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2010_Living Trusts Caculating Benefits

2010_Living Trusts Caculating Benefits

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Chances are you’ve already heard a lot about the attributes of Living Trusts:
Chances are you’ve already heard a lot about the attributes of Living Trusts:

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03/25/2014

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 American Academyof Estate Planning Attorneys
 ©AAEPA
 American Academyof Estate Planning Attorneys
 ©AAEPA
LivingTrusts
CalculatingThe Benefits
Compliments of:
The Law Firm ofPurcell & Amen, L.L.C.
(314) 966-8077 www.yourestatematters.com
 
Living Trusts: Calculating theBenefits
Chances are you’ve already heard a lot aboutthe attributes of Living Trusts: avoiding probateand legal quagmires, sometimes loweringestate and/or income taxes and protectingprivacy. Yet it’s also important to receive solidestate planning guidance before making finaldecisions, and to carefully weigh the benefitsand potential drawbacks.
Why Choose a Living Trust?
The desire to ensure that an heir is providedfor materially is the most common reason for creating a Living Trust. In the case of minors, aTrust allows a parent to provide for a childwithout giving the child control over theproperty. The parent can also mandate howthe property is to be distributed and for whatpurposes.A Trust is also a useful tool for taking care of heirs who have mental impairments or lackinvestment experience. The Trust documentcan establish that all money is controlled by aTrustee with sound investment experience and judgment. Likewise, a Trust preserves theintegrity of funds when the recipient has ahistory of extravagance. It can protect theproperty from an heir’s spendthrift nature aswell as from his or her creditors.This is also true of persons who may feelpressure from friends, con artists, financialadvisors and others who want a slice of thepie. A Living Trust can make it extremelydifficult for a recipient to direct property to oneof these uses.A “spendthriftprovision in a Living Trust isoften used to further preserve the integrity of assets. It prohibits the heir from transferring hisor her interest and also bars creditors fromreaching into the Trust. Living Trusts arerelatively easy to update, modify or revoke inmost cases. A Will, however, is difficult tochange, and establishing one requires manyformalities.
Short-circuiting the Ordeal of Probate
Among the most popular benefits of a LivingTrust is the avoidance of probate. Becauseproperty in the Trust is not considered part of an estate, it does not have to undergo thissometimes lengthy process. The property isinstead administered and distributed by theTrustee, according to the specific terms of theTrust.Probate expenses can be significant. Costsvary according to the size of the estate andwhat it includes. It also varies by state. Somehave very expensive and onerous procedures,while others offer a streamlined version of probate.Avoiding probate means not only avoidinghassle and expense, but also saving time.Probate can extend the amount of time beforean heir receives an inheritance by months,years – even longer if the Will is contested. Notonly can this create hardship among the heirs,but the property in the estate may also suffer.Many assets must be carefully managed topreserve and enhance their value. Losses mayeasily occur during this interim period.There is an emotional price to pay, too.Survivors may be continually reminded of theloss of a loved one as the process drags on.Probate can also lead to loss of privacy. Willsand probate are public matters, whereas aLiving Trust keeps the estate private. Typicalprobate documents list all assets, appraisedvalue and names of new owners. Thisinformation becomes available to marketers,media, creditors and con artists.
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