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 Helpful Articles
from David Vollrath,
Union County Foundation Executive Director
The Foundation encourages you to work closely with your professional advisor(s)
as you develop your estate plan and consider your present and future charitable goals. |
Understanding Living Trusts
(Part of a series of articles on charitable giving and the Union County Foundation
by David Vollrath - Executive Director)
For most of us any mention of the words "living trust" is promptly followed by a deer in the
headlight type look and an immediate disconnect from the conversation. Recently a resource book came to my attention
entitled the Retirement Bible by Lynn O’Shaughessy. This book addresses many important financial
subjects that often we ignore because they just seem too complicated. This book cuts through the legalese and states
the important points in language understandable to us "regular folk."
The book’s discussion on living trusts is helpful. Let it first be said that to set up any trust you will need
to work with a qualified attorney. Our County is blessed with an abundance of wonderful legal professionals willing
to assist. A living trust simply is a revocable legal document that lets specific estate assets pass directly and
immediately to named heirs instead of going through the potentially lengthy court system known as "probate."
This bypassing of probate is the single biggest advantage of having a living trust. By avoiding the open nature
of probate a living trust is arguably less likely to be contested and best suited to preserve the privacy of its
distributions. Another advantage may be if you own property in other states the living trust will allow you to
avoid lengthy, costly, and complicated out of state probate.
Another advantage pointed out in the book out is that the living trust allows you to name
in advance whom (successor trustee) you would like to step in to handle the financial and legal affairs of the
trust's assets if you become incapacitated. You will decide and stipulate in advance how it is determined that
you are no longer able to perform the afore mentioned duties. An example might be that certain physicians must
agree that you can't manage your affairs. This transition occurs without court involvement. Safeguards can be written
into the trust document regarding successor trustee actions.
For many people the living trust has become the main piece of their estate plan. A living
trust does not replace the need for a will. Inevitably there will be assets that are not included or named in the
living trust. Alarmingly often a person may set up a living trust but then not follow through on putting assets
into the name of the trust. A living trust does not work if it is" empty." If you intend for your house,
car, stocks, etc. to be part of the trust you must have the assets titled to the trust. Any assets not included
in the living trust will be distributed by the "pour over" will.
The book makes several important additional points:
- Having a living trust while you are alive has absolutely no effect on your taxes.
- A living trust doesn't control all property. For example, a house held jointly will pass
directly to the remaining owner.
- Retirement accounts, and IRA's transfer directly to the beneficiaries listed on the account's
paperwork,
- Your living trust won't automatically remove your ex-spouse as a beneficiary whereby
many wills have a feature of instantly removing a former spouse without additional paperwork.
- A living trust will not make your estate taxes disappear. Other types of trusts can help
reduce estate taxes.
The Union County Foundation encourages you to consider your present and future charitable goals. The Foundation
is equipped to help you achieve these goals by providing: planned giving and estate planning resource information,
charitable gift annuities/life income plans, and a broad array of charitable choices. Please call us at 937-642-9618,
email us, reference our website, or stop by our Marysville office at 126 N. Main St. We are committed to helping
you.... “preserve your footprint in time.”
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