Estate Planning Checklist

ESTATE PLANNING IS SO VERY IMPORTANT!

ARE YOU PREPARED?

TAKE 60 SECONDS TO ANSWER THESE QUICK QUESTIONS:

[YES or NO] I have a current Living Will which expresses in writing my wishes concerning life-sustaining treatment or death-delaying procedures.

[YES or NO]  I have a Health Care Power of Attorney or Health Care Surrogate to permit my spouse, children, or other designated person to make health care decisions for me in the event I am unable to make those decisions myself.

[YES or NO]  I am confident that my current estate plan protects me from unnecessary placement in a nursing home and provides clear instructions for care in my own home.

[YES or NO]  I have a Living Trust in place as part of my estate plan so my family can avoid the delays and expenses of probate.

[YES or NO]  I am comfortable that my estate plan will allow my family to avoid costly guardianship court proceedings.

[YES or NO]  I am confident that my current plan protects my surviving spouse and children from creditors, lawsuits, and failed marriages.

[YES or NO]  I am confident that my current estate plan has taken into consideration any potential federal estate tax consequences at my death.

[YES or NO]  I have taken steps to protect my children’s inheritance in the event my surviving spouse chooses to remarry after my death.

[YES or NO]  I am confident that my current estate plan contains the documents necessary for my family to do Medicaid planning in the future and to help prevent the impoverishment of me or my spouse from the devastating effects of a long-term catastrophic illness and nursing home costs.

If you answered “No” to one or more of these questions, please give us a call or send us an e-mail to discuss how we can assist with your estate planning needs.

Caravette & Associates, P.C.

312 540 1600

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(Note: The information in this article is intended to be general in nature. Plan to discuss your particular circumstances with an attorney for how this might apply to you.)

Revocable Living Trust

by E. Christopher Caravette

What is a Revocable Living Trust, and How Can it Benefit Me?

A revocable living trust is a type of trust that is typically used for estate planning purposes.  It is a carefully drafted document, called a trust agreement or declaration of trust, that is tailored to your particular and unique circumstances.  It does not replace a will, but works with your will to provide additional advantages and benefits.

Like all trusts, there are three separate parties:

There is the person who creates the trust (typically called the grantor), who transfers legal title to certain of his or her assets to…

A trustee, who, in turn, holds and manages those assets for the benefit of…

A beneficiary (or beneficiaries), who is entitled to the trust assets.

A revocable living trust is one in which you, as the grantor, name yourself as a beneficiary during your lifetime and then designate others as future beneficiaries (usually upon your death). Initially, and during your life, you will act as the sole trustee (in which case the trust is called a “self declaration” or “declaration of trust”).  You also manage the trust during your lifetime, just as you manage your every day affairs.  Upon your death, or upon your disability, you may name a friend or relative as successor trustee.

What are the advantages and benefits of a revocable living trust?

Avoidance of Probate.  A revocable living trust may help you reduce certain delays and costs associated with formal probate proceedings, depending upon the extent to which your revocable living trust is funded prior to your death.  A simple will not allow your estate avoid the probate process.  This streamlines the settlement of your estate, and can save your estate quite a bit of money, as probate is a process that takes at least six months and sometimes years to settle, and can cost thousands of dollars (typically six to ten percent of the value of your estate).  While a revocable living trust will cost more than a simple will, the cost savings to your estate can be substantial.

Additionally, a revocable living trust is less vulnerable than a will to legal challenges in court, and can include a clause disinheriting any party who challenges the terms of the trust.

Provides for Your Disability.  Unlike a will, a revocable living trust allows you to provide for the management of your property in the event you become seriously ill, incapacitated, or you were no longer able to manage the trust property yourself.  Upon that disability, your successor trustee would simply take over for you.

Flexibility.  A revocable living trust is “revocable” because you can amend the trust or terminate it at any point during your life.  It is called “living” because it becomes effective immediately – during your lifetime. Upon your death, your trust may continue as an irrevocable trust that cannot be changed.

Typically, the trust agreement will require the trustee to distribute income and principal to you, or as you direct. During any period in which you are not disabled, you may change any or all provisions regarding succeeding beneficiaries (who they are and the nature of their interests) as well as provisions regarding the trustees (who they are, when they will serve, and the extent of their powers).

For tax purposes, income generated by the trust is taxed to you during your life. Distributions to you are not considered taxable gifts. Upon your death, the trust assets are subject to estate tax as part of your estate.

Continuity. When you create a revocable living trust, you establish an arrangement that may continue throughout your life and possibly provide for future generations. We will work with you to draft your trust agreement.  Typically, it will provide that upon your death, the trust assets will continue in trust for a stated period of time for the benefit of your family or other persons, or charity, as you designate. In addition, we will prepare a simple “pour over” will, which can dispose of tangible personal property in your estate upon your death by “pouring” those assets into the trust.

Tax Considerations. In some cases, a revocable living trust will maximize your opportunities to save on estate taxes.  These taxes are imposed after your death and are based on the size of your estate (including assets in your trust) after the application of certain exemptions and deductions. However, a revocable living trust is typically not a tax-saving device.  You will still be taxed on the trust’s income each year, and the property in the trust will be included in your gross estate for federal estate-tax purposes.

Confidentiality.  A will that is probated is a matter of public record, available to anyone to read or publish; a revocable living trust is not.  Consequently, information relating to the existence and size of your trust and its beneficiaries remains private, before and after your death.

Is a revocable living trust right for you?

A revocable living trust may be of tremendous benefit to you, but each individual has to weigh the costs and benefits.

(Note: The information in this article is intended to be general in nature. Plan to discuss your particular circumstances with an attorney for how this might apply to you.)