Trusts are often used in estate planning as they provide a more efficient and faster way to transfer assets to heirs without the cost and publicity of the estate. A living trust (also known as an inter vivos trust) is created while the grantor is alive and allows beneficiaries to receive trust ownership. Trusts can be organized to achieve various objectives, such as transferring property, minimizing estate taxes, preserving assets of minors, or benefiting a charity. The surest way to avoid probate is to have a trust.
A living revocable trust does not need court approval and keeps everything private. The second document of the plan is called a “dumping will”. A will is necessary if you have a trust as it acts on any property that is not transferred to the trust. The will provides for the collection of such property, the payment of inheritance costs, and the transfer of what remains in the hands of the trust.
It also appoints guardians for minor children and may address other issues that do not relate only to “assets”. Anyone who is single and has assets titled in their exclusive name should consider a revocable living trust for two main reasons: to keep you and your assets out of a court-supervised guardianship and allow your beneficiaries to avoid the costs and hassles of probate. A trust allows you control over your estate that wills cannot provide, allowing you to decide how and when your assets will be distributed. Assets, whether real estate, bank accounts, or other tangible or intangible assets (but not IRAs or other retirement accounts), are transferred to the trust's name while it is alive.
Upon death, certain assets remain eligible for an increase in base, even if they are in a revocable trust at the time of their death. Assets held in a revocable trust, on the other hand, are considered part of the original owner's estate. We also work with clients and their lawyers in connection with Schwab's appointment as current or successor trustee. This is achieved by creating AB Trusts or ABC Trusts and then dividing your assets roughly equally between the two trusts.
But a will can control the alienation of assets you haven't included in your trust, and you can create a will to transfer to your trust any assets you hold at the time of your death, if you haven't already done so. When John's doctor certified to Mary that John could no longer make responsible decisions about himself, Mary became the sole trustee of the trust without any court action required.
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