Home > Estate Planning > 3 Great Reasons to Set Up a Revocable Trust

3 Great Reasons to Set Up a Revocable Trust


3 GREAT REASONS TO SET UP A REVOCABLE TRUST !

By: Nadine M. Catalfimo, Trust & Estate Attorney

Trusts are not just for wealthy individuals. They are useful to anyone for many reasons. This article will discuss 3 top reasons to set up a Revocable Trust (hereinafter “Trust”).

Like a Will, you can change and amend your Trust during your life. You can change the beneficiaries and take assets out and put them back in. A Trust becomes irrevocable when you die. “Irrevocable” means you cannot change the terms of the Trust (unless you give the Trustee the power to do so).

#1 – PROBATE AVOIDANCE AND PRIVACY.

A Trust is a legal document similar to a Will, but it is not subject to probate when you die. “Probate” is the court process of gathering assets, reporting to the court, determining creditors and debts, paying bills and then distributing estate assets to beneficiaries. In NH, the entire probate process can take up to one year or longer. An Executor cannot administer an estate and control assets until authorized by the court. It can take a couple of months to get appointed, whereas a Trustee can take control of assets in a Trust immediately! Because a Trust is not filed with the court, it is a private document and only Trustees and beneficiaries will have access to it.

Assets owned by a Trust and assets that designate a Trust as a beneficiary avoid the probate process entirely. It is very common to title assets in the name of a Trust. You have complete control of your assets held in your Trust. When you die or become incapacitated, the Trustee steps in immediately – without any court approval and without any delays.

#2 – MINOR CHILDREN AND GUARDIANSHIP AVOIDANCE.

A Trust is a great vehicle to plan for the future of minor children. You can specify the age(s) when a minor receives property, which can be over and above the age of majority. When a minor receives property under a Will, a guardianship proceeding is necessary to appoint a guardian until the minor reaches 18. Assets owned by a Trust avoid the necessity of a guardianship proceeding (of the property) for a minor because the Trustee holds and administers the property in Trust.

This type of planning is beneficial if you have minor children from a previous marriage and you don’t want your ex to have control over assets left to your minor children. If you become incapacitated during your life, assets held in Trust will not require a guardianship proceeding for you individually.

Guardianship proceedings require annual court filings, accountings and the payment of annual fees. There are also delays with the court process. Assets in Trust avoid guardianship proceedings entirely.

#3 – FEDERAL AND STATE ESTATE TAX PLANNING.

A Trust is also used for federal and state estate tax planning. It is possible to defer the federal estate tax of a married couple until the death of the surviving spouse, and in some states, the state estate tax as well. There are estate tax planning techniques that can be incorporated into a Trust to utilize the federal exclusion amount in a “bypass” a/k/a “family” trust to shelter those assets passing to beneficiaries, with capital gain and income tax benefits.

Sometimes the transfer of assets from one spouse to another spouse will lower or entirely eliminate each spouse’s federal and state estate tax liability. If you own real estate in another state, your estate may be subject to state estate tax upon your death in that state, regardless of your domicile state.

In some situations, hundreds of thousands of dollars can be saved, sheltered and passed to beneficiaries (instead of Uncle Sam) upon your death – by implementing estate planning techniques and setting up a Trust now.

If you would like to learn more about estate tax planning and establishing a Revocable Trust, and whether it is right for your situation, please contact Nadine Catalfimo, Trust and Estate Attorney, at (603) 952-4491, 300 Brickstone Square, Suite 201, Andover, MA, 01810, or ncatalfimo@MA-NHEstateLaw.com .

Advertisements
Categories: Estate Planning
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: