Revocable (Living) Trust

For a multitude of reasons, a revocable trust (also known as a living trust) should be the centerpiece of an estate plan. The key word is revocable. It can be created, changed, or completely revoked during the creator’(s) lifetime. The person(s) creating the trust (you and/or your spouse) is/are called the trustor(s), and it is managed day to day by the trustee(s) (the same people). A trust is a separate legal entity from its trustor(s), much like a corporation is a separate legal entity from its shareholders. In the same way that shareholders of small companies manage them in their capacity as officers and directors, you manage your trust as a trustee.

Like a Will, a trust can designate beneficiaries for your estate, and name successor trustees to manage the trust upon your death or incapacity. However, a trust can do much more than a simple Will. First, if your estate is valued over $100,000.00, or contains real property in California, a Will virtually guarantees that your estate will go through an expensive, time consuming, and expensive probate in the courts. Our firm has a simple philosophy that we hope you share: your estate belongs to you and your heirs. They way it gets distributed should be quick, inexpensive, and private.

Second, if the value of your estate is greater than the statutory exemption in the Internal Revenue Code, that portion exceeding the exemption will be subject to a high percentage estate tax. While not an issue when only one spouse dies, that tax has a mean bite upon the death of the second spouse. A trust allows the trustor(s) to effectively double their estate tax exemption by placing some assets into a separate “bypass” trust upon the death of the first spouse. The exemption amounts are scheduled to undergo radical transformations during 2010 and 2011, so please contact us for the latest advice.

Another significant advantage of a trust is that it is an operational document during the trustor(s) lifetime, which means that it is far less likely to be the subject of a challenge for undue influence or competency by relatives who did not get what they thought they deserved.

If a trust is truly the preferred estate planning document (as opposed to a simple Will), why don’t more people have them? The reasons can best be summed up in three categories:

1. People who don’t understand trusts (if you’re reading this, that shouldn’t apply to you);
2. People who originally drafted a simple Will (which may have been sufficient at the time) but haven’t reviewed their estate plan since then;
3. People who don’t want to think about death and therefore ignore the inevitable consequences thereof.

Our firm may not be able to help you live longer or healthier, but we can provide piece of mind that your loved ones will benefit from the proper estate planning documents you have directed us to create. All estate plans done by our firm are personally drafted by attorney Scott Williams, and never by paralegals or legal secretaries as is the case with many larger firms. All consultations on estate planning are at no cost or obligation, so please call today to schedule yours.