Trusts

Revocable Living Trusts

A trust is a contract between the grantor (the person who creates the trust), the trustee (one who controls the trust) and the beneficiaries (those entitled to benefit from the trust). You, as grantor, determine how the trust will be operated by the trustee and who benefits, how they benefit and when they benefit. You can create a trust that permits you to be trustee and give you the right to receive full benefits from it. This type of trust is typically referred to as a Revocable Living Trust and is often used as a substitute to your will. It permits you to keep total control and access to all your assets during your life, and provides for the distribution of your assets to your beneficiaries at your death without the intervention of the courts.

We often refer to a revocable living trust as your rule book of Instructions. The truth about trusts is that they have changed. They no longer are only used to avoid taxes. They have become a means of protecting and providing for you and your loved ones. They can also help with long term care expenses.

You Should Know That a Trust…

  1. Is a legal entity that operates indefinitely (works during life & after death)
  2. Keeps you in control
  3. Requires NO court intervention (handled entirely by trustee you name in accordance with your detailed instructions)
  4. Reduces or eliminate estate taxes if married
  5. Provides asset protection for your spouse after your death
  6. Prevents court control of your assets at incapacity
  7. Prevents you from unintentional disinheriting your children
  8. Avoids guardianship issues
  9. Keeps your affairs private (as opposed to open for public review in probate)
  10. Provides asset protection for your children if in bad marriages or to ensure your assets don’t go to the child’s in-laws
  11. Requires proper funding and titling of the assets
  12. Provides disability planning in case you become disabled prior to death.
  13. Plans for proper management of your business in your absence
  14. Offers protection of assets from a spouse’s subsequent marriage after your death
  15. Avoids probate at death, upon death the trust operates based on your directions
  16. Allows quick distribution to beneficiaries, and can passes on your wisdom and values
  17. Does not start the Medi-Cal qualification (clock)
  18. Does NOT provide asset protection from a nursing home, lawsuits, or other creditors

Very few revocable living trusts provide all these benefits. Only a qualified estate planning attorney will know how to incorporate these protections into your plan. As you can see due to changes in the law, trusts are for much more than tax avoidance for the rich, they keep You In Control! Remember not all trusts are created equal.

If you are not sure what your trust provides for you call us for a review of your trust at 415-905-0215 or fill out the contact form at the bottom of this page to send us an email.

Asset Protection Trusts

Protection and Planning for “Life Changes”

Asset protection planning involves creating a plan in advance, making decisions today to protect yourself, your business, and your hard earned wealth. There are many changes in life that can cause you to lose your assets including, loss due to lawsuits, nursing home care, divorce or family indiscretions, wrongly giving assets away to your children, and potential creditors. If you do not plan now while you can, your wealth created through your lifetime of work, your savings, and investing could easily be lost overnight.

You Should Know That Asset Protection Planning…

  1. Is never too late
  2. Obtains the best results when pre-planned (Transfer early to avoid appearances of fraudulent conveyance.) Requires giving up access direct access to what ever you are trying to protect
    • Debtor/Creditor law provides that whatever you can get, your creditors can get
  3. Depends on more than exemptions, as they can change with the your current life situation
    • Married and single exemptions for Veteran’s Benefits and Medi-Cal qualifications are not the same.
  4. Starts “Medi-Cal Clock” running for Transfers
  5. Starts “Veterans Benefits Clock” running for Transfers
  6. Preserves “Your” Money for You and those You Love

Irrevocable Trusts

One popular strategy to protecting assets is to use an irrevocable trust. An irrevocable trust is a contract between the grantor (the person who creates the trust), the trustee (one who controls the trust) and the beneficiaries (those entitled to benefit from the trust). You, as grantor, determine how the trust will be operated by the trustee and who benefits, how and when.

A typical income only irrevocable trust permits you to receive the income on your assets, but you must give up your right to your principal. In some irrevocable trusts, you can retain the right to change who gets your assets during your life and after your death, and maintain 100% control of your assets until your mental disability or death (asset protection trusts).

Tax reduction trusts are much more restrictive than asset protection trusts. Typically, you cannot retain any right to control or access any of the assets in an irrevocable tax reduction/avoidance trust.

It is a common misconception that irrevocable trusts, once created, cannot be changed. While that is true of many irrevocable trusts created to avoid taxes (tax reduction trusts), it is not true of all irrevocable trusts. There are many irrevocable trusts available that are quite flexible and grantor-friendly. Not all Irrevocable Trusts/Asset Protection Trusts are created equally

If you would like support and to review all your options before creating an irrevocable trust, please call us at 415-905-0215. You can also register for my next free workshop. When a new workshop has been scheduled, you will be able to register through this website.