Trusts 101

Article submitted by Kay Richter, Attorney at Law, specializing in Eldercare Law and Estate Planning.
For more information, she can be reached at 520-318-1301.

A revocable living Trust is a document which provides for management of your property during your lifetime and also at your death.

During your lifetime you can be your own manager, called a trustee. Or you can choose another person to be co-manager such as a bank or trust company or a child, or other person. Third, you can choose to have someone other than yourself to do the entire job. Sometimes it is a relief not to have to do all of the work yourself. During your lifetime, with a revocable living trust, you have total freedom to do anything that you wish to do with your property. You have freedom to buy, sell, give away anything you want. You are completely in charge.

If you are ever unable to manage your financial affairs, your backup trustee can step in and manage for you. This is very easy. If you did not have a trust set up, you might have to have a conservatorship set up, the court procedure if a person is disabled.

At your death, this same person or bank or trust department also would manage your financial affairs. For everything titled in the name of your trust, you would have no probate at the time of your death. Probate is the court procedure at death if a person has not set up a trust or other titling.

If you have real estate in another state, you could have a probate in that additional state also. With all of your real estate titled in a trust, you have no probate in any state because of the real estate. Further, if someone wants to contest your estate plan, it is harder to contest a revocable trust. You can set up a small trust for children or grandchildren so that their college education is paid for by the trust, with the child receiving the outright distribution at a time that they are mature enough to handle it.

Finally, you can save estate taxes if you are a married couple and set up a trust if you need it. You can receive full step up on the basis of any community property if one of you dies. This can save income tax if the surviving spouse sells the property later. All in all a trust can be a useful planning technique.