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Los
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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. For 2011 and 2012, the amount
is increased to $5,000,000 which is portable by the spouses.
Portability has requirements, which
if not met prevent the survivor from using the decedent's unused
exemption. 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. An election to use the
decedent's unused exemption has to be made. 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, and also to
insure that the decedent's wishes are complied with by the
surviving spouse..
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.
WOULD
YOU LIKE TO CONSULT WITH US ABOUT LIVING TRUSTS?
IF YOU ARE A GENERAL PRACTICE ATTORNEY
AND WOULD LIKE TO CONSULT WITH US ABOUT YOUR CLIENT, PLEASE LET US
KNOW IN ADVANCE SO WE MAY DO A CONFLICT CHECK.
CALL US FOR A FREE LIVING TRUST
CONSULTATION:
818-340-4479
Living Trust Attorneys in Woodland Hills Ca
Living Trust Attorneys in Los Angeles Ca
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WOULD
YOU LIKE TO CONSULT WITH US ABOUT LIVING TRUSTS?
Conservatorship
Information
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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
Oaks
Encino
Tarzana
Northridge
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Hollywood
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Nuys
Additional
Nearby cities:
Burbank
Glendale
Pasadena
Living
Trust Attorneys in Woodland Hills Ca
Living
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