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Establishing Your Trust: Step-by-Step

Your to-do list to establish your trust may sound like a lot of work. Steps don’t need to be rushed, be sure to cover all of the bases.

ASSETS. MAKE A LIST.

Think of this as an inventory of all of your “worldly goods;” these are things you want to pass on to others. You’ll decide later which things to include or exclude from your trust. For example:

  • Real estate—include the address and the way the property is listed on your deed.
  • Cash, savings, checking, brokerage accounts—include the account name, account number and financial institution that holds the account.
  • Personal property—vehicles, family heirlooms, jewelry, collectibles.
  • Insurance policies, businesses.

BENEFICIARIES. MAKE A LIST.

  • Your beneficiaries will one day inherit the assets in your trust.
  • Beneficiaries can be family members, charities—the designations are up to you.

TRUSTEE. CHOOSE ONE.

Discuss your options with your attorney, then identify your top choices.

  • Once you’ve decided, discuss your choice with your trustee; review the responsibilities with them, it’s important they understand what’s in store.

ENGAGE YOUR ATTORNEY TO PREPARE THE TRUST DOCUMENT

  • Your attorney will prepare a draft version, carefully review it.
  • Once you’ve approved the draft, your attorney will prepare the official version for your signature.

TRANSFER THE TITLE OF YOUR ASSETS INTO THE TRUST’S NAME

This is a crucial step and cannot be overlooked—it takes a bit of work on your part:

  • All assets held in your name like real estate, vehicles, bank and brokerage accounts need to be transferred to the trust’s name.
  • Be ready to provide a copy of your trust to your bank, DMV or county recorder for their review—this is important because your asset’s title needs to match the name of your trust. They may request a copy of your trust to keep on file.

UPDATE YOUR BENEFICIARIES FOR PROPERTY NOT HELD IN TITLE

Some of your assets are in your name and always will be, like insurance policies or a pension.

  • Be sure to update your beneficiaries on all financial instruments to make your wishes known.

CONFIRM THE ASSETS HAVE BEEN “MOVED” INTO THE TRUST

  • Double check your financial statements – you should notice the account holder is the trust’s name.
  • Same thing for your real estate holdings – your county recorder’s website and property tax statement will now be listed in your trust’s name.

ORGANIZE YOUR DOCUMENTS

  • Keep a few copies of your trust on hand.
  • Provide a copy of your trust to your successor trustee(s).

UPDATE YOUR TRUST AS NEEDED

Periodically review your trust – do it as a new year’s present to yourself – just to make sure everything is still current.

  • As you acquire new assets, be sure to take title in the name of the trust.
  • Beneficiaries may need to change, based upon your wishes or other circumstances, so update your trust accordingly.

 

Contact Scott D. Bloom law for more information on how a trust can be a part of your estate planning.

To schedule your free consultation,
email us, or call 1-215-364-1111
or 1-855-992-6337 (Toll Free)

What is a Trust vs a Will?

WHAT IS A TRUST vs A WILL?

Both trusts and wills are used in estate planning. Both are used to name your beneficiaries and which beneficiaries will receive your assets after you are gone.

The paths your beneficiaries will take with a trust and a will are, however, quite different.

A LIVING TRUST IS ABOUT SPEED—IT’S BUILT FOR EFFICIENCY

A living trust (revocable or irrevocable) is not subject to probate. A will is subject to probate. This is the main difference between the two estate planning tools.

  • While attorney’s fees for setting up a trust are often more than a will, having your assets in a living trust can speed up the time it will take for your beneficiaries to actually receive assets you want them to inherit.
  • Fees to execute the trust’s terms are minimal, if any. The successor trustee will simply fulfill the terms of the trust and make the asset transfers happen to the beneficiaries.
  • Probate of a will can last at least one year.
  • Once probate begins, your estate will incur attorney’s fees and other expenses, such as asset appraisal fees. The probate court may set a cap on the fees your estate will incur during probate.

A LIVING TRUST GOES INTO EFFECT WHILE YOU ARE ALIVE

Your revocable or irrevocable trust is active once you’ve signed it. A will takes effect upon your death.

Two examples:

  1. Your trust designates your son as a co- trustee of your trust. If you are no longer able to make decisions about finances–let’s say you have a chronic illness or an accident–your son can immediately and legally continue to take the financial reins–without going to court or any other entity to give your son the power to do this.
  2. If you have a disabled child a trust can be set up to fund and to oversee their care. You and your successor trustee(s) can be legally empowered to make decisions about the child’s well-being, education and care throughout your child’s entire lifetime.

A TRUST IS KEPT PRIVATE

Since a living trust isn’t subject to probate court, it is a private matter between the grantor, the trustee and the beneficiaries. No one outside of those mentioned in the trust can find out the value of your assets, how much was given to your beneficiaries, or any other details.

What happens in a probate court is public record.

Contact Scott D. Bloom law for more information about using a trust in your estate plan.

 

To schedule your free consultation,
email us, or call 1-215-364-1111
or 1-855-992-6337 (Toll Free)

What Are The Different Kinds Of Trusts?

TESTAMENTARY TRUST

A testamentary trust is part of a will. This type of trust will be established after the grantor’s passing and during the will’s probate phase.

