Frequently Asked Questions

A “living trust” is merely an agreement, like a contract, between two parties. The person establishing the trust (the “Settlor” or “Trustor”) and the person holding the property (the “Trustee”) hold property for the benefit of another (the “Beneficiary”). In a typical living trust, these three legal “persons” are the same person; you. The term “living trust” means that the trust is established and funded during your lifetime, as opposed to a testamentary trust which is created in your will and must go through probate to be funded. In order for a trust to be a valid, binding instrument; all that is necessary is for the parties executing it to have the legal capacity to enter into a contract, including age and competency, and for the trust to actually own something (the “corpus”). To fund the trust, you can assign, deed and transfer your assets into the trust, including your real property. Once the trust is signed, dated and acknowledged by a Notary Public, it is in full force and effect. Your trust does not need to be recorded, with the exception that the deed transferring real property is usually recorded with the applicable Courty Recorder’s Office.

A well thought out estate plan ensures that your plans for your medical care, guardianship of your minor children, and the management and distribution of your assets will be carried out according to your wishes and not left to the State or others to decide.

Yes. But your family may not like it. The government’s estate plan is called Intestacy and guarantees government interference in the disposition of your estate. Documents to appoint an Administrator must be filed with the Probate Court and their approval must be obtained. If you fail to plan for your estate; you lose the opportunity to protect your family from a complex process that can be timely and costly; and which might have unwanted consequences in the distribution of your estate. Additionally, you have to consider estate taxes. There is much you can do in planning your estate that will reduce and can even eliminate estate taxes.

The court will appoint guardians for your minor children. The probate court may appoint a conservator or guardian to make decisions about your medical care if you are unable to do so. Without a valid estate plan all decisions about your estate will have to be approved through the probate court system.

A Will is a written document that states who you wish to be the guardians for your minor children and how you would like your assets distributed at your death. The will names an executor to facilitate the management of your assets during the probate process.

Trusts are a legal construct that allows you to create a separate legal entity to hold your assets. A trustee is named who manages the assets for the benefit of you and your beneficiaries. Revocable living trusts are created and funded during your lifetime and you often name yourself as trustee to maintain control of the assets until your death or incapacity. A testamentary trust is created after your death by a provision in your Will. Trusts are very flexible and there are many different types. The type of trust used is dependent on your specific goals and circumstances.

A Living Trust offers protection should you become incapacitated by allowing your successor trustee to manage your assets without interruption. Please note that even with a Living Trust you should still have a Will known as a “pour-over” Will. These Wills make sure that any assets, which may not be in your Living Trust at the time of your death, “pour-over” into the trust. Your Trust Package will include all of the necessary estate planning documents including a “pour-over will”.

Yes. In fact, most people who create Living Trusts act as their own trustee. If you are married, you and your spouse can act as co-trustees. During your life, you will have complete control over all of the assets in your trust. In the event of your incapacity your hand-picked successor trustee assumes control over your affairs.

Yes, a Living Trust is valid in all fifty states, plus the District of Columbia.

No. A Living Trust can help anyone protect his or her family from unnecessary probate and court costs, and federal and state estate taxes. Any person with an estate large enough to require probate will derive meaningful benefits from a Living Trust. In addition, only a Living Trust can avoid all of the problems, including court supervision, which can occur in the event of your incapacity.

If your estate is subject to either federal or state estate tax, a trust can save substantial taxes for a married couple. These savings are obtained by being able to use the exemption amount at each death, instead of just at the death of the surviving spouse. However, a Living Trust will not save any death taxes for an individual unless other deductions are available (for example, if you give a portion of your assets to charity).

Whether your estate will be required to pay any tax on your estate at the time of your death depends on the size of your estate and the tax laws at the time of your death. Currently, an estate of under $12,920,000 does not have to pay any federal estate tax; however, many states have a separate estate tax. Our estate planning software, unlike most “on-line” services, takes into account the state death tax as well as the federal estate tax. Generally, any part of your estate going to a surviving spouse or to a qualified charity is exempt from estate tax. If your estate must pay tax, the maximum federal estate tax rate is 40 percent. Typically state estate tax rates are considerably lower. Please note, that the exemption and tax rate are subject to change.

No. The purpose of creating a Living Trust is to avoid probate, guardianship, conservatorship, and reduce or even eliminate federal and state estate taxes; it is not a vehicle for reducing income taxes. In fact, if you’re the trustee of your Living Trust, you will file your income tax returns exactly as you filed them before the trust existed. There are no new returns to file and no new liabilities are created.

No. Because you maintain complete control over your assets titled in your Living Trust, those assets are considered available for your use should you have to go into a nursing home.

