Stewart Ogilby, Independent Advisor
Stewart Ogilby
All our trusts in Florida are prepared by an attorney who specializes in estate planning.
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Florida Living Trust Probate Estate Planning The Estate Plan TM Henry W. Abts III

An Overview of The Living Trust

The purpose of this page is to provide a general overview, or synopsis, of the advantages of a Living Trust including those bearing on Federal Estate Taxes.

The author has years of experience as an Independent Advisor with Henry Abts' organization and is not a lawyer. Having affiliated with several "hub attorneys" (and having helped to set up two of these) I now affiliate (in Florida) only with attorneys who limit their practice to estate planning matters.

A Revocable Living Trust consists of a number of inter-related documents (the so-called Statement of Trust and its Ancillary Documents) created during life in which the grantor (the person who executes the trust) retains the right to revoke the trust, change its terms, and regain possession of the property in the trust. The grantor is typically the trustee of the trust (the person who manages the property in the trust) during his or her lifetime.

The Advantages of a Living Trust

A Living Trust minimizes administration and probate costs arising at the grantor's death, since property titled in the name of the trust avoids probate. Placing property in a Living Trust also avoids the necessity of a court-supervised conservatorship in the event of the grantor's mental incompetence. Upon death, the trust sets forth the terms for the grantor's spouse, children and grandchildren. The trust can protect the grantor's heirs from potential creditors, including divorced spouses.

Disadvantages

Bear in mind the facts that the grantor maintains total control over his or her assets and that all trust documents are amendable and revocable. It is up to the individual considering a living trust as to whether or not these facts offset the following three "disadvantages" (if they can be called such) of having a Living Trust prepared in place of simple Will(s):

  1. There is work required on the grantor's part to make certain that specific and appropriately personalized documents are drafted for his family. This can be accomplished with help provided by an estate-planning attorney in conjunction a knowledgable advisor.

  2. There is work required on the grantor's part to fund his living trust. The help of a competent advisor in properly funding the trust is strongly recommended.

  3. A comprehensive legally constructed living trust can be initially overwhelming. Assistance of a competent advisor is recommended to help trust clients properly understand their documents.

Purposes of a Living Trust

  • To avoid the delays, costs and publicity of probate.
  • Make certain that your assets go to whom you want, when you want and how you want.
  • To protect your heirs from their possible inability to plan, their potential disability, their creditors and their potential predators.
  • For married persons, to take advantage of both spouse's Estate Tax Exemptions.
  • To defer all estate taxes until the death of the surviving spouse.
  • To prevent intentional or unintentional disinheritance of children and grandchildren by a surviving spouse.
  • To appoint who will manage the estate and be responsible for the distribution of its assets following the death or incapacity of the present trustee.
  • To appoint a patient-advocate and to state one's intent regarding artificial life support.
  • To designate (on a separate list) who is to receive items of personal property (jewelry, etc.).

How the Living Trust works regarding Federal Estate Taxes

On New Year's day in 2013 congress passed the American Taxpayer Relief Act of 2013. Now federal estate taxes will affect only the richest families in America. Effective immediately, every person may leave or give away up to $5.25 million without owing any estate tax. As a practical matter, that means that under the new rules about 99.5% of all estates will NOT owe any federal gift/estate tax. In addition, the exemption is adjusted for inflation in coming years!

It is important to realize that the size of the estate is increased by the death proceeds of all life insurance owned by the decedent on his life. It is worth mentioning at this point, without going into much detail, that a properly designed ILIT (Irrevocable Life Insurance Trust) may keep life insurance proceeds out of the taxable estate to provide immediate cash for paying estate taxes incurred by large estates that exceed the amount of the tax exemption. This device is frequently used to protect valuable family property (farms, businesses, etc.) from liquidation due to sizable estate taxes.

Tax implications are complicated. For an overview, you might like to read this online article which also contains links to estate planning topics.

Do you have a trust?

Persons often execute a Living Trust without fully understanding it's provisions. Wherever you are located, if you currently have a Living Trust it is advisable to have your estate planning documents reviewed by an attorney whose primary focus is upon estate planning. There are too many provisions to consider on this single page. However, if you have an existing trust, here are a few things a good attorney may advise you to look for:

  • Do your Marital and Family Trusts give the surviving spouse a testamentary limited power to appoint trust property for distribution among children and grandchildren? If not, flexibility to reduce the beneficiaries' income and estate taxes is lost.
  • Does your Family Trust permit the "sprinkling" of income to children and grandchildren? If not, the opportunity to shift income to lower tax brackets is lost.
  • Does your trust permit the trustee to postpone distributions to beneficiaries (beyond the distribution dates) for good cause? If not, it may be impossible to protect trust assets from the beneficiaries' creditors as well as from divorced spouses.
  • Is the Marital Trust a QTIP (Qualified Terminal Income Preservation) Trust? If not, a surviving spouse can disinherit children intentionally or unintentionally.

"What do I do next?"

Whether or not your estate is big enough to involve estate taxes, if you have only Wills or no Wills in place, or your present documents (including any trust) are inadequate or outdated, feel free to contact me. For logistical reasons, I work throughout Florida. However, I will attempt to locate for you an Estate PlanTM attorney and/or advisor in your home state.

Whether you presently have a trust or not, take a few minutes to watch the below video. It was made by Jeffrey Marsocci, a life and estate planning attorney who works closely with The Estate Plan. Jeff's practice is in Raleigh, North Carolina and if you live in North Carolina, feel free to contact him.

If you reside in Florida at least several months of the year and want to have an Estate Plan Revocable Living Trust prepared by an experienced Florida estate-planning attorney, together with my help, please phone or email me. Include your name, postal mailing-address and telephone number(s). Of course, you are under no obligation by virtue of our discussion.

Stewart Ogilby
Independent Advisor — The Estate PlanTM
All our Florida trusts are prepared by an attorney who specializes in estate planing.
Referrals nation-wide
Email: WiseBird@pobox.com

Toll-free     1-800-998-2523

Florida Living Trust Probate Estate Planning The Estate Plan TM Henry W. Abts III

This material is not intended to be legal advice and should not be considered to be legal advice. It does not constitute the recommendation of any legal document for any specific client. It is educational material summarized from books that are widely available in public libraries and in books and other publications that are sold in every state through retail outlets.