Essentials Of Estate Planning Living TrustOne of the most popular estate bequeathing tools used in the US today besides a will is the estate planning living trust. This is a legal arrangement facilitated through an attorney or a lawyer that is commonly used to manage the estate assets during the lifetime of the owner of the estate. The owner is known as the grantor or the trustor. The person who manages the affairs of the grantor's estate is known as the estate trustee. He is also known as the executor of the estate. In some cases, the grantor and the trustee are one and the same persons. The third party that is involved in a living trust is the beneficiary of the living trust. A beneficiary is an individual to whom the estate assets will be transferred on the estate owner's death. An estate can be transferred to more than one beneficiary. In such a case, the estate assets are divided up among all the designated beneficiaries. Estate owners who have an estate that is worth more than $ 100,000 can usually benefit from having the living trust. Although smaller living trusts are not subject to probate, those in excess of $ 100,000 are. It can cost you about two to four percent of the estate value in legal and court fees to probate such a substantial living trust. Smaller living trusts avoid the public glare that a will probate process involves. They are private affairs and never involve courts. This is because a living trust is a separate legal entity that is in effect created out of a legally binding agreement between the parties involved in them. Further, the transfer of estate to designated beneficiaries takes place during the lifetime of the estate owner, so dissension is avoided. An important point to consider here is that a living trust only involves the distribution by a trustee of only those estate assets placed expressly within the purview of the living trust agreement. People usually cover health care services such as Medicaid, life insurance needs, and other estate assets within the purview of of a living trust. Other assets such as 401(k) plans and IRAs are usually not covered in a living trust arrangement.. Living trusts are useful devices to reduce estate taxes. This is because through a living trust its grantors (a married couple) can take advantage of the maximum unified credit available to them as deductions towards estate and gift taxes. A living trust also avoids the tool of conservatorship for management of estate assets in certain circumstances. Then again, an advanced living trust can be used by remarried spouses, with children from earlier marriages, to ensure that their children receive their due inheritance. An estate planning living trust is especially useful in achieving the above objective when you as the owner of the estate become incapacitated. In such a case, the trustee explicitly follows instructions laid down in the living trust agreement. |