A common estate planning technique involves the establishment of a living trust, revocable trust, or revocable living trust. By transferring all your property to the trust on behalf of the beneficiaries whom you have designated, you can avoid probate and place limitations on your beneficiaries’ access to the trust funds, if you choose. In addition, a trust allows you to keep your financial affairs private and change its terms over time.
An estate planning attorney at Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A. can provide you with comprehensive estate planning services, including developing a living revocable trust. We can help achieve all your estate planning goals. As you consider whether to make a trust part of your estate plan, here are five things you need to know.
- You must fund or transfer your assets to the trust to avoid probate. A trust only helps you avoid probate if you successfully transfer the assets to the trust. If you don’t fully fund the trust by completing the asset transfer process, then there will be a need for both probate and trust administration after your death. As a result, the account statement, stock certificate, title, or deed to the property must specifically reference the trust name or you as the trustee to ensure that it is properly transferred to the trust. You also can avoid this problem by executing a simple “pour-over” will, which takes all your remaining assets at the time of death and transfers them to be included as trust funds.
- Trusts still have tax implications. During your lifetime, the trust uses your social security number. As a result, any income on the trust funds is reportable on your individual federal and state tax returns during your lifetime. Following your death, the trust becomes irrevocable, and the trustee must file an annual fiduciary income tax return. Income not distributed to beneficiaries is taxable to the trust. However, distributions to the beneficiaries are taxable on their federal and state income tax returns.
- Living trusts do not protect assets from your creditors. While there are many ways to protect trust funds from creditors, simply placing assets in a living trust does not protect them from creditors. For example, holding property as tenants by the entireties with your spouse protects that property from the individual creditors of either spouse. However, transferring the assets into a trust causes the loss of the tenancy by the entireties status, which could result in the assets being vulnerable to the claims of creditors.
- Living trusts are revocable or modifiable. You can always revoke or change the provisions of a living trust as you see fit throughout your life. Therefore, if your circumstances change, you want to place limits on one of your children’s ability to access assets, or you want to revoke the trust altogether, you can do so. You can also move all your trust funds and assets out of the trust if you do so at any time during your life.
- You may not want to put all your assets in your trust. There may be reasons you DON’T want to transfer all your assets to your trust. For example, jointly held property with a spouse automatically goes to the surviving spouse. Therefore, you should get legal advice before automatically transferring all your assets to a trust.
Call Us Today for Assistance with Your Trust Funds
The estate planning lawyers at Kramer, Green, Zuckerman, Greene & Buchsbaum, P.A. provide comprehensive estate planning services so that we can minimize the need for probate proceedings in your estate. However, we also offer the full range of estate, probate, and related services when your loved one passes away.
We are here to help your family navigate the complex legal problems that often arise after losing a family member in the most efficient manner possible. Call us at (954) 966-2112 or find out more about our legal services online. Set up a time to talk to us about your legal needs today.