Frequently Asked Questions 2018-01-06T10:39:11+00:00

TrustWORTHY Questions

Will my assets be distributed differently if I have a Living Trust, versus a Will?

With a Will, once probate is completed, all assets must be distributed immediately. With a Trust, the assets may remain indefinitely, since the Trust is a legal entity and “lives on” after the decedent’s death.

If I don’t have a Will, what happens?

Without a Will, the state automatically provides one for you. Your Will will subject you to Probate Law.

Why don’t attorneys tell you about the Living Trust?

Less than 1% of all law school students receive ANY trust law training. They are simply not trained in how to help you avoid probate problems. In many cases, the only reason for not having a trust is the attorney lack of knowledge and their realization that they will not get probate fees.

Do I need to notify my attorney about my Living Trust?

No, when you execute your Trust and Pour-over Will, you nullify any previous Will.

If I have less than $1,000,000 in my estate, why do I need a Living Trust?

In Arizona, if your estate is worth $75,000 or more – you will be subject to probate. In Utah, the probate limit is $50,000+. A Living Trust (by not being subject to probate law) is not governed by probate law, thereby allowing transfer of yours assets to your heirs without extreme fees and unnecessary delay.

How can lawyers justify their fees for probate?

Today’s probate system can not be justified. The entire system is running along unchecked and is extreme in its costs and delays.

If my home is put into the Living Trust, how will it affect my mortgage?

There is no change. You as trustee are still in control and the mortgage follows the asset holder of the real property.

Should I put my personal assets into my Living Trust?

Yes, it is better to transfer all assets into your Trust, thereby eliminating unnecessary conflict from heirs.

Can Joint Tenancy avoid probate?

Yes and No – The probate process can be eliminated on the death of the first spouse if assets are held in Joint Tenancy. However, when the second joint tenant dies, all assets in the estate must be probated — plus you lose half of the Stepped Up Basis when the first death occurs.

Is the Living Trust recognized in all 50 states?

Yes, the trust is valid.

Can two people living together, but unmarried, create a Living Trust?

Yes, it’s quite common to have an A-B Trust that identifies the separate property of two individuals, and is especially appropriate when they have purchased property together.

Is an A-B Trust one Trust or two trusts?

It is one Trust while both Trustees are living, but can be divided (at the death of the first spouse) and used to determine the difference between the decedent’s assets and the survivor’s assets.

Can I name a charity as beneficiary of my Living Trust?

Yes, by a properly written Living Trust.

Should I advise my children that I have a Living Trust?

It is not necessary, however, you should always tell your Successor Trustees (who might be your children) where your documents are kept.

Can I deduct the cost of my Living Trust from my taxes?

Yes, all but the Pour-over Will portion which is not tax deductible. According to the 1980 tax code, the “estate tax planning” of the Living Trust comes under miscellaneous expenses and must exceed 2% of your adjusted gross income for a tax deduction. Check with a qualified CPA.

How do I file income tax with a Living Trust?

The IRS has ruled that the Living Trust has no effect upon income taxes. All income flows to the individual who continues to report all income on the U.S. lndividual lncome Tax Return (Form 1040) whether filing married, single, or as head of household. You still use your social security number. In 1981, Congress legislated that Form 1041
(the Trust tax return form) would not be needed to use form 1040. If the IRS mistakenly says you must use “1041”, simply advise them that your Living Trust is a “Grantor” Trust as mentioned in Section 1.671-3 (a) (1) of the IRS regulations.

Should I put my life insurance policies inside the Living Trust?

Yes, your Trust should be made the Contingent Beneficiary (if you’re married) or the Primary Beneficiary (if you’re single) of all your life insurance policies. In doing so, your policies will be in order. Without a Living Trust, if you and the beneficiary die simultaneously the insurance money must pass through probate before it can be given to any heirs.

Should I put my checking account(s) and car into the Living Trust?

You may wish to keep your checking account(s) if they remain under $75,000, and your moderately expensive cars outside the Trust. Cars are exempt from probate in most states because they fall under the jurisdiction of the Department of Motor Vehicle Code and correlating Probate and DMV would be impossible. However, if you own a more expensive car, more than one moderately priced car or a motor home, it is advisable to record those vehicles in the name of your Living Trust.

Should I put my Mobile Home into my Living Trust?

Most definitely, in some states mobile homes were once registered as motor vehicles but are now registered in a different department. In California for example, all new mobile homes bought in California must register with the Department of Housing and Community Development.

Is a Successor Trustee personally liable for the debts of my Trust?

No, a creditor has a claim solely against the assets of the Trust (assuming that the Successor Trustee has acted in good faith and not abused their capacity as Successor Trustee. This is why you pick someone you “trust”).

Should my safe-deposit box be put into the Living Trust?

It is not necessary, but, is a good preventive action. We would always suggest that you put your safe-deposit box in the name of your Trust.

Should I put Keoghs and IRAs in the Living Trust?

Your Trust should be included as a ‘beneficiary’ – either ‘Primary’ (single client) or ‘Contingent Beneficiary’ (couples)… speak with your financial advisor. It should never be the owner of your Keoghs and IRAs, because that is comparable to an outright distribution and could generate serious taxable consequences. Speak to your financial advisor for recommendations on how best to reflect such retirement accounts in your trust.

