Funding a Trust & Trusts to avoid probate

Trusts to avoid probate Compiled by Kenneth Vercammen Irrevocable Trust: A Trust, which cannot be changed or canceled once, it is set up without the consent of the beneficiary. Contributions cannot be taken out of the trust by the grantor. Irrevocable trusts offer tax advantages that revocable trusts don't, for example by enabling a person to give money and assets away even before he/she dies. Opposite of revocable trust. Probate is defined as the procedure by which an Executor proceeds to admit a Will to the jurisdiction of the Surrogate Court, which is proved to be valid or invalid. The term generally includes all matters relating to the administration of estates. There are instances where Surrogate Court monitoring of the estate is desirable. Much has been written about the disadvantages of probate. Following are just a few of the problems associated with probate and why certain people set up Trusts in addition to Wills. Lack Of Privacy with Wills Documents filed with the Surrogate Court are public information. They are available for inspection to anyone who asks. In large estates, which may require an accounting, your probate file will contain a complete list of all assets devised by your Will including business assets. This lack of privacy may lead to problems among family members who now know the plan of distribution and may then contest any provisions with which they disagree. Disinherited relatives and creditors are notified and given time by the Court to contest the Will distribution. Time Consuming The probate of an estate may take several months to several years to complete. During that time family members may have to apply to the Surrogate Court for an allowance. Fragmentation - Real Estate If you own real property in more than one state, probate rules must be followed in each state in which real property is located. The cost and time may be increased. Revocable Living Trust & Irrevocable Trusts A Revocable Living Trust is a legal device that allows you to maintain complete control over your assets and avoids Probate. However, a Revocable Trust does not reduce Estate Tax and does not protect your assets from nursing home fees. Because there is no probate of a Revocable Living Trust, your private financial matters remain private, there are no probate costs, no long delays and loss of control, and no fragmentation of the estate. However, since you still control the trust, it cannot shield assets from Nursing Home, Medicaid or Estate Taxes. To do that, you will need to hire an attorney to prepare an Irrevocable Trust. Fees are minimum $3,000- $5,000 for trusts. A Revocable Living Trust can be structured to automatically create separate Trusts upon the death of your spouse. Here's how it works. If the wife dies first, the husband has total control of his Trust. Also, for the remainder of his life, he receives all income from her Trust and has the use of the assets whenever needed for living expenses. When he dies, each Trust will claim its tax exemption, and some will go tax-free to their children, or any other beneficiary they designate, without having to go through probate. https://www.njlaws.com/trusts-and-wil... https://www.njlaws.com/free_special_r... You Maintain Complete Control Over Your Property In a Revocable Living Trust The principle behind a Revocable Living Trust is simple. When you establish a Living Trust, you transfer all your property into the Trust, and then name yourself as trustee, or you can name you and your spouse as co-trustees of the Trust. The trustees maintain complete control over the property, the same control you had before your property was placed in trust You can buy, sell, borrow, pledge, or collateralize the trust property. You can even discontinue the Trust if you choose. That is why it is called a "Revocable" Living Trust. We will explain the "Irrevocable Trust" at the end of the article. Transferring Property Into the Trust The transfer of title to property into the Trust is a relatively simple matter when you hire an attorney. Anywhere you have assets, you will get help in transferring your property into the Trust. Your attorney, securities investor, etc., will provide you with assistance needed to transfer your property into your Revocable Living Trust. Your attorney will provide the information and assistance you need to properly fund your Trust. Complete Privacy Probate records are public; your Trust documents are private. A Trust will safeguard the privacy of your family and your private financial matters.