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A Living trust is an important estate
planning tool for individuals, married couples and domestic partners. A
living trust is a legal document that is created to hold and manage your assets
during life and then distribute your assets to your named beneficiaries upon
your death.
A living trust also allows you
to avoid probate upon your death. In
A great deal of flexibility is
afforded in planning your desired distribution provisions with a living trust,
especially when dealing with beneficiaries who are minor children or
individuals with special needs.
Because a minor child does not
have the legal capacity to manage property, an outright gift to a minor child
is rarely advisable. Instead, with a living trust, you are able to manage
the property in trust for the benefit of the minor child until an age specified by
you. This date could be when the child reaches the age of 21 or upon the
happening of a certain event, such as graduation from college, or a combination
of these.
Living trusts also enable
individuals to participate in estate tax planning. Currently individuals
have a $2 million exemption from estate taxes. In other words, every
person is entitled to transfer up to $2 million in assets upon their death
without paying any estate tax. Amounts over $2 million are subject to
steep taxation rates. Married couples whose joint estates are over $2
million would be well-advised to create credit trusts to ensure that their
$2million exemption amount is not wasted and subject to taxation in the
surviving spouse's estate.
With a living trust there is
also the added protection of naming a successor trustee to manage your property
for your benefit in the event you become incapacitated.
A comprehensive estate plan package should include a living trust, pour-over will, financial durable power of attorney, and an advance health care directive.
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