1st Feb 2013
One of the estate planning mechanisms that people use to avoid probate is the Living Trust. In a Living Trust, the estate owner designates a Trustee (usually himself while he is still alive) and a Successor Trustee to administer his estate in the event of his death or mental incapacity. When the estate owner passes away or becomes mentally incapacitated, the Successor Trustee then handles the Trust and oversees the transfer of the assets to the beneficiaries – without the estate having to go through probate. Should you consider having a Living Trust, an estate planning lawyer from Orange County can assist you.
While the estate Owner or Trustor is alive, he begins the transfer of his assets to the Living Trust. If he has real estate property, it would be judicious for him to transfer these from his name to the Trust, even if the property is still under loan. Federal law prohibits banks from accelerating loan payments when the Trustor transfers property to his Living Trust – for as long as he lives in that house.
If you are the Trustor, you are also assured that you retain control over your property when you transfer these to your Living Trust. When you are still alive and when mentally competent, you have full control over all your assets. As your own Trustee, you may deal with your assets in any way you like – just as if you were still the owner of your property. There will be no changes as far as income taxes are concerned. Thus you do not have to file for a new Tax Identification Number for your Trust. And since your Living Trust is revocable, you can amend it or cancel it by revocation should you desire. An estate planning lawyer from Orange County can advise you if you plan to amend or revoke your Living Trust.
When you become incapacitated, your appointed trustee then begins to administer your estate as per your instructions. And when you pass away, your successor trustee implements your wishes as per the stipulations in your Trust.
Not all your assets need to be transferred to your Living Trust. Assets with explicit beneficiary designations such as life insurance policies or annuities payable directly to a designated beneficiary do not have to be transferred to your Living Trust. Moreover, money from most retirement accounts is transferred automatically to the intended beneficiary without having to go through probate. Other assets that need not be transferred to your Living Trust include bank accounts that are opened as payable-on-death account and “in trust for” account with an identified recipient. The proceeds pass directly to that beneficiary.