Your Estate Plan: Ideas You Can Really Use

The Use of Living Trusts as Part of Your Estate Plan

By Earl H. Cohen, Attorney at Law

Welcome to the next in a series of articles, Your Estate Plan, a monthly series of articles on estate planning and planned charitable giving. This series of articles will present practical information and ideas you can really use, regardless of your age or the size of your estate, in planning and keeping your estate and charitable giving plans up to date.

Last month we discussed the use of beneficiary designations including transfer on death and payable on death designations. This month we'll discuss one of our Top Estate Planning Tools, Living Trusts.

Living Trusts are also known as revocable living trusts and inter vivos trusts. A Living Trust can, and usually will serve as the core of your estate plan. Such trusts play a vital role in providing a vehicle for the effective management of your affairs during your lifetime, for the lifetime of your spouse and children and other descendents, as well as providing probate avoidance. Such trusts provide asset protection for beneficiaries through the use of a spendthrift clause in the trust document as well as the appointment of successor trustees. The use of a Living Trust avoids probate for the assets owned by the trust and the trust can also be used effectively for estate and income tax planning. A Living Trust can also serve as the vehicle for direct charitable gifts and charitable remainder trusts for your charitable beneficiaries.

Once a Living Trust is signed, the trust must be implemented to gain the full advantage of the planning. Implementation involves funding the trust by registering assets in the name of the trust and, for certain assets, naming the Living Trust as the beneficiary. Typical assets that are used to fund a Living Trust are certificates of deposit, stock and bond accounts and real estate.

We are often asked "If I have a Living Trust do I need a will?" The answer is simple and practical. While we would hope that our clients would succeed in registering all of their assets in their trust during their lives (thus completely avoiding probate) that often doesn't happen. Even with a Living Trust, most clients will often own some assets in their own name. A will becomes necessary to assure that those assets will pass through the estate and on through to the trust.

While a full discussion of the issues and techniques surrounding the use of Living Trusts is beyond the scope of this article, feel free to contact us for an easy to understand monograph.

Watch for next month's article in which we will discuss The Use of Wills in Your Estate Plan.

For further information on how these and other estate planning techniques may apply to your situation or your charitable planned giving strategy, feel free to call me at 612-339-4295.