Tuesday, January 03, 2017

trust ( must include an incapacity clause)

  • 除了固定資產外, 應為自己人身/壽保險 (life insurance)理賠部分設立一筆信託, 這樣你可以省下一筆遺產稅; 當萬一發生時, 也會有人即時處理你的事
  • It is called "trust" because u are trusting this entity (trust) to take care of ur assets for u and to carry out ur wishes when u can no longer do so for urself
  • revocable living trust with an incapacity clause, ur trust must include an incapacity clause
  • transfer ownership of ur assets into the trust
  • update the beneficiaries on all ur assets
  • when u acquire an asset, u will need to transfer ownership of it to the trust. it should be prto fur thinking whenever u make a big-ticket purchase or open a saving or investment account
  • comparison: will vs. revocable living trust --- see gmail note 
Revocable living trust
  • revocable living trust takes everything for u, both while u are alive and after ur death
  • a revocable living trust is a set of documents stating who controls ur assets while u are alive and what will happen to ur them when ur are gone
  • a will says where u want ur assets to go after ur death
  • with a revocable living trust, u take the steps while u are alive to sign the title to ur property over to the trust for ur own use and benefit while u are alive; u also specify in the trust where u want each piece of property to go when u are gone
  • the property is held in the name of the trust, for u, while u are alive, and for ur beneficiaries, after u are gone
  • when u dies, the trust passes ur property directly to the people u want to have it; the trust lives on even after u are gone, carrying ur wishes
  • anytime u want to, u can amend the trust, so u can always change ur mind about who gets what
  • there is no probate for trust, the courts are not involved in the transfer of ur estate
  • In many cases, especially in states with statutory probate fees, trusts are far superior to wills
  • in all states, the only way for property valued over 100,000 dollars (or as little as 60,000 in some states) to transfer from the name of the deceased to the beneficiary is to have a judge do it through the probate courts. In most states, this is expensive and time-consuming. 
  • the attorneys get the probate fees thus they prefer to recommend will, instead of a trust
  • wills are public documents, after u die, ur will is probated, anyone can go to the courthouse and look up the information within the will --- lack of privacy
  • with trust, only the people u want them to see can see the trust 
  • with a trust u save time and u avoid probate fees and legal fees
  • trust -- no courts, no probate fees, no attorneys
  • set up a trust, as soon as possible,there is a fair bit of paperwork involved in switching assets into a trust
  • the less money u have, the more the probate (fees and process) hurts, thus not rich people had better set up a trust
  • besides setting up a trust, u need to have a will as a backup, covering any asset u have no put into ur trust, e.g., furniture, personal items; if u have underage children, u should designate who is to serve as their guardian so ur wishes will be clear to the court (a trust doesn't address guardianship) 
  • single mother needs a trust, so the appointed guardian will have the funds they need right away to care for the children
  • trust is crucial for the speedy disbursement of a life insurance payout to support the children, if anything happens to the mother
How to set up a Revocable living trust
  • there are books in the bookstore that will show u how --- cost 20 dollars
  • computer programs for setting up trusts are available for about 50 dollars
  • if u decide to do it urself, u need to have a qualified attorney to look it over to make sure u did it correctly
  • having an attorney draw up a trust is safest
  • depending on the size of ur estate and how expensive the attorney is, u can get a simple revocable living trust drawn up for between 300 to 1,000 dollars
  • if u want ur attorney to help  u transfer ur assets into ur trust, i.e., to fund the trust, this will cost ur more money
  • once the trust is set up, making simple changes to it will cost about 100 dollars
Components of a trust
  • trustor or settlor -- the person who creates/sets up the trust, and who owns the property that will be put into the trust
  • trustee-- the person who controls the assets in the trust; the person or persons who have signing authority over every asset inside the trust. the trustee decides everything that happens to the money in the trust; ur u are single, u can be the sole trustee; or u and ur spouse/partner can be joint trustee; most often the trustor is also the trustee; appoint urself the trustee so u retain all control over the trust
  • u may have as many trustees as u want; however, having more than two is not usually recommended
  • Co-trustee/joint trustee -- another person who has the authority to manage and invest the assets of the trust, although all trustees must agree to financial or investment changes; parents often choose to make their children co-trustees, upon the deterioration or disability of the parents; couples usually set up their trusts so that they are both co-trustees, thus both must agree to any changes
  • Successor trustee -- the person who steps in  to make decisions about the assets in the trust if and only if the trustee or co-trustees can't or do not want to act in the decision-making process; the person who takes over the management/control of the trust when the trustee dies or is no longer capable of making decisions (known as incapactiy)
  • current beneficiary --- the person who is to benefit from the assets that are in the trust' typically, while u are alive, u remain the beneficiary; every majob asset u own should have a beneficiary
  1. make ur revocable living trust the beneficiay of ur life insurance policy
  2. documents that must contain designations of beneficiaries: life insurance policy, regular investment accounts, saving accout/bank account, 401 (k) retirement account, individual retirement account (IRA)
  3. minor children are never to be ur beneficiary --- because they are not allowed to take ownership of assets
  4. if u are married, don't make ur trust the beneficiary of ur 401 (k) or IRA (if u are single, it is fine to make ur trust the beneficiary)
  5. if u are married, u need to make ur spouse the primary beneficiary fo ur 401 (k) and IRA, u can then name ur trust as the contingent (secondary) beneficiary of these accounts
  • remainder beneficiary --- person or persons who will inherit everything in the trust after the current beneficiary (who is usually the trustor as well) dies
Funding ur trust
  • once the trust is set up, u must transter ur assets into ur trust
  • once u create a trust, u need to takes steps to change the title (ownership) of all the property to be held in the trust from ur invidual name to the name of the trust -- this procss is called fundign the trust
  •  must change or ahve a lawyer change all the titles of ur bank accouts, stock accounts, real estate, and all major assets into the title of the trust ; transfer an asset's title into the trust
  • computer programs and books about trusts provide sample letters to show how to fund ur trust
  • if u have a lawyer to draw up ur trust, he will have form letters available to show u
  • or the lawyer can handle changing titles of ur stock portfolio, insurance policies, bank accounts, etc., for u, the fee is higher than that for simply drawing up the trust, it might be well worth it