Can I use my Living Trust as loan collateral?

You may use your assets in your trust, but not your Trust.

Can my Living Trust shelter my income from income taxes?

No, it does not act as a tax shelter.

What if I remarry?

If you are older and have, in essence, finished building your estate, it may be appropriate to retain your trust in its existing form and not include your new spouse in the Trust. In this situation, the spouse should have their own Trust (often called a ‘separate property trust’).

Will my Living Trust affect my Social Security Benefits?

No, there is no effect on income received and social security benefits are considered income.

If I transfer real estate into my Living Trust, will my property taxes go up?

No. Transfers into a Living Trust have no effect on property taxes.

If I am only a part owner of property, can I transfer my share into a trust?

Yes, your share (‘undivided interest’) can go into the trust without changing that owned by others. However, some states may require the signature to alter the originating deed documents.

Can I name Trustees and beneficiaries who live out of state?

Yes. There is no limitation on where your Trustees or beneficiaries reside.

Will I have to consult an attorney every time I buy new assets?

No. Once your current assets are transferred to your Living Trust, you take title to all new assets in the name of the trust. They will then be owned by your trust.

Does my Living Trust need to be registered or recorded anywhere?

No. The Revocable Living Trust is a private document which is not publicly recorded. However, if you own any interest in real estate, the new deeds showing trust ownership will be recorded at the area’s county recorder’s office. Additionally, all of those responsible for handling your assets (banks, credit unions, brokers, etc.) will also have proof of the existence of your trust once you re-title your assets into your trust.

Can I sell assets owned by my Living Trust without complication?

Yes. You sell assets in the same way you currently do. You will, however, add the word “Trustee” (or ‘TTEE’) after your signature.

Can I change the terms of the trust?

Yes. While you are alive and competent, you can alter your trust or even revoke it without penalty at any time.

Can I transfer real estate into my Living Trust?

Yes. In fact, all real estate should be transferred into your Living Trust. Otherwise, upon your death there will be a probate in every state where you own real property. When it is owned by your Living Trust, there is no probate anywhere.

Is the Revocable Living Trust a tax loophole that the government will soon close down?

No. The Revocable Living Trust has been authorized by tax laws for centuries. The government has no interest in making you go through probate or a Conservatorship proceeding. Such actions only clog up the courts.

Is it difficult to transfer assets to my trust?

No. All your assets (except IRA and pension benefits which reflect change of beneficiary designations ONLY) can actually be owned by your Revocable Living Trust. We assist in transferring your real estate and all your personal property. The only assets you need to transfer are your stocks, bonds, and bank accounts and, in most cases, there is no fee for changing title to these assets into your living trust.

Can I transfer my separate property as well as my community property into the Living Trust?

Yes. All your assets, both’ separate property’ and ‘community property’, are transferred into your Living Trust but they are not co-mingled. Separate property assets retain their separate property character while in your trust. If there is a divorce or dissolution of marriage, all assets come out of your Living Trust in the same way they went in — Community Property is divided between the parties and separate property is returned to the party who originally owned it.

Can any attorney create a Revocable Living Trust?

No. The drafting of your Revocable Living Trust should only be done by a skilled estate planning attorney trained in the area of tax and trust law. It is important that you seek out an experienced organization in order to create your Living Trusts. After all, your Living Trust will be the document which manages and disposes of all your hard earned wealth. Make certain you choose a law firm that is both qualified and experienced.

Is the trust still valid if I move to another state?

Yes. Your Living Trust is valid in all 50 states, regardless of the state where is was originally created.

Is a Living Trust only for the rich?

No. A Living Trust can help anyone who wants to protect his or her family from unnecessary probate fees, attorney’s fees, delays, court costs, and estate tax. In fact, if your total estate is greater than $50,000 in Utah and $75,000 in Arizona, a Living Trust offers substantial protection for you and your family.

Is a Living Trust a good idea for a single person?

Yes. If you are widowed, divorced, or unmarried, a Living Trust offers protection for your estate as well.
It eliminates probate, Conservatorship, and can assist you in reducing or eliminating estate taxes on larger estates (more than $1,500,000 or so).

Are there any major disadvantages to a Revocable Living Trust?

No. Because you have complete control of all assets in your trust, you are free
to manage your trust in any way you see fit. Also, because your trust is often revocable, you have the right to make any changes in it while you are alive and competent.

TrustWORTHY Questions

Do I need to notify my attorney about my Living Trust? 2017-11-02T22:28:14+00:00

No, when you execute your Trust and Pour-over Will, you nullify any previous Will.

Why don’t attorneys tell you about the Living Trust? 2017-11-02T22:26:55+00:00

Less than 1% of all law school students receive ANY trust law training. They are simply not trained in how to help you avoid probate problems. In many cases, the only reason for not having a trust is the attorney lack of knowledge and their realization that they will not get probate fees.

If I don’t have a Will, what happens? 2017-11-02T22:26:19+00:00

Without a Will, the state automatically provides one for you. Your Will will subject you to Probate Law.

Will my assets be distributed differently if I have a Living Trust, versus a Will? 2017-11-02T22:25:43+00:00

With a Will, once probate is completed, all assets must be distributed immediately. With a Trust, the assets may remain indefinitely, since the Trust is a legal entity and “lives on” after the decedent’s death.