For example:

An older couple, Michael and Stephanie, have adult children and grandchildren. Michael and Stephanie want to help their grandchildren, great-grandchildren (and more, if possible) with their higher education expenses. The couple currently have a separate brokerage account set up just for this.

Rather than transferring this account into their minor grandchildren’s names right now, the couple decide to set up a testamentary trust, which is a part of their will. This gives Michael and Stephanie access to their brokerage account while they are still alive for a dire financial emergency. Assuming everything goes according to their financial plan, their testamentary trust will be established after Michael and Stephanie pass away. It will be overseen by two co-trustees, their adult daughter Monica and their financial adviser.

The testamentary trust will be professionally managed by the financial adviser. Daughter Monica is empowered through the trust to choose a different adviser, who will become a future co-trustee; any future adviser must be licensed and with an established, national firm. Michael and Stephanie have planned an investment strategy so that gains in the fund are reinvested and that $30,000 per descendant can go toward higher education. Monica (and her successor trustees) are not empowered to withdraw any funds unless the funds are for higher education expenses. Funds can be drawn via check and the check can only be made out to a college or other institution of higher learning. This is all spelled out in the trust.

LIVING TRUST

There are two types of living trusts: revocable and irrevocable. A revocable trust gives you most flexibility, but no estate tax benefit. An irrevocable trust gives you minimal flexibility but maximum estate tax benefit.

REVOCABLE TRUST

With a revocable trust you continue to control the assets when you are the trustee. You can change or undo the trust any time you wish.

  • This gives you maximum flexibility to manage the trust’s assets while you are alive, while knowing the assets will not be subject to probate and therefore can pass rather quickly to your beneficiaries.
  • Probate can be a long and costly event. The period of time can vary but at least a year is normal. Your estate will also incur attorney’s fees and other expenses during probate. In some states the probate court determines what “reasonable” probate fees will be.
  • With a revocable trust, your beneficiaries will need to understand their own tax situation and to pay the appropriate taxes once they’ve acquired what you’ve passed on to them.

IRREVOCABLE TRUST

An irrevocable trust allows you to permanently and irrevocably give away your assets to your trust during your lifetime. That word “permanent” means what it says: once the trust is in place, it cannot be undone unless the grantor and all beneficiaries agree to it.

  • The advantage has everything to do with estate taxes: since the assets are no longer yours, they are no longer a part of your estate.
  • “No estate taxes” is very attractive but the permanent aspect of this trust makes its use to be one for a specific purpose, such as Medicaid Planning.
  • Discuss this option with your team of advisers and see if right for you.

Contact Scott D. Bloom law for more information about using a trust in your estate plan.

To schedule your free consultation,
email us, or call 1-215-364-1111
or 1-855-992-6337 (Toll Free)

What Is A Trust?

WHAT IS A TRUST?

A trust:

  • is an estate planning tool–a legal document–which is commonly used to manage the disposition of assets after the person who created the trust (the grantor) passes away. In addition, a trust can be used to distribute assets while the grantor is alive. It all depends on the purpose of the trust and how the grantor wishes to set up asset management and disposition.
  • can replace a will and can also be used to supplement a will.
  • names beneficiaries who are to receive assets per the terms of the trust.
  • is managed by a trustee or multiple trustees.
  • identifies beneficiaries and may also identify successor trustees who will manage the trust on an on-going basis.
  • takes assets out of your estate because the trust itself becomes the owner of the assets. The trustee then controls and manages the trust’s assets.
  • can operate for several generations—or for a single one—it all depends on how it’s set up.

A TRUST HAS SEVERAL ESTATE PLANNING BENEFITS

  •  A trust is not typically subject to probate. This means that assets can usually be distributed to beneficiaries faster than assets that are part of a Will, because a trust isn’t usually subject to what can be a lengthy probate court process.
  • Because the trust spells out what is supposed to happen with the assets, the beneficiaries can be assured that there isn’t deviation from what the trust says. The trustee is legally bound to do what the trust says.
  • A trust can potentially ensure that assets are available for generations of beneficiaries; you can have confidence that your assets are helping your heirs for a long time.
  • An irrevocable trust  can be used to help assets pass to the beneficiaries without estate taxes coming due.

A TRUST IS A FIDUCIARY DOCUMENT

  • A trust’s purpose is to manage assets–assets are things like cash and things that can be sold for cash (e.g. a home, business, precious metals, bank accounts, jewelry, family heirlooms–anything you consider to be of value).

A TRUST MAY BE USED FOR CARE-TAKING

  • A trust can include assets which can be used to pay for the care of others.
  • This can include the care of anyone—for the trustee while they are still alive—or for an individual who is too young to care for themselves or doesn’t have the mental or physical capacity to care for themselves.

HOW DO I KNOW IF A TRUST IS RIGHT FOR MY SITUATION?

  • A team of professionals is the best way to determine if a trust is right for you. Start with an estate planning attorney and possibly a CPA in your education process. They will discuss all of the options with you so you can make the best decision for your needs.

There are many different types of trusts, each has its own purpose. We’ll go into a few of these in a separate blog. To identify the best kind of trust for your needs, talk to the professionals at the Scott D. Bloom Law office.

To schedule your free consultation,
email us, or call 1-215-364-1111
or 1-855-992-6337 (Toll Free)

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