Estate Planning Newsletter

• Tax Treatment of Long-Term Care Insurance Premiums and Benefits
  People are living longer, but for many a reality of aging is that at some point they are unable to care for themselves. The costs of retirement homes and in-home care are rising, generating concerns for many on how to pay for the cost... Read more.
• Special Powers of Appointment
  What is a Power of Appointment? A power of appointment is the power given by one person to another (referred to as the “holder” of the power of appointment) to designate who is to receive an asset.... Read more.
• Privacy Rule May Impact Estate Planning
  The Health Insurance Portability and Accountability Act of 1996 (HIPAA) became effective on April 14, 2003. HIPAA establishes national standards for the protection of certain health information. The purpose of HIPAA is to ensure that a... Read more.
• Whether Children Conceived After the Death of a Parent are Entitled to Benefits
  Several states refer to children who are born or adopted after the execution of a parent’s will and omitted from the provisions of the testamentary instrument as “omitted” or “pretermitted” children. In the... Read more.

• Clean Out Your Estate Planning Attic
• Lawyer Has No Duty to Non-Clients Unless Client’s Intent is Definite
• Families get these 3 things wrong about estate planning, advisor says
• Corporate Transparency Act Affects Your Estate Plan
• Strategic Financial Plans For Widows

The Living Trust

Unlike a will or some other types of trusts, which take effect upon the death of their creator, a “living trust” or “inter vivos trust” comes into effect during its creator’s lifetime. The creator of a living trust is referred to as a trustor or settlor.

Characteristics of a Revocable Living Trust

A revocable trust is one that:

• Is created by the trustor while the trustor is alive
• Gives the trustor the power to revoke the trust while still alive

Purpose

Living trusts have two main purposes that typically cannot be accomplished by wills:

• Avoiding probate
• Providing for management of a person’s estate if the person becomes incapacitated

Role of the Trustee

When a living trust is created, a trustee must be chosen as well. The trustee is often the trustor himself/herself, although the trust should also name a successor trustee who is someone the trustor believes is responsible and can manage a trust. If the trustor becomes incapacitated, typically the trustee is given authority to care for and make decisions about the property subject to the trust.

The trustor can generally designate himself/herself as trustee, although certain types of trusts require that someone else be the trustee.

Characteristics of an Irrevocable Trust

An irrevocable trust is one that:

• Is created by the trustor while the trustor is alive
• Does not give the trustor any power to amend or revoke

There are two basic forms of irrevocable trusts:

• Temporarily irrevocable – It would only be irrevocable for the amount of time specified by the trustor, such as 5 years or 10 years
• Permanently irrevocable – May not be changed or amended for the duration of the trust

Why Have an Irrevocable Trust?

An irrevocable trust allows for removal of property from the trustor’s taxable estate for estate and gift tax purposes and allows for use of the annual gift & estate tax exclusion as part of a gift-giving program. It also simultaneously prevents beneficiaries from exerting any control over the property.

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