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Los Angeles Living
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Woodland
Hills Living Trust Attorney, Los Angeles Living Trust, Lawyer
What is a Living Trust?
A Living Trust is a vital
component of an estate plan, and part of estate planning
documents prepared for you while you are alive. In order for a
Trust to work properly, you must transfer most of your assets to
your living trust. Title to some assets cannot be transferred to
the trust, such as IRA accounts. While you are alive and well,
you are the Trustee of the Trust. Since you are the trustee, you
manage the day-to-day operations of the Trust while you are alive
and well. Normally, while you are alive and have capacity, the
Trust is revocable. This means that you have full control over
the assets and that can spend all the money in the Trust, revoke
or cancel the Trust, amend or change the terms of the Trust, and
change any of the beneficiaries of the Trust. You select one or
more successor trustees in your Trust document. The successor
trustee is the person or persons who will manage the Trust after
you are no longer able to do so.
Why prepare a Trust?
In
the event of your incapacity or death, the successor Trustee
steps in and manages the Trust for you. If properly funded, the
selection of the successor trustee is a very helpful estate
planning tool in avoiding a conservatorship proceeding. The
successor Trustee can give you income and principal for your
benefit while you are alive. Normally, the primary successor
trustee is your spouse, if you are married. For most unmarried
persons, the Successor Trustee can be one of a child, another
person, or a bank.
Probate
Avoidance and Cost Savings
Assets
which are properly transferred to the Trust normally escape
Probate. Estate Planning can result in a significant savings to
your heirs. Probate Fees in California are Statutory and
Extra-Ordinary and can range between two percent and ten percent
of your estate.
Tax
Planning Opportunity
In
case of married persons, the Trust can take advantage of the
Marital Deduction and can be set up to save a substantial amount
of estate taxes. Each person is allowed to transfer a certain
limit during their lifetime, or after their death, tax-free. In
2007 ans2008, the amount that can pass without Federal Estate Tax
is $2,000,000. In 2009, this amount is increased to $3,500,000.
This
is called the Exemption Equivalent Amount (unified credit). This
means that if a married couple's trust is set up properly, then
that couple can transfer up to $4,000,000, by using the marital
deduction, tax-free. If the married couple does not take
advantage of the marital deduction and does set up their estate
plan properly, by leaving all of his or her estate to the other
spouse, then that couple loses one of their unified credits. This
can result in a $2,000,000 loss, and can cause a substantial
amount of estate tax.
In
order to take advantage of both exemption equivalent amounts
(formerly Unified Credit), a married couple can create an AB
Trust. When both spouses are alive and well, the A and the B
Trust are totally revocable. The income or principal is paid both
spouses. When one spouse passes away, the Trust is divided into
two SubTrusts. One Trust is called the Decedent's Trust and the
other Trust is called the Survivor's Trust. The Decedent's Trust
contains the deceased spouse's marital share of the assets. The
Decedent's Trust becomes irrevocable on the death of the first
spouse. To protect the Decedent Spouse's wishes, the surviving
spouse cannot change this portion of the Trust. However, all
income of the Decedent's Trust will normally be paid out to the
surviving spouse. The principal of the Decedent's trust is
available to the surviving spouse if he or she needs it for his
or her health, education, support or maintenance. When the
surviving spouse passes away, the balance of each SubTrust is
paid out to the beneficiaries of that Trust.
The
surviving spouse's share is called the Survivor's Trust. The
Survivor's SubTrust remains revocable by the surviving spouse.
The surviving spouse can spend all the assets in the Survivor's
Trust, can amend or change that SubTrust, can change the
beneficiaries, and can revoke or cancel the Trust. The entire
income and principal of this SubTrust are paid to the surviving
spouse. When the surviving spouse passes away, the remaining
balance of the Survivor's Trust is paid out to the beneficiaries
of the Survivor's Trust.
One
benefit of AB Trust planning is that both spouses can make use of
the Exemption Equivalent Amount, thus taking advantage of a
significant tax savings.
For
most people, the main benefit proper Trust planning is that the
estate can avoid Probate. The heirs can benefit by between two
and ten percent of the gross estate by proper estate planning.
Additionally, an estate plan can eliminate a substantial amount
of time taken in Probate Administration.
This
articles and our e-course are not intended to replace specific
advice of an attorney and is intended to be educational only. We
highly recommend that you meed with a qualified attorney for
specific advice regarding your estate and for professional
preparation of all legal documents.
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Conservatorship
Information
Conservator
E-Course
Executor
E-Course
Successor
Trustee E-Course
California
Probate Code 13100-13101: Affidavit of Small Estate
Counties
Served:
Los
Angeles County
Orange
County
Ventura
County
Santa
Barbara County
San
Diego County
San
Bernardino County
Nearby
San Fernando Valley Cities:
Los
Angeles
Calabasas
Woodland
Hills
West
Hills
Sherman
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Encino
Tarzana
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Reseda
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Nuys
Additional
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Glendale
Pasadena
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