Our character is an omen of our destiny, and the more integrity we have and keep, the simpler and nobler that destiny is likely to be.
 

               
George Santayana

 
 
 
 
 

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Basics of Revocable Trust Management


ASK THE LAWYER

1. HOW WILL MY LIVING TRUST AVOID PROBATE?

Your Living Trust is designed to allow you, as Trustee, to ensure that your estate does not require court supervised probate. (Probate is a process where the court supervises the distribution of your estate after your death. Whether or not you have a Will, probate is necessary unless you choose to have your estate administered independently.) In your Living Trust, you have selected a Successor Trustee to succeed you after death. Your Successor Trustee is responsible for carrying out your wishes. Not only can your Declaration of Trust state your desires, but by including in the “Minutes” of your Trust other requests, the Successor Trustee can transfer you assets to your loved ones immediately, without having to wait for court direction.

2. WHO CAN BE A TRUSTEE?

During your lifetime, you are your own Trustee. You may wish to select a professional Trustee to manage your assets in Trust, but a professional Trustee, such as a bank, Trust company, or title company is not required by law. For example, someone with a large estate who does not want the headaches of managing certain assets can contract with a professional Trustee or another person to manage his or her affairs. In some cases persons who travel outside of the country a good deal of the time hire professional Trustees to make sure their affairs are handled according to their needs and desires. However, professional Trustees can be very costly and normally persons with Living Trusts will act as their own Trustees.
More importantly, Trustees who handle your affairs after your death need clear direction from you to enable them to distribute your estate correctly. In your Living Trust, great care has been taken to provide your Trustees with clear directions as well as the necessary authority to distribute you estate according to your wishes. Additionally, your Living Trust provides protection against anyone who may try to alter your intentions.

3. WHAT ARE SETTLORS, TRUSTEES, SUCCESSOR TRUSTEES, AND BENEFICIARIES?

The “Settlors” are the creators of the Trust. You are the Settlor of your own Trust. The “Trustees” are the managers of the Trust assets. You are also the Trustee of you Trust during your lifetime. The “Successor Trustee” is the person or persons who will distribute the assets of you estate after your death. The “Beneficiary” is the person or persons who will benefit from the assets of the estate. Again, you are the beneficiary of your estate during your lifetime. In your Trust, you will have named contingent beneficiaries who will benefit from your estate after your death.

4. IF I AM THE SETTLOR, TRUSTEE AND BENEFICIARY, IS THERE REALLY A TRUST CREATED?

Yes. By designating beneficiaries who will benefit form your estate according to your wishes after your death, a Trust results. You may think of your Trust as a substitute for a Will with two important differences. First, a Will does not take effect until after your death, and second, a Will must be proven in court through the process of probate. A Living Trust takes effect as soon as it is funded with your assets, and a Living Trust avoids the probate problem.

5. WHAT IS THE DIFFERENCE BETWEEN A FUNDED AND AN UNFUNDED TRUST?

Once you have drafted your Living Trust, there are two important steps to take. The first is to execute your Trust by signing all of the necessary documents in front of witnesses and a Notary Public, where indicated. You must then fund your Trust by transferring your assets into the Trust. It is really quite simple. For example, with a Quitclaim Deed, you can transfer real property from you current ownership to your Trust (some states require different procedures for transferring real property). Such a transfer is not considered to be a sale, therefore no reassessment of your property will take place and no tax consequences will result. Similarly, you need to contact your bank or other financial institutions and request that they change the name on your accounts to the name of your Living Trust. Often the institution will give you a Certification of Trust form. If you need to transfer your stock certificates into your Trust, you should notify your broker and/or the company that you own share in for specific instructions. Your broker will be happy to assist you. When these steps are completed, your Trust is fully funded.

6. WHAT IS A GENERAL ASSIGNMENT?

A general assignment is an alternative method of transferring your properties into your Trust. By signing the General Assignment, we have included (Schedule of Trust Property section) with your Living Trust estate plan you will be providing written evidence that you clearly intended to place all of your property into your Trust including properties you may acquire in the future. Do not, however, rely solely on this General Assignment to “fund” your properties into the Trust. You should still follow the instructions contained in paragraph 5 above which tells you to execute and record deeds to land and to transfer all of your financial institution accounts into the Trust. The General Assignment should be viewed as a “back-up” document that will only be used if you die before your “funding” is completed to prove your true intention.

7. CAN I BEQUEATH PARTICULAR ASSETS TO PARTICULAR PERSONS?

With a revocable Living Trust, you can specify at the creation of your Trust that you wish certain assets to go to certain persons or organizations at your death. However, as a working document, you may designate in the Trust Minutes special instructions to Successor Trustees or you may list specific gifts of personal property. This can easily be done in your own handwriting. A Trust Minutes section is included in your Living Trust Plan as a permanent and valuable tool in administering your estate.

8. CAN I EVER CHANGE MY MIND?

Yes. A Revocable Living Trust is fully revocable or amendable at any time by you and your spouse acting together, if you are married, or by you alone if you are unmarried. Also, if you acquire assets and wish to have them directed to a particular individual, simply include in the minutes of your Trust your desires so that your Successor Trustee can give effect to your wishes according to your Trust. Of course, Virginia L. Weber is available to assist you whenever you wish to formally amend or revoke your Trust.

9. WHAT IS A POUR OVER WILL?

Since it is impractical to include everything you own in your Trust by deed, account or name, you will find included in this plan a simple or “Pour Over Will.” Unlike the normal Las Will and Testament you may be used to, the Pour Over Will simply directs your named Executor to Pour Over any asset into your Living Trust that you failed to include in your Trust originally. Typically, a conscientious Trustee of his or her Trust will have already transferred all major assets into the Living Trust to that no probate is necessary to transfer the remaining assets into the Living Trust though the Pour Over Will. You might think of the Pour Over Will as a housekeeping tool for your estate plan.

10. WHAT DOES AN ADVANCED HEALTH CARE DIRECTIVE MEAN?

Every Estate Plan includes an Advanced Health Care Directive, also known as a Living Will. It is your option to use these documents or not to use them. The Advanced Health Care Directive allows a person of your choice to make health care decisions for you in the event you become physically unable to make these decisions or give consent to treatment yourself. You may also allow your designated agent to withhold medical treatment in certain circumstances.

11. WILL MY LIVING TRUST AVOID TAXES?

No. However, different taxes can have different results depending on the size of the estate and the circumstances existing at the time of your death. For example, if you have income producing property in your Trust, during your lifetime you will be taxed on the income in the same matter as if it were property held by you without a Trust. If you have a particularly large estate, it may be helpful to consult a Certified Public Accountant to maximize your estate and to avoid the untimely payment of taxes. Your Living Trust is an important tool in the overall estate plan

12. HOW CAN I GET MORE INFORMATION?

Virginia L. Weber will be happy to answer your questions about your Living Trust. My goal is to assure your family that your Living Trust will meet the needs which you specified in establishing your Living Trust. I am here to help in any way I can.

 
 

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