Trusts for Family Wealth Preservation
In summary, living
trusts have many advantages when it comes to preserving
assets. While they can eliminate or reduce estate or "death
taxes" and assist in avoiding probate or the need for a
conservatorship, they may not be ideal for everyone. Instituting
a Living Trust requires a lot of thoughtful, detailed work for
the couple, and maintaining it must be considered as well. New
must be prepared for the grantors, and many of the couple's
assets need to have their titles changed to properly reflect
the trust as the new owner. Life
Insurance policies need to have their beneficiary changed
to the trust as well.
After the death of the first spouse, the survivor will have
additional responsibilities at a very emotionally trying time.
The survivor, with the help of an attorney
and/or CPA, will be required to ascertain the fair market value
of all assets maintained and included in the trust and then
divide the trust into Trust A and Trust B. Depending on the
number and type of assets, this can be a substantial duty. The
survivor, also, is required to keep records for tax purposes
and file an income tax return for Trust B. While Trust A continues
as a revocable trust over which the surviving spouse is in complete
control, Trust B becomes irrevocable. Because of that, the survivor
cannot change Trust B's
provisions nor its beneficiaries.
If an emergency or ill health arises and the surviving
spouse needs to take any of the funds held in Trust
B, he or she may need to legally justify withdrawing
them, possibly at a time of limited or reduced capacity.
After considering both the benefits and drawbacks of establishing
a living trust, the couple can
make an informed decision. A living trust is an excellent way
to avoid probate and estate taxes, but it involves more effort
than filling out forms on the internet, or simply signing a
document. The advice of a qualified estate planning attorney
can help determine if a living trust is right for you. THE MAMOLA LAW FIRM, APC is conveniently located throughout Orange County. For additional information, please contact us at (949) 333-6543.