The Truth About Living Trusts in Rochester
A lot has been written about Living Trusts and how they can help families avoid probate. But what is the big hoopla about a Living Trust? Everyone is talking about, promoting, and presenting seminars about Living Trusts. Living Trusts are not the panacea they are hyped to be and are not for everyone!
What Is a Revocable Living Trust?
The revocable “living” trust is one form of estate planning, which manages your assets during your lifetime. You as grantor set up this trust during your lifetime which directs the trustee to manage and distribute the trust property for your benefit. Because the trusts is revocable, you may change or terminate this trust at any time during your life. Upon your death, the trust becomes irrevocable (can no longer be changed or terminated), and the trustee will carry out your instructions for managing or distributing the estate.
How Does a Living Trust Work in Rochester?
In order to set up a trust in Rochester, you need a grantor, trustee, trust property and at least one beneficiary. The grantor creates the trust, the trustee administers the trust, and the beneficiary receives the benefits of the trust. Once you have created the trust, you then transfer the title of all your assets (stocks, bonds, real estate, life insurance policies, etc.) from your name to the name of the trust. If you wanted complete control of your trust, you may name yourself as the trustee and beneficiary.
Why Would I Want to Set Up a Living Trust in Rochester?
Minimize federal estate taxes. If you have an estate worth over $600,000, your estate will be taxed from 37% up to 55% upon your death. With a properly established living trust, you can avoid estate taxes on estates worth up to $1.2 million.
Simplifies lifetime management of your assets. A living trust collects all your assets which makes it easier for you to mange all your assets. Also, a corporate trustee (bank) can administer your trust and assist you with your investment management and record keeping.
Provides for your spouse and heirs. Your trust can provide for your spouse, children or grandchildren upon your death. You can set up specific instructions as to when the trust is to distribute income or principal to your beneficiaries. You may set this up to provide for educational expenses for children or grandchildren, and even set up age requirements for when the children may receive any money.
Avoid Probate. The “dreaded” probate is the legal process to distribute the assets of your estate upon your death. Although probate has been simplified and is no longer an ordeal, many people do not want their families to go through this public process. With a living trust, the trustee is able to continue to administer the trust without interruption and without public record. Probate is avoided.
Protection in the event of incapacity. Your trust will have named a successor trustee to manage your trust assets if you are unable to act. This eliminates the need for and expenses associated with competency proceedings and the appointment of a guardian to manage your affairs.
Other Advantages of a Living Trust in Rochester
- Avoids the expense of probate administration.
- Avoids opening probate in other states where you own out-of-state property.
- Allows for more planning opportunities that are not available with property held by joint tenancy.
- More difficult to contest than a will.
- Amendments require less formality than a will.
- Provides for limited creditor protection for beneficiaries.
Do I Need a Revocable Living Trust?
Revocable living trusts are not for everyone - there are other estate planning tools available. However, if you have significant assets, desire simplified management of your assets, provide financially for your spouse, children, or grandchildren, and/or dread having your family face probate upon your death, setting up a living trust may be the proper estate planning tool for you!