| The additional stress, money and burden never would have been placed on his family if Jeff had taken the time to finalize his Living Trust. In the end his estate was forced into probate and his family didn't see a dime for over a year, not to mention 7% of his hard earned assets went to the government.
Your goal is to keep your assets in your family. Doing that can mean three things; probate avoidance; lawsuit protection and tax avoidance or minimization. There are certain threats to security we all may face that can prevent us from keeping our assets in our families. First: The three D's - Death, Divorce and Disability; second: Income and Estate Taxes; and finally: Lawsuits. The purpose of proper estate planning is to minimize or even eliminate these threats to your financial security.
Most of you have probably heard of a Living Trust but may not be sure exactly what it can do or why you need one. The primary purpose of a Living Trust is to avoid probate. Even though a Living Trust does not provide asset protection, it's still a very important and valuable estate planning tool because of probate avoidance. To plan a trust becomes useful when one is planning how to incorporate a business.
One of the main reasons you will want to avoid probate is that like all court proceeding, it is very expensive. All states have some kind of probate procedure that takes both time and money for the administration of an estate. Putting property into a Living Trust avoids probate which effectively cuts off the flow of money to the probate bucket - leaving those funds for your heirs.
Second, since the Living Trust is one of the two domestic Trusts in which you can act as your own trustee. This means that you will continue to manage your assets in the same way as you did before you created the trust.
Finally, you will name the beneficiaries of your Living Trust.
Then, the only thing left to do is fund the Living Trust, that is, change titles to your assets. You keep control. Nothing changes except the title to your assets. Your trust remains revocable and changeable during your lifetime. This flexibility allows you to amend it to fit any situation that might arise in your life.
If incapacity occurs, the back-up trustees simply step in and take over management of the assets until the incapacity ends. Where there is no trust in place, the Living Probate must be commenced to establish a conservator to handle the affairs. When the incapacity ends, it can be really hard to get rid of this court-appointed conservator and it requires even more court proceedings.
Finally, it all comes down to control. With probate, the court has control. With a Living Trust, you have control during your lifetime and you maintain control over your estate to a certain extent, even after incapacity or death, by making your intentions clear in your trust documents.
So, to recap - a Living Trust provides protection from probate and conservator ship in the case of incapacity. You and your spouse maintain 100% control during your lifetimes and can keep some level of control after death through specific inheritance instructions. Finally, a Living Trust allows you to take advantage of the maximum estate tax exclusion.
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