Law Office of Derryl H. Molina

(408) 244-4992

TRUSTS

Home      Estate Planning      Trusts      Wills      Elder Law      Wealth Management      Mediation     Probate   

 

 

How Are Trusts Used?

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.

 

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.

 

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.

 

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.

 

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.

 

 

What Are the Most Common Types of Trusts?

 

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.

 

 

What Can Go into Trusts?
  • Stocks and bonds
  • Real Estate
  • Mutual Funds
  • Variable annuities
  • Capital Management Accounts
  •  Life Insurance
  • Art
  • Collectibles
  • Personal Possessions

 

 

 What you need to bring to a Trust Consultation Meeting

1)        A copy of the deed to your residence(s) or any property in which either or both of you hold any interest.

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.

3)       Originals of all trusts, wills and codicils you may have previously prepared elsewhere.

4)      Most recent bank statements for accounts you have separately or jointly.

5)      A copy of your partnership agreement.

6)      A copy of any insurance policy, stock certificates or other documents that have beneficiaries listed.

7)       All passbooks and savings certificates on which either or both of your names appear.

8)       Most recent statements for all mutual fund and stock brokerage accounts, if any.

9)      A list of any known debts, liabilities, pending lawsuits or other claims against your estate.

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.

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.)

 

 

                                                             

BASIC TAX TRUSTS

NAME

NEEDED IF

TRUSTEE CAN BE

BENEFICIARY

Spec.Pwr.Appt

RESULT

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

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

 

No tax when passes to children on survivor�sdeath

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

 

 

 

                                         

THE GIFTING TRUSTS

NAME

NEEDED IF

TRUSTEE CAN BE

BENEFICIARY

Spec.Pwr.Apt.

RESULT

QUALIFIED MINOR�S TRUST (2503c)(EDUC.)

Desire yrly gift to minor ($10K)

 

Single minor child

Child must have

Terminates  as  bene reaches 21- inc taxed at minor�s rate; no charge ag parent�s exemption

IRREVOCABLE LIFE INSURANCE TRUST

Have ins. you don�t need as security for a loan or to borrow from/taxable estate

 

 

 

Not part of gross estate on death�transfer value less than death benefit.Benes receive on death of insured.

CHARITABLE REMAINDER TRUST OR

CHARITABLE ANNUITY

Older persons without children; assets over $500 K

 

Settlor

 

Receives  more monthly paymt than keeping a CD, remainder int. is deductible

 

 

                                         

NON-TAX-TRUSTS

NAME

NEEDED IF

TRUSTEE CAN BE

BENEFICIARY

Spec.Pwr.Appt.

RESULT

ANCILLARY TRUST

Real Estate in another state

 

 

 

Avoid 2nd probate�trustee proves successorship and signs docs

STANDBY TRUST

Will be unable to care for own affairs at some point in life

 

 

 

All assets transferred to trust if you become disabled.

MANAGEMENT TRUST

Want someone else to manage your assets

 

 

 

Hired trust dept. responsible for managmt

MEDICAID TRUST

(Types below qualify for govt. benefits)

To qualify for nursing home benefits under Medicaid

 

 

 

 

a.    TESTAMENTARY

 

 

 

 

 

b.    UNDER 65

DISABLED

 

 

 

 

 

c.    MILLER (QUIT)

 

 

 

 

 

d.    NON-PROFIT ASSN

 

 

 

 

 

e.    DISABLED CHILD

 

 

 

 

 

f.     SPECIAL NEEDS

 

 

 

 

 

 

 

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