Saving on estate taxes is just one of the benefits of a Living Trust. If your estate is over your state’s “small estate” limit, then your estate must go through the expense and delay of a court administered probate proceeding at your death. Further, estate taxes have no bearing on the protections which a Living Trust (along with the appropriate health care power and general power of attorney) can provide in the event of your incapacity.

One of the most important things you can do as a parent is to protect your children, especially when they are minors. If you die, the Court will appoint a Guardian for any minor child; therefore, if you want to determine who that person will be, you need to designate your choice of the Guardian in your Will. Without a trust, the Guardian will also take charge of the assets going to the child, which will be under court supervision, until the child attains age 18. With a trust, when minors are the beneficiaries, your designated successor Trustee can manage and invest the trust funds, free of the costs and restrictions that arise when the Court appoints a Guardian. Often times, the person you may want to raise your children might not be the best person to manage the assets. With a trust, you can have the duties split or you can have the same person performing both functions. Additionally, with a trust, you can continue the management of a beneficiary’s assets to whatever age you desire; certainly beyond age 18. The management of a beneficiary’s assets in a trust can include disbursement of assets and/or funds in increments, according to your directions (e.g., 1/3 distribution at age 25, 1/3 distribution at age 30, and the balance at age 35). Of course, during this period, the trustee can use any, or all, of the trust principal for the benefit of the beneficiary for such beneficiary’s health, education and support.

There are a number of different trust types for a married couple; all of which are typified by the result after the first death. The factors which go into determining the correct type of trust are the size of the estate, the tax laws, the underlying ownership of the trust assets and the comfort level the couple has with the degree of control the survivor should have over the trust. Based on these factors, the different types of trust are:

A “probate avoidance trust” which continues everything in a single trust for the benefit of the survivor who maintains the complete right of change and/or revocability. Typically, this type of a trust is utilized when there will be no possibility of estate tax and there is no issue about the control the survivor will have over the entire trust.

A “disclaimer trust” which is like the probate avoidance trust, except the surviving spouse has the opportunity to disclaim any portion of the decedent’s estate into an irrevocable tax avoidance sub-trust. This sub-trust is created, if necessary, by the terms of the trust after the first death, and then passes tax free at the survivor’s death. This is a very useful trust given the uncertainty of the estate tax laws and the likelihood that most estates will not actually require the creation of a separate trust for tax purposes; it defers the decision of what estate tax planning is necessary until the time of the first death, when the size of the estate and the exact nature of the tax laws are clearly defined. Typically, this type of trust is utilized when there is no concern with the survivor having full control over the trust.

An “A/B Trust” is called that because, at the first death, the joint trust splits into two sub-trusts (originally labeled the “A Trust” and the “B Trust”. The deceased spouse’s sub-trust (which we call the “Decedent’s Trust”) is funded up to the maximum amount which can pass tax free in the year of death (currently $12,290,000) and the surviving spouse’s sub-trust (named as the “Survivor’s Trust”) receives the balance. The Decedent’s Trust is irrevocable and is held for the lifetime of the surviving spouse (typically, the survivor is the sole trustee and has the right to all of the income and the right to use any or all of the principal of the sub-trust for her/his benefit); however, this sub-trust can be protected from creditors of the surviving spouse (including the “spend-down” for Medicaid) and survivor cannot leave the assets of the Decedent’s Trust to anyone other than the children. The balance in the Survivor’s Trust qualifies for the unlimited marital deduction and no tax is due at the first death. At the death of the survivor, what is in the Survivor’s Trust is subject to tax, but only to the extent that the total is above the exemption amount in the year of the survivor’s death. The Decedent’s Trust, because it was already subject to tax at the first death and because it is an irrevocable trust, passes estate tax free at the second death. Because of the higher exemption amount and the loss of a potential income tax benefit at the death of the surviving spouse, this type of trust is not recommended for most situations (although it may still be beneficial for “non-traditional” couples).

With the 2010 Tax Relief Act and the American Taxpayer Relief Act of 2012, a new type of trust called a “Marital Deduction Trust” is now the recommended choice for many estates. At the first death, the joint trust again splits into two sub-trusts; the deceased spouse’s sub-trust (which we call the “Decedent’s Trust”) is funded with the deceased spouse’s estate up to the maximum amount which can pass tax free in the year of death (currently $12,290,000) and the “Survivor’s Trust” receives the survivor’s estate. As with the “A/B Trust”, the Decedent’s Trust is irrevocable and is held for the lifetime of the surviving spouse (typically, the survivor is the sole trustee and has the right to all of the income and the right to use any or all of the principal of the sub-trust for her/his benefit); as with the A/B Trust, this sub-trust can be protected from creditors of the surviving spouse (including the “spend-down” for Medicaid) and survivor cannot leave the assets of the Decedent’s Trust to anyone other than the children. The balance in the Survivor’s Trust qualifies for the unlimited marital deduction and no tax is due at the first death. At the death of the survivor, because the Decedent’s Trust is treated as part of the survivor’s taxable estate (even though no tax must be paid), the assets in this trust receive a new basis adjustment (a “step-up”) and the heirs can sell the entire estate with no capital gains tax.

