Who Owns the Property Inside A Living Trust?

by Irrevocable TrustsLiving Trusts

There are many different complex terms and rules associated with estate planning, but it is critical to understand when you may or may not own property once it has been placed in a living trust.

Property placed inside a revocable living trust still belongs to you unless you retitle it properly. This is, unfortunately, a common estate planning mistake that people forget about when setting up a living trust for the first time.

Your living trust outlines who you want to receive the assets inside after you pass away and who should be appointed as successor trustee to manage the distribution of that property. This is different from an irrevocable living trust.

Property transferred and properly titled into an irrevocable living trust becomes the property of that trust, and not part of your probate, estate or belonging to you. When you set up a living trust, you will need to transfer the assets from your name to the name of the trust. This also means that your trust legally now owns all of these assets, but that you manage those assets as the trustee.

So, this does not remove all personal credit all personal liability issues or responsibility. It’s very important to consult with an experienced and dedicated estate planning lawyer to learn more about this process and to ensure you have considered all of the most important aspects of creating a living trust. Discussing your options with an experienced estate planning lawyer in Virginia Beach is strongly recommended to give you clarity on the process and to allow you to move forward successfully.

 

 

 

What Kinds of Property Should Be Placed Inside a Living Trust?

by Estate PlanningIrrevocable TrustsTrusts

Want to use a living trust in Virginia? Or need more information about how a living trust differs from an irrevocable trust? In these cases, educating yourself is a great first step and one that you can follow with a Virginia Beach estate planning lawyer meeting.

Your most valuable property should be included inside your living trust to get the greatest benefit. One of the biggest reasons that most people create a revocable living trust with the help of an estate planning lawyer is to avoid the fees, court involvement and long process of probate. The more an item is worth, the more it could potentially cost to push it through probate.

Some of the most common pieces of property to consider including in your revocable living trust are:

  • Precious metals
  • Security accounts held by brokerages and stocks and bonds
  • Real estate
  • Copyrights and patents
  • Small business interests
  • Valuable works of art
  • Valuable collections

You are eligible to add property to your living trust at any time and since you will likely appoint yourself in the role of trustee in order to manage it, you can also give away or sell property in the trust or remove it and then put it back in your name as an individual. Although a living trust is a popular estate planning tool, it’s certainly not the only way to decrease the possible expense or frustration of probate.

 

When Is an Irrevocable Trust the Right Choice?

by Estate PlanningIrrevocable Trusts

Lost wills and testaments in Virginia require a probate process in order to distribute assets to heirs, but the use of a trust can avoid probate. Your personal and lifestyle preferences will help you determine whether or not an irrevocable trust or a revocable trust is most appropriate for your needs. A Virginia irrevocable trust could be used with your other estate planning documents to give you the control and protection you need.

An irrevocable trust is one that cannot be changed. Only a beneficiary is eligible to make and approve changes to the trust document after it has been established. With a revocable trust, however, the creator can update this as necessary.

This is a leading reason why revocable living trusts are more common since there is a greater level of control. You might wish to make updates yourself to a trust after it has been established if your life circumstances change. An irrevocable trust could limit your estate’s vulnerability to creditors, however.

If you intend to pass along your estate to your heirs, an irrevocable trust can be one way of doing this. There are several different options that might qualify as revocable trusts. For example, you could use an irrevocable life insurance trust such that proceeds are paid into the trust before a trustee manages them for the beneficiaries. To learn more about creating an irrevocable trust in Virginia, schedule a meeting with an estate lawyer today.

 

 

Caring for a Child with Addiction or Mental Illness After You Pass Away

by with No Comment Elder LawInheritanceIrrevocable Trusts

A woman in train alone and sad
Every parent has concerns about how they will pass on their assets to their loved ones in the future but there are many more complications when you have a child who is struggling with mental illness or with addiction issues.
Many parents who find themselves in this situation may feel overwhelmed by the process of caring for these children and therefore, avoid thinking about how these children will be taken care of when the parents are gone. Estate planning might differ in this situation when compared with another type of family. There are a couple of important steps that you need to take in order to plan appropriately for the future.
Whether the child is affected by addiction or mental illness, they may never fully recover from this condition and this is why it is important to think about using tools such as a trust in order to strategically allow access to them for support.
Not distributing the assets directly to your children means that they will most likely be invested with an experienced financial advisor with the ideal purpose of the money growing. In the event that the mental illness or addiction problem gets worse, this allows for more resources to fight the addiction. If the addiction problem is abated, however, the trustee may be able to help the child with new endeavors such as education or job opportunities. Careful planning should always go into any situation in which there is mental illness or serious concerns about addiction or spendthrift behavior. A trust may be the most appropriate way to plan for this- ask your Virginia estate planning attorney for more information.

