Living Trust

Although the enclosed "Declaration of Trust" may appear complicated, it is really quite simple. The trust actually owns your property for your lifetime. Following your death, your desires for the distribution of your estate are carried out by a person your designate; this person is called your successor trustee.

You may wish to have your property go to your spouse after your death, then, after your spouse's death, to your children or grandchildren. Depending upon your desires, your trust will include the necessary provisions to ensure that your wishes are carried out.

If you are single or widowed person, you may have family, a friend or charities to whom you wish to give your property at your death. your trust will enable your designated successor trustee to carry out your wishes without the costs associated with probate.



Although we do not provide legal advice on your estate plan, the following documents have been drafted by our staff pursuant to your direction.

BASICS OF REVOCABLE LIVING TRUST MANAGEMENT

• i. HOW WILL MY LIVING TRUST AVOID PROBATE?

A revocable living trust is designated to allow you, as Trustee, to ensure that your estate does not require court supervised probate. probate is the process of the court's supervising the distribution of your estate after your death. Whether or not you have a Will, probate is necessary unless you choose to have your estate administered "independently."

You have selected a trustee to succeed you after your death. Your trustee is responsible for carrying out your wished. Not only can you Declaration of Trust state your desire, but by including the "Minutes" of your trust other specific requests, the trustee you select to carry out your desires can transfer your assets to your loved ones immediately, without having to wait for court direction.

• ii. WHO CAN BE A TRUSTEE?

During your lifetime, you are your own trustee. You may wish to select a professional trustee to manage your assets in trust, but a professional trustee, such as a bank, trust company or title company is not required by law.  For example, someone with a large estate who does not want the headaches of managing certain assets can contract with a professional trustee or another person to manage his or her affairs. In some cases, persons who travel outside of the country a good deal of the time hire professional trustees to make sure their affairs are handled according to their needs and desires.

Like anything else, professional trustees can be costly; however, normally, persons with living trusts act as their own trustees.

More importantly, trustees who handle your affairs after your death need clear direction from you to enable them to distribute your estate correctly. In your trust package, great care has been taken to ensure that your trustees have the authority to distribute your estate as well as the protection against anyone who may wish to alter your intentions.

• iii. WHAT ARE SETTLORS, TRUSTEES, SUCCESSOR TRUSTEES AND BENEFICIARIES?

By creating your living trust, you are a "settlor." As stated above, you are normally the "trustee" of your own estate during your lifetime. Likewise, during your lifetime, your are also the "beneficiary."

• iv. IF I AM THE SETTLOR, TRUSTEE AND BENEFICIARY, IS THERE REALLY A TRUST CREATED?

Certainly, by designating beneficiaries who will take your estate according to your wishes after your death, a trust results. You can think of your trust as a substitute for a Will, which differs in the important aspects that a Will does not take effect until after your death and it requires probate by the court. A living trust takes effect whenever you want, by your act of funding it with your assets, and it takes effect now a dynamic instrument for your personal estate plan.

• v. WHAT IS THE DIFFERENCE BETWEEN A FUNDED AND UNFUNDED TRUST?

Having received your living trust documents, your living trust will not take effect until you execute it by signing all of the necessary papers and obtaining witness signature and a notary. However, even then you trust will remain "unfunded" until you transfer your assets into it.

Transferring your assets into your trust is quite simple. For example, with a deed, you transfer your real property from your current ownership to your trust. The law does not consider such a transfer to be a sale for the purposes of reassessing your property for tax purposes. In addition, you may contact your bank or other institution where you hold assets to rename your assets and accounts as belonging to your trust.

After your assets are transferred to your trust, your trust is considered "funded."

• vi. WHAT DO I DO TO BEQUEATH PARTICULAR ASSETS TO PARTICULAR PERSONS FOLLOWING MY DEATH?

With a revocable living trust, you can specify at the creating of your trust that you wish certain assets to go to certain persons or organizations at your death. However, as a working document, your trust allows you to designate in your trust "Minutes" just what your desires are. The "Minutes" of your trust are included in your trust package, and they remain with your trust as a permanent party of your trust administration.

• vii. CAN I EVER CHANGE MY MIND?

Yes. Remember that a revocable living trust is fully "revocable" at any time. You can simply revoke your trust by including a simple revocation in the minutes, for example, stating "on xyz date, I hereby revoke for all time, my interest int his, my ABC trust." Also, if you acquire assets and wish to have them directed to a particular individual, simply include in the "Minutes of Trust", your desires so that your successor trustee can give effect to your wishes according to your trust.

• viii. WHAT IS A POUR OVER WILL?

Since it is impractical to include everything you own in your trust by deed, account or name, you will find included in this package, a simple "Pour Over Will." Unlike the normal Last Will and Testament you may be used to, the Pour Over Will simply directs your named Executor to "pour over" any asset which you failed to include in your trust, into your trust, for distribution under the terms of your living trust.

Typically, a conscientious trustee of his or her trust, will have already transferred all major assets into the living trust so that no probate is necessary to transfer the remaining assets into the living trust through the Pour over Will. You may wish to think of the Pour over Will as a housekeeping implement for your estate.

• ix. WHAT DOES A POWER OF ATTORNEY ACCOMPLISH?

When your create a living trust, a legal entity is established for the maintenance and care of your assets and estate. In the event that you leave the country or become incapacitated, the Power of Attorney allows you to designate an individual to act on your behalf in managing your affairs, usually on a temporary basis. In the extreme example, a Power of Attorney will enable your designee to transfer for you, many of the remaining assets that, because of an incapacity you could not transfer to your trust yourself.

• x. WHAT DOES A DURABLE POWER OF ATTORNEY FOR HEALTH CARE DECISIONS MEAN?

As an option, some persons choose to include a health care Power of Attorney in their trust package. This allows a person of your choice to make medical decisions in the event you are physically unable to make decisions or give consent to treatment yourself. The optional health care Power of Attorney also allows your designated agent to withhold medical treatment in certain circumstances.

• xi. WILL MY LIVING TRUST AVOID TAXES?

No. However, different taxes can have different results depending on the size of the estate and the circumstances existing at the time of your death. For example, if you have income producing property in your trust, during your lifetime you will be taxed on the income in the same manner as if it were property held by yo without a trust.

If you have a particularly large estate, it may be helpful to consult with an estate planner to maximize your estate and to avoid the untimely payment of taxes. Your living trust is an important tool in the overall estate plan.

Contact ELITE LEGAL to settle your Living Trust today.

(William O. Douglas)