Another version, the “ABC Trust”, has the excess of the deceased spouse’s estate above the exemption amount going to another sub-trust often called a QTIP (“qualified terminable interest property trust” – which we label as the “Marital Deduction Trust”). The Decedent’s Trust (as well as the Marital Deduction Trust, if applicable) is an irrevocable trust held for the lifetime of the surviving spouse. Typically, the survivor is the sole trustee and has the right to all of the income and the right to use any or all of the principal of the trust for her/his benefit; however, the survivor cannot leave the trust to anyone other than the beneficiaries initially named. The balance of the assets which are not allocated into the two irrevocable trusts are placed in the Survivor’s Trust which qualifies for the unlimited marital deduction and results in no estate tax at the first death. At the death of the survivor, what is in the Survivor’s Trust is subject to tax, but only to the extent that the total is above the exemption amount in the year of the survivor’s death. The Decedent’s Trust, because it was already subject to tax at the first death and because it is an irrevocable trust, passes estate tax free at the second death. The Marital Deduction Trust is only subject to tax to the extent that it and the Survivor’s Trust exceeds the available exemption amount at the time of the survivor’s death.

You are not required to try to figure out the correct type of trust for you; our software will determine which is the best type of trust for your situation by using our unique “matrix” which analyses your responses to certain questions, as well as the most up-to-date status of the federal and state tax laws.

You have the option to prepare a Joint Trust along with all of the matching supporting documents for a “Non-traditional Couple”. Our software will determine the best type of Trust for you after taking into account your estate tax situation. Please note that only a legally married couple can use the Federal Estate Tax “unlimited marital deduction”; this means that, although the full exemption [currently $12,920,000] is available at the first death, if the deceased party’s estate is greater than the exemption, there will be a tax due at the first death (even with the trust). However, by properly structuring the trust, you can keep the exemption amount from being taxed at the second death (which means the two of you can leave up to almost $25,840,000) in assets free of Federal Estate Tax!

Yes. A non-citizen surviving spouse can be required to pay substantial estate taxes at the first death if a proper estate plan is not in place. Depending on the size of the estate, it may be necessary to have your Living Trust set up as a “Qualified Domestic Trust” to avoid the payment of any taxes at the first death. Our software will create the appropriate trust for you based on the information you provide in the assembly process.

Other than making sure that you title any newly acquired asset in the name of the trust, the simple answer is “nothing”. Once a trust is created and funded, it will continue on until it is revoked or it is distributed pursuant to its terms. There are no on-going costs or fees to establishing a Living Trust; nor are there any separate accountings or tax returns required during your lifetime. IRS Regulations provide that a revocable living trust uses the tax identification number of the Grantor — your Social Security Number — as its identification number and no separate tax returns should be filed for the trust. Instructions on how to transfer or title assets into the name of the trust will be provided.

Should a change be necessary, you can create a Restated Amendment at any time in the future. A Restated Amendment completely rewrites your estate plan; so it will have all the new language if there have been any legal changes which would affect your trust; and will allow you to implement any changes you need to make to keep your trust current. However, the Restated Amendment keeps your existing trust name and date, so you do not need to re-title any of the assets already titled in the name of the existing trust.

Yes. In most cases, all real estate should be transferred into your Trust. Otherwise, upon your death, depending on how you hold the title, there will be a probate in every state in which you hold real property. When your real property is owned by your Living Trust, there is no probate necessary.

You can transfer United States savings bonds to a revocable living trust without any tax consequence. The transfer is made by having the bonds reissued in the name of the trustee. The form that must be used to make the transfer is Department of the Treasury Bureau of Public Debt, Form PD F 1851 E (Request to Reissue United States Savings Bonds to a Personal Trust). Complete instructions for reissuing the bonds are set forth in Form PD F 1851 E.

This form may be used to transfer all savings bonds, including Series EE, Series E, Series HH, Series H, and Series I. Use Form PD F1851 to describe the bonds. If more than 13 bonds are to be transferred, use Form PD F 3500 (Continuation Sheet for Listing Securities).

You should be aware, also, that your signature (as the bond holder) must be certified by a certifying officer (this includes authorized employees of insured depository institutions and corporate central credit unions). For a complete list of certifying officers, see Department of Treasury Circular No. 300 31CFR Part 306. This is not the same as having your signature acknowledged by a notary public.

