1. If you have a Living Trust, will there be any court proceedings when you die?
Generally not. But there are exceptions. For example, if you have what is called a “Pour-Over” will, and you have left considerable assets that you failed to transfer into the trust (assets outside the trust), probate proceedings will need to be instituted for the pour-over will. For this reason, we recommend that our clients review their trust and estate plan every 5 years to make sure their most important items of property are inside their living trust and not governed by the pour-over will.
2. Should you have a durable Power of Attorney in addition to a Living Trust?
This is not a bad idea. Why? The agent can be given to the right, among other things, to transfer to your trust any property you may not have transferred, both before and after, you have become disabled.
3. During your lifetime, what taxes will a living trust avoid?
None. A living trust will not save any potential taxes during your lifetime. Since the trust is revocable, the assets of your trust are included in your federal gross estate. For income tax purposes, under the ‘grantor trust’ income tax rules, you are treated as the owner of the trust. However, we at EBPTA can provide an analysis for you to avoid or reduce potential estate or gift taxes assessed to property your beneficiaries eventually receive.
4. Can a living trust make distributions to persons other than the grantor?
It depends on the language in the trust. If the trust gives the trustee discretion to make decisions on who to distribute the assets, they may, but this type of discretion is unusual. Our clients like to identify each and every beneficiary they wish to receive their property.
5. Is it expensive to transfer property into a living trust?
It is not expensive but it takes knowledge and attention to detail to make the transfer effective. One of the most glaring problems we find is when a new client comes into our office with a living trust they created to transfer any property into the trust.
6. Do you need to go to court to amend a living trust?
No. You can amend it any time. We recommend that our client’s trust documents and estate plan be reviewed every 5 years to update the trust with any newly acquired property or changes in beneficiary designations.