In Some States, Irrevocable Trusts Aren’t Necessarily Irrevocable

by with No Comment Estate and Trust AdministrationEstate TaxesIrrevocable Trusts
Estate tax return
Estate tax return
Irrevocable sounds so very final, but in some states, appearances can be deceiving.
According to a National Law Review article, people who created lifetime irrevocable trusts to avoid estate taxes don’t have to live with them irrevocably, in some instances.
“The assets in the irrevocable trust pass upon death free of estate tax,” according to the item “To achieve the estate tax advantages, the client needs to give up control, which necessarily means the trust is irrevocable.
However, changes in life or in the law oftentimes make the trust provisions less desirable.”
An example given in the article is if the create of the trust, for whatever reason, wants to change the trustee or even the location of the trust, along with the change in how the money will be disposed after death.
“Fortunately, a number of states now allow irrevocable trusts to be amended, even without court involvement,” the story states.
Legally acceptable means of amending provisions without court approval, called “decanting” and “nonjudicial reformation,” can change what might originally have appeared permanent.
“The dilemma is whether these changes could jeopardize the estate tax advantages the client desired and obtained at the creation of the trust,” the article goes on.
“The good estate tax news is that the IRS has issued a number of Private Letter Rulings that indicate estate and generation skipping tax advantages will still apply even if an irrevocable trust is modified. Of course, the devil is in the details, in determining what types of changes are appropriate and the method in which the changes can be done under state law. But at least in the estate tax world, what is irrevocable may be irrevocable only in part.”

When irrevocable trusts no longer make sense, they can be revoked

by with No Comment Estate PlanningIrrevocable TrustsTrusts

There’s irrevocable in the dictionary, and then there’s irrevocable in the law. The two are not the same thing at all, and for that, some people are quite grateful, according to a recent article in Forbes magazine.
“Americans were once trust-happy,” the story began. “Now many are having second thoughts, and rightly so. Given the 2013 tax law, a trust may be more trouble and expense than it’s worth. Worse, a trust set up to save taxes might even increase them.”
“You need to ask, ‘Does this trust still make sense?’” Kenneth Brier, an estate lawyer in Needham, Mass., was quoted as saying.
Irrevocable, according to Merriam-Webster, means “not possible to revoke.”
Irrevocable when it comes to trusts doesn’t necessarily mean that at all, the Forbes piece points out.
“It’s often possible to terminate a supposedly ‘irrevocable’ trust” according to the article. “One common situation involves a bypass trust. In a typical estate plan, when the first spouse dies, assets equal to his exemption from federal estate and gift taxes are placed in this trust. The widow has access to the earnings and if need be the principal, but at her death the trust assets bypass her estate and go straight to the kids. The point is to preserve the husband’s exemption from estate tax. It made sense for a lot of families when the amount exempt from federal estate tax was $675,000 per person in 2001 or $2 million in 2008.
“But in December 2010 Congress temporarily upped the exemption to $5 million and this past January made that exemption permanent and indexed for inflation; i’s $5.25 million for 2013. Moreover, since 2011 spouses have been able to inherit each other’s unused exemptions. So, going forward, a couple can shield a combined $10.5 million from federal estate tax without a bypass trust.”
Fortunately, Forbes indicated, most bypass trusts allow the trustee to distribute assets in kind to a widow if the trust is $100,000 or less or if, and this is key, it no longer makes economic sense. In other words, if the fees are higher than the value of keeping the trust intact, a trustee can essentially revoke it, or be forced to do so.
“If the trustee won’t go along you can petition a judge to terminate the trust,” the article concluded.