Why Create A Living Trust?
Probate litigation can be a long and drawn-out process, in addition to being expensive. A trust can sometimes be a useful means to transfer assets without the necessity of probate. A living trust is a trust that you set up during your lifetime, as opposed to one that is created upon your death by means of your will.
When you create a trust, you name a person, often yourself, as a trustee. As trustee, you will hold the legal title to the assets in your estate for the benefit of your heirs, who become the beneficiaries of the trust upon your death. When you are the trustee of your own living trust, you have complete control over all of your assets that are being held in trust.
A revocable trust is a kind of living trust that you can revoke or dissolve whenever you wish during your lifetime. It allows you to avoid probate while giving you control of your assets while you’re still living. It becomes an irrevocable trust when you die or become incapacitated, at which point the management will be transferred to a successor trustee whom you’ve appointed.
A revocable trust will help to avoid probate; however, in most cases, it remains subject to federal estate taxes if your estate exceeds the inheritance tax threshold. During your lifetime, taxation is no different from any other asset you own. When you contact a Phoenix revocable living trust lawyer, he or she can help you manage all of the legalities of a revocable trust.
Advantages Of A Revocable Living Trust
Because probate can be expensive and time-consuming, for some, a living trust can provide a means to a speedy transfer of assets. If your estate is less than $50,000, however, Arizona’s Uniform Probate Code provides for a streamlined probate process, making it not terribly useful to put assets in trust, unless your estate exceeds that amount. For larger estates, when continuity is important, a trust is often a good idea to avoid tying up assets in a lengthy probate process. To learn more about the benefits of a revocable living trust, reach out to a seasoned Phoenix estate planning lawyer.
A Pour-Over Will To Back Up A Living Trust
When you set up a trust for your heirs, you will still need to have a will, which you can set up to handle the transfer of any assets you’ve accumulated since the creation of the trust. If you’ve gained additional assets and have not added them to your trust, they won’t automatically transfer to your heirs. With the help of your Phoenix revocable living trust attorney, you can set up your will to “pour over” any new assets into your trust, or you can use your will to leave property to some other person who is not a named beneficiary of the trust. Otherwise, if you have no will, any property not part of your living trust will be distributed according to Arizona’s laws governing intestacy.
Tax Ramifications Of A Revocable Living Trust
In most cases, establishing a living trust to avoid probate does not affect federal estate taxes, but it depends on the kind of trust you’ve set up. There are specific types of sophisticated trusts that can be used in high-value estates to lower the federal tax obligation. Unless your estate is valued in excess of $5.34 million, however, federal estate taxes are irrelevant.
Consult A Knowledgeable Phoenix Revocable Living Trust Lawyer
At the Arizona estate planning law firm of Gorman Law Group, PLC, we will advise you on whether a revocable living trust will be advantageous in your circumstances. Depending on your goals, we can draw up trust documents that will accomplish your purpose and meet your specific needs. If a trust is not going to be to your advantage, we will let you know, rather than push you into it to generate legal fees, as we’ve seen some law firms do. Some goals that can be legitimately achieved through a living trust include:
- Protecting assets;
- Protecting heirs from the unscrupulous;
- Providing for someone with a disability;
- Supporting a worthy cause.
Trusts are often useful in helping high-asset clients avoid probate while reducing federal estate taxes when transferring assets to your heirs. An experienced Phoenix revocable living trust attorney at our firm will draft all the required documents to ensure that your goals for your estate and your family are met. Contact Gorman Law Group, PLC, in Phoenix, Scottsdale, Sun City or Sun City West for honest answers to all of your questions about whether a revocable trust is right for you and your heirs.