Home > Planned Giving > Five Benefits of a Living Trust

Five Benefits of a Living Trust

Fast Fact

You can name Sisters Hospital Foundation as beneficiary of all or a percentage of the assets left in the trust after your lifetime much like you can do with an ordinary will. Any amount left to us is completely free of estate taxes because it qualifies as a charitable bequest.

Have a question about living trusts? We've compiled some of the most frequently asked questions and answers to help you find the information you need.

Q. Is probate bad?
A. Not necessarily. Probate refers to the court process for determining the validity of your will, collection and disposition of assets, payment of proper claims and legacies, filing of tax returns and distribution of your estate as directed by your will. There is nothing inherently wrong with probate provided your state has streamlined the procedures and settlement costs are reasonable. Of course probate difficulties may result from a poorly drawn or outdated will, and here the remedy is up to you.

Q. Does your living trust and will control your entire estate?
A. Probably not. Jointly owned property generally goes to the surviving joint owner, regardless of what your will says. The same is true of community property in nine states. Life insurance, IRAs and other retirement plan benefits are often payable to named beneficiaries. If you overlook these arrangements, you may upset your overall plans, resulting in heavier taxes and the inequitable division of assets among your beneficiaries.

Q. Does a living trust save taxes?
A. Because you continue to benefit from the trust assets and they're still yours according to the IRS, you remain taxable on the trust income, and the trust assets are subject to estate tax. But both a living trust and a testamentary trust with proper provisions can eventually save estate taxes. In either case, for example, a properly drafted trust with provisions taking full advantage of the $3.5 million (in 2009) amount exempt from estate taxes can minimize taxes if you're married and your combined estates are worth more than $3.5 million.

Q. Can I benefit personally from a living trust?
A. Yes. When you name a professional trustee to administer your trust, you free yourself from investment responsibilities and details. Moreover, with advancing age you may find it difficult to look after routine matters. In case of your illness or absence, the trustee can even pay your bills. And in states where probate is costly and time-consuming, a living trust provides your chosen beneficiaries with an effective shortcut.

Have a Question Not Answered Here?

Please call Julie Snyder at 716-862-1992, or e-mail us at jsnyder@chsbuffalo.org, for more information.

The information in this Web site is not intended as legal advice. For legal advice, please consult an attorney. Figures cited in examples are for hypothetical purposes only and are subject to change. References to estate and income tax include federal taxes only. Individual state taxes and/or state law may impact your results.