Estate Planning Often Includes A Living Trust

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Estate Planning Often Includes A Living TrustConfronting what might happen if someone dies is difficult for many families. You may think it is too early to worry about or you may think that your estate is too small to bother having a plan or a living trust. The fact is, the rich are wealthy because they planned ahead. The earlier you research and understand estate planning matters, the better you will fare building your estate.

Last month at the Marotta family vacation my father reviewed his finances and what we should do after he is gone. Repetition has removed all the awkwardness from this process. My father has taken an hour to discuss our family’s finances every vacation as far back as I can remember. My brothers and I know and understand his finances, and each year we ask questions and gain wisdom of how we might order our own finances.

Many financial products are sold through greed or fear, but estate planning isn’t one of them. Having an estate plan and a living trust is an import part of wealth management.

What is a “living trust”? A living trust is a legal document created to hold ownership of an individual’s assets during their lifetime and distribute the assets after their death. The individual who creates the trust (the grantor) names a person who will serve as trustee and follow the terms of the trust after the grantor dies. It is called a “living” trust because it is created and takes effect during the grantor’s lifetime. A will, by contrast, only takes effect after death.

The benefits of a living trust are several:

Having a living trust allows you to distribute your estate with minimum delay. With a living trust (and proper trust funding) there are no probate, no additional court costs and no attorney fees. Without a living trust, it could take significantly longer to settle and close the estate, which translates into additional costs and inconveniences to the beneficiaries.

Having a living trust allows you to specify that each beneficiary’s individual needs are met. You don’t have to rely on a written document and the court system to account for every contingency, you can specify a trustee who will have the fiduciary responsibility to make decisions on your behalf.

Having a living trust, with proper estate tax savings provisions contained therein, allows you to reduce the taxes that can spoil otherwise careful planning. If you are married and both of you have a living trust then your tax savings can be doubled! Death hasn’t always been a taxable event, but in modern times estate taxes can consume a large percentage of your assets. If the assets in your estate are significant, the fees paid for a living trust are insignificant compared to the value added to your beneficiaries.

Having a living trust allows you to ensure that a family business stays in the family. Whenever a significant portion of the estate is not liquid, estate planning must include the ability to generate liquid assets for estate taxes. (Uncle Sam doesn’t barter.)

Having a living trust allows you to ensure that your assets are distributed in the manner of your choice. With a living trust you can change any part of your trust at any time, and your property remains under the control of your trust even if you are disabled. Your designated trustee has a fiduciary responsibility and therefore greater control to do what is best for your beneficiaries.

We are offering an Estate Planning and Living Trusts seminar on Wednesday, October 6th, 2004 at our offices at the Boar’s Head. Please call Bob Arms at (434) 973-0988 for directions and to reserve a seat. Our guest speaker will be G. Raye Jones, J.D., LL.M. with Martin & Raynor, P.C. Lunch will be provided.

Having a living trust, although complex, is too important to ignore.

Photo by Rod Long on Unsplash

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President, CFP®, AIF®, AAMS®

David John Marotta is the Founder and President of Marotta Wealth Management. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. In addition to his financial writing, David is a co-author of The Haunting of Bob Cratchit.