what goes in the trust
  • real estate
  • nonretirement investments
  • savings (bank and credit union accounts)
  • outstanding loans u have made that have yet to be repaid
what does not go in the trust
  • car -- if the event cause an accident, the fact the title to the car is a trust might lead the other party to think u are wealthy and may increase their desire to sue u for damages beyond what ur insurance policy will cover; for insurance, if the trust owns the car, that can make it hard to get insurance (people are insurable, not trusts)
  • 401 (k) and IRA accounts if u are married -- it's better to make ur spouse the beneficiary (if u are single, u can make the trust the beneficiary)
  • except ur retirement accounts, everything can be changed into the trust
  • retirement accounts by law must be held in an individual's name
  • many people after they have had a trust created also change the beneficiary of all their retirement accounts to the trust, if u are married, this is NOT a good idea; spouses have certain privileges that nonmarried couples don't have; if u have a retirement account and u die, ur spouse has the right to take over the retirement acocunt as if it were her own, ur spouse can keep the money in there, take it out, or do whatever she pleases; However, if u leave retirement account to anyone other than ur spouse, e.g., ur trust, ur children, ur mother, these beneficiary have to wipe the retirement account clean within 5 years, even if they don't need the money, they have to take it out adn pay taxes on it within that 5 years; thus, if u have a trust set up and ur have retirement account, if u are married, ur primary beneficiary if ur spouse, not the trust, the trust can be the second beneficiary, the one that gets everything if the primary beneficiary die
provide ur children with a trust
  • the earlier u do ur revocable living trust, the better, even if u don't have a lot of money
  • if u die with a trust, whild the court still has the final say over guardianship, u at least can make the important decision of how, when, and for what purpose ur children will receive the money u are leaving them
  • besides setting up a trust, u need to have a will as a backup, covering any asset u have no put into ur trust, e.g., furniture, personal items; if u have underage children, u should designate who is to serve as their guardian so ur wishes will be clear to the court (a trust doesn't address guardianship) 
if you die with a will, not a trust
  • ur will does not have the power to assure ur best friend will be the legal guardian of ur children
  • will can express ur wishes, the court always has the last decision when it comes to who is appointed legal guardian of ur children
  • the judge can take charge of the funds u want ur children to have until they are 18 years old
  • if ur children are underage, each year the guardian has to go back to court to account for the money spent on behalf of the children during the past year, there are guardian fees, fees to a lawyer to do the guardianship reporting
  • besides setting up a trust, u need to have a will as a backup, covering any asset u have no put into ur trust, e.g., furniture, personal items; if u have underage children, u should designate who is to serve as their guardian so ur wishes will be clear to the court (a trust doesn't address guardianship) 
  • comparison: will vs. revocable living trust --- see gmail note 
Find a good lawyer
  • word of mouth to find a goo attorney specializing in estate planning (at least 10 years)
  • interview at least three of them (no fees to go through this interview process)
  • make sure u like the lawyer and feel comfortable in his presence
  • drafted wills and trusts in the past 5 years for at least 200 people
  • charge a flat fee to draw up a will and/or a trust--- include drawing up the document and explain it to u
  • charge a flat fee for funding the trust --doing the paperwork to transfer the titles of all ur property and assets into the name of the trust 
  • no charge for simple questions over the phone 
  • Martindale-Hubbell law directory http://www.martindale.com/
  • see gmail note for more details --- find a good lawyer
why ur trust must include an incapacity clause
  • should u become incapacitated, an incapacity clause of ur trust will grant ur successor trustee, the person u designate, legal authority to handle ur affairs
  • a good trust will also designate a backup trustee in case ur successor trustee is incapable of fulfilling his responsibility as trustee
a trust with an incapacity clause vs. durable power of attorney for finances
  • see gmail note for comparison: a trust with an incapacity clause vs. durable power of attorney for finances
Holding title for ur assets
  • see gmail note for more details

No comments: