Revocable Living Trusts
Revocable Living Trusts
Living Trust Packages are for clients who want a comprehensive estate plan that takes advantage of a Living Trust to avoid probate, protect the client in the case of mental disability, provide one master plan for all assets, and allow for more flexible beneficiary planning. We include in this package a Living Trust with Pour-Over Will, Durable Power of Attorney, Advance Medical Directive, Anatomical Gift, Memorandum for Distribution of Personal Property, and a portfolio, which contains a variety of additional documents. We can also structure the Living Trust Package to provide significant Estate Tax savings.
A Revocable Living Trust has five general advantages over traditional Will Planning
- Provides superior disability planning
- Avoids probate
- Provides one master plan for all assets
- Encourages improved beneficiary planning
- Provides superior estate tax planning
The Living Trust Provides Superior Disability Planning
The Living Trust provides far superior disability planning over traditional Will Planning. Since nearly everyone will be disabled, even if for a short time, before death, proper disability planning is critical to estate planning.
The Living Trust Avoids Probate
All assets titled or designated to a Living Trust avoid probate. Probate consumes an average of 9% of an estate, and this amount rises to 75% for some estates. The smaller the estate, the larger the percentage. Probate generally takes a year and a half, and nearly 25% of the time, probate takes over 3.5 years.
The Living Trust Provides One Master Plan for Assets
Unlike Will Planning, which only affects probate assets, the Living Trust provides one master plan by which probate and non-probate assets can be managed and distributed. Traditional Will Planning involves a master plan for probate assets, and multiple “mini estate plans” for non-probate assets, such as some life insurance policies, and retirement and bank accounts.
The Living Trust Encourages Better Beneficiary Planning
Beneficiaries of an estate or trust may receive their share outright or in a beneficiary sub-trust. There are a variety of reasons for establishing beneficiary sub-trusts, such as a beneficiary’s age, maturity, disability, or risk. Sometimes these beneficiary sub-trusts are required by law, such as for minor or disabled beneficiaries. At other times, a beneficiary sub-trust is strongly recommended for “at-risk” beneficiaries, which includes those with chronic substance abuse problems, at-risk marriages, serious debt problems, and so forth. The Living Trust automatically builds in some of these beneficiary sub-trusts, and better facilitates the creation of other sub-trusts.
The Living Trust Provides Superior Estate Tax Planning
The Tax Planned Living Trust protects an estate from taxation up to two federal exemption amounts, possibly saving hundreds of thousands of dollars. Traditional Will Planning protects an estate from one federal exemption amount. A Complex Will, with a Testamentary Credit Shelter Trust, may protect an additional exemption amount, but unnecessarily subjects the estate to probate.