G.Y.M. ASSOCIATES, INC.
Living Trust Frequency Asked Questions
1. WHAT IS A REVOCABLE LIVING TRUST? A Revocable Living Trust is a legal document -"a paper person" which owns property. The property is owned and managed by the Trustee (you) who manage and control the property owned by the trust. The trust can be changed or revoked at anytime by the Trustee (you).
2. WHY SHOULD I SET UP A REVOCABLE LIVING TRUST? There are five basic reasons: 1) to avoid probate fees, 2) to avoid probate delays, 3) to leave more of your estate (property) to your heirs, 4) to avoid probate publicity, 5) to reduce Federal Estate Taxes and Capital Gain Taxes.
3. DOESN'T MY WILL DO ALL THOSE FIVE THINGS? No. Your will is the estate settlement document which puts your estate in probate court.
4. IF I HAVE A TRUST DO I NEED A WILL? Yes. But it is call a pour-over will. Your pour-over will acts as a safety net to scoop up all the properties you left out of your trust and pours them into your trust.
5. CAN I PLACE MY CHILDREN'S NAMES ON MY DEEDS AS JOINT TENANTS AND AVOID PROBATE? Yes you can, but this can be a disaster. Some of the problems are: A) You lose control, you cannot sell or make a loan on property unless children agree. B) Your property could be seized and sold as settlement to pay your children's judgment. C) There is no stepped-up basis for income tax purposes. There could be gift tax problems.
6. I THOUGHT JOINT TENANCY AVOIDS PROBATE. WHY SHOULD I HAVE A TRUST IF MY PROPERTIES ARE JOINT TENANCY? Joint Tenancy does avoid probate. However there are income tax, gift tax, control and liability aspects of Joint Tenancy which many people are unaware of. Joint Tenancy is cheap and easy. It also has many advantages.
7. DO I LOSE ANY CONTROL OVER THE PROPERTY IN MY TRUST? No. You can do anything you want with the Trust Properties as Trustee. When you set up your Revocable Living Trust, you are transferring title of your properties to the trust. You, as Trustee, must then manage the property in the trust for your benefit. As Trustee, you can spend, save, invest or even give the property away at your discretion.
8. DOES A BANK OR TRUST COMPANY HAVE TO BE INVOLVED? No. You can act as your own Trustee.
9. IS A LIVING TRUST JUST FOR RICH PEOPLE? No. Anyone who owns any kind of property can set up a Living Trust.
10. IS THERE A LOT OF PAPER WORK INVOLVED IN A TRUST? Not really. Setting up your trust does require attention to retitling your property. Once your trust is set up, your biggest job is to make sure you take title to your newly acquired accounts and property in the name of the trust.
11. WHY DIDN'T MY ATTORNEY TELL ME ABOUT THE LIVING TRUST? Most attorneys are not knowledgeable about the living
12. DOES A WILL AVOID PROBATE? No. A will does not avoid probate. Wills are an open invitation to probate court and the public. And one of the most expensive ways to settle an estate.