate Planning Newsletter

• Types of Durable Powers of Attorney
  If you become incapacitated, who is supposed to make decisions for you about the management of your property or your health care? A durable power of attorney allows someone you designate to act on your behalf. It is usually included as... Read more.
• Methods of Making Organ & Tissue Donations
  Statistics from the U.S. Department of Health and Human Services indicate that while an average of 75 people receive an organ transplant each day, 18 people die each day while awaiting an organ transplant. The Uniform Anatomical Gift... Read more.
• Avoid the Reciprocal Trust Doctrine When Creating Life Insurance Trusts
  Estate planning attorneys utilize a number of different estate planning techniques to accomplish the goals of their clients and sometimes to minimize transfer taxes. One common estate planning technique is the transfer of assets into an... Read more.
• Reverse Mortgages for Enhancing Retirement
  Many are familiar with the concept of a mortgage, where an individual makes monthly payments to a lender. However, for those who qualify, there is another type of mortgage called a “reverse mortgage” (RM), where the lender... Read more.

• Private vs. Public when talking estate planning documents
• New Treasury proposal would hammer wealthy investors using clever tax strategies
• Proposed Clawback Regs May Undermine Some Estate Planning
• 6 tax strategies for wealthy clients
• 67% of Americans have no estate plan, survey finds. Here’s how to get started on one

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.

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