Since you will be transferring your savings bonds through the mail to a Savings Bonds Processing Site (there are five sites specified in the instructions), you should send them by registered or certified mail with a return receipt requested or Priority Mail.

A “Living Will” is a document that describes your wishes regarding life support if you are ever in a terminal condition or irreversible coma (think Terri Schiavo). A “Living Trust” deals with your assets either in the event of incapacity or at death. Both are very important and necessary parts of a proper estate plan and both are included in our Trust Package.

Unfortunately, you may have to become the subject of a conservatorship or guardianship proceeding. If you become mentally disabled before you die, the probate court can appoint someone to take control of your assets and personal affairs. These court-appointed agents must file a strict accounting of your finances with the court. A Living Trust will help avoid this process because your assets are titled in the trust; and you have already appointed someone to act as the successor trustee of your trust if you are no longer able to act. Additionally, if you have created a Financial Power of Attorney and Health Care Power of Attorney; you have already given someone else the ability to make both financial and health care decisions on your behalf. In short, with a properly drafted and complete estate plan, you can eliminate the need for a guardianship or conservatorship.

Yes. New federal regulations known as the Health Insurance Portability and Accountability Act (“HIPAA”) imposes strict privacy regulations on the disclosure of individually identifiable health information. This necessitates the addition of specific release and consent authority in all health care powers before any health care provider can release medical information to your agents and interested persons. Because HIPAA has no “grandfather” exceptions, previously executed estate planning documents may now be useless unless the documents specifically address the HIPAA requirements. All heath care documents and the living trust included in our program are specifically HIPAA compliant and the HIPAA release provisions are made effective immediately.

You can create a “Pet Trust” as an option; this trust can be for a specific animal or animals or for whatever animals survive you. You can designate different trustees for the care of the pet and the amount allocated for the care of the animal. You will also have the option to designate a trust “enforcer”; this person is a third party who has the right to make sure the funds are actually being used for the care of the animal..

Your digital assets and/or rights (including any “social media”, on-line accounts and/or email accounts) will be automatically transferred to the Trust with the “Assignment of Personal Property” (created as part of the trust package); both the trust and the Financial Power of Attorney also specifically authorize the Trustee and Agent to deal with digital assets and/or rights. However, it is important to maintain a list of all of your digital assets and print it out on paper; this list should include all of your on-line accounts as well as a list of usernames and passwords. This is sensitive information, so protect this information by keeping it in a secure place. Some people will put this information in a sealed envelope to be opened only upon death or incapacity. Wherever you keep this information, make sure you tell your successor Trustee (and agent under the Financial Power of Attorney, if different) where this information can be found. You should update this list at least yearly. In addition, tell your successor Trustee what you want done with your digital assets. If you have a social networking site, such as Facebook or LinkedIn, let your successor Trustee know whether you want the site maintained following your death or whether you want the site removed (some sites have specific policies regarding what happens when a person dies or is incapacitated, so make sure you check each site’s policy). If you have a collection of music or photographs, tell your successor Trustee what you want done with those.

Our site is the safest possible. All information you provide is sent via a 256 bit secured SSL connection. Further, we do not ask for any sensitive information; although we provide you with the option to input account numbers for the transfer letters to your banks and other financial institutions, you can always leave the account number field blank and enter the information by hand before delivery.

Before you begin, you should consider:

  • Who will be the executor of your Last Will and Testament;
  • Who will be the successor trustee for your trust;
  • Who should be the Guardian for your minor children;
  • Who will make financial decisions for you if you cannot make them yourself;
  • Who will make health care decisions for you if you cannot make them yourself;
  • How you want your end of life medical care handled;
  • If you want to make any anatomical gifts at your death; and
  • How you want your estate to be distributed at your death.

As mentioned in the previous answer, first you should decide on some important estate planning considerations, then:

Choose the type of estate plan that is best for you.

Register your Account.

Complete the Interview. The Interview is a screen by screen context sensitive question and answer process. You can save your answers and come back at a later time to finish.

Once you have finished the Interview, click on “Finish”, and the software will automatically prepare your revocable trust and all supporting documents based upon your answers, and you will be able to review the documents on your computer, and make changes to your answers if necessary.

Also, once you have finished your review, please send me an email or call me at the contact information below and we will make arrangements for you to sign your documents in my office (if you have purchased a package which includes Notary Public fees) or for your documents to be either mailed or emailed to you with instructions on how to proceed with signing your trust and funding your trust. That’s it; once signed, witnessed and acknowledged by a Notary Public, your estate plan is in effect.

This program is designed to make the building of a basic estate plan as easy and economical as possible. Completing the online interview yourself allows you to work at your own pace, ask yourself the important questions and see the plan come together.

If you have any questions at anytime, please contact me at (775) 324-1111 or at