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You can use trusts to ensure the orderly and private transfer of property to another individual or to secure the cost of providing for an elderly relative, parent, or disabled child. Trusts can help finance a loved one's education and even serve as portable pension plans. |
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Trusts can help you avoid probate costs and protect assets from creditors' claims. They can provide a structured way to administer your personal and financial affairs should you become incapacitated, and they can be used to make tax-advantaged charitable gifts. |
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You can rely on trusts to manage assets for the benefit of your heirs and other beneficiaries and provide for the continuation of alimony or child support payments. Trusts can save a business from an untimely liquidation or a disadvantageous sale. |
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Trusts are also used to avoid unnecessary capital gains taxes and manage your estate tax exposure. Without proper estate planning, your beneficiaries could stand to lose as much as 80% of their inheritance to taxes under current law. |
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Whether a trust contains $100,000, $500,000 or $5 million, trusts can make an immeasurable difference in the lives and circumstances of a wide range of individuals with varying financial needs and considerations. |
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What Are the Most Common Types of Trusts? |
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Basically two types of trusts exist: 1) Living (or inter vivos) trusts and 2) Testamentary (contained in a will) trusts. The Revocable Living Trust is the most common, and it is created during your lifetime. In contrast, the Testamentary Trust is created after your death by the provisions of a will and provides no lifetime benefits. |
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What you need to bring to a Trust Consultation Meeting
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1) A copy of the deed to your residence(s) or any property in which either or both of you hold any interest. |
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2) A copy of the pink slip (Certificate of Title) for any vehicle(s) in which either or both of you have any ownership interest. |
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3) Originals of all trusts, wills and codicils you may have previously prepared elsewhere. |
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4) Most recent bank statements for accounts you have separately or jointly. |
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5) A copy of your partnership agreement. |
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6) A copy of any insurance policy, stock certificates or other documents that have beneficiaries listed. |
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7) All passbooks and savings certificates on which either or both of your names appear. |
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8) Most recent statements for all mutual fund and stock brokerage accounts, if any. |
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9) A list of any known debts, liabilities, pending lawsuits or other claims against your estate. |
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10) A list of all safe deposit boxes on which either or both of your names appear, stating the bank and branch and an inventory of the contents. |
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11) A copy of your previous Health Care Directive. 12 ) A copy of any and all beneficiary designation forms-joint bank accounts, stock certificates, mutual funds, IRS's, 401K's, life insurance, bonds, etc. Please get them from the institution holding them.( This is VERY important.) |
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NAME |
NEEDED IF |
TRUSTEE CAN BE |
BENEFICIARY |
Spec.Pwr.Appt |
RESULT |
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BY-PASS TRUST (Credit Equivalent or Credit Shelter) |
Estate is over $600,000 per spouse. |
Surviving Spouse, named Trustee |
Surviving Spouse alone or with surviving children |
Surviv. Spouse, yes. |
No tax to children after surviv. Spouse dies |
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MARITAL DEDUCTION TRUST (QTIP or QDOT) |
QTIP:Children by former marriage QDOT: A non-US citizen spouse |
Surviving Spouse
US citizen or corporation |
Surv Spouse gets all income for life/principal invasion ok |
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No tax when passes to children on survivor�sdeath |
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GENERATION SKIPPING TRUST (Dynasty Trust) |
To avoid tax on assets again when children die. |
Child of Settlor |
Child receives income, principal |
Child can have |
Not taxable on child�s death; taxable only on death of grandchildren |
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NAME |
NEEDED IF |
TRUSTEE CAN BE |
BENEFICIARY |
Spec.Pwr.Apt. |
RESULT |
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QUALIFIED MINOR�S TRUST (2503c)(EDUC.) |
Desire yrly gift to minor ($10K) |
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Single minor child |
Child must have |
Terminates as bene reaches 21- inc taxed at minor�s rate; no charge ag parent�s exemption |
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IRREVOCABLE LIFE INSURANCE TRUST |
Have ins. you don�t need as security for a loan or to borrow from/taxable estate |
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Not part of gross estate on death�transfer value less than death benefit.Benes receive on death of insured. |
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CHARITABLE REMAINDER TRUST OR CHARITABLE ANNUITY |
Older persons without children; assets over $500 K |
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Settlor |
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Receives more monthly paymt than keeping a CD, remainder int. is deductible |
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NAME |
NEEDED IF |
TRUSTEE CAN BE |
BENEFICIARY |
Spec.Pwr.Appt. |
RESULT |
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ANCILLARY TRUST |
Real Estate in another state |
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Avoid 2nd probate�trustee proves successorship and signs docs |
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STANDBY TRUST |
Will be unable to care for own affairs at some point in life |
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All assets transferred to trust if you become disabled. |
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MANAGEMENT TRUST |
Want someone else to manage your assets |
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Hired trust dept. responsible for managmt |
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MEDICAID TRUST (Types below qualify for govt. benefits) |
To qualify for nursing home benefits under Medicaid |
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a. TESTAMENTARY |
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b. UNDER 65 DISABLED |
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c. MILLER (QUIT) |
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d. NON-PROFIT ASSN |
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e. DISABLED CHILD |
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f. SPECIAL NEEDS |
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The information on this website is for educational purposes only and should not be considered legal advice or an attorney-client relationship. For clarification of any material of this website or to seek help on your particular issue, feel free to contact The Law Office of Derryl H. Molina at (408) 244-4992 or email Derryl H. Molina at attderryl@comcast.net