This short but to-the-point article (from JDSUPRA, 1/23/24 by Alder Pollock & Sheehan P.C.) demonstrates the need to work with an experienced estate planning attorney when creating your estate plan. Trusts offer many benefits to clients, but only if they are set up and maintained correctly. You need a lawyer who knows what is required and when to ensure that happens. Read on to see if your current or future trust is set up properly or not.
“There are numerous benefits of using trusts in your estate plan. For example, trusts can maximize the tax code provisions shielding assets from gift and estate taxes, protect assets from the clutches of creditors or ex-spouses, and maintain control over potential spendthrift heirs, just to mention a few common benefits.
Accordingly, revocable living trusts may be viewed as an integral part of your overall estate plan. But trusts aren’t a “draft-it-and-forget-it” proposition.
Notably, a trust won’t do you any good if it isn’t properly funded, including additions that are warranted. For example, you may neglect to move certain assets — including cash, securities, real estate, artwork and other types of property — into the trust before your death. This may defeat your estate planning intentions.
Assuming you have a need for a trust, and you’ve already made the necessary arrangements, make sure to retitle assets in the name of the trust. This is often easier said than done and will require you to meet specific requirements depending on the asset type. It’s not enough to simply transfer assets to the trust. For example, a transfer of ownership of real estate generally requires you to jump through some extra hoops.
If you fail to retitle assets, they’ll fall outside the scope of the trust. This means they’ll have to go through probate like other assets in your name. The probate process can be costly and time consuming, depending on which state you live in, and opens up the assets to public inspection. Even worse, you don’t derive the benefits of using a trust for those assets unless those assets are eventually transferred into the trust according to the provisions of your will.
Be aware that despite a common misconception, a revocable living trust doesn’t save tax. In effect, it’s tax-neutral.”
As promised, this was a short post but full of good information. If you are considering setting up or updating your estate plan please call me. I have many years of experience in establishing trusts for my clients. And its good to know that when you are a client, you’ll enjoy a complimentary review of your plan every three years, to ensure it continues to meet your needs. Reach me at 513-399-7526 or schedule a consultation through my website, www.davidlefton.com.
Source: JDSUPRA 1/24/24 Alder Pollock & Sheehan P.C.