A living trust is a way to manage your investments for your benefit
during your lifetime and for your family's benefit afterward.
How the Plan Works
A revocable trust agreement is simple. You transfer assets usually
cash and securities to the trust, naming the trustee of your choice.
(That trustee may even be you.) You're the beneficiary of the trust
during your lifetime. The trustee will manage the assets and pay to you
the net income or if you want additional funds, a portion or all of the
principal.
After your lifetime, the trust becomes irrevocable. Your specified
loved ones can receive lifetime income or principal from the trust, or
you can have their share given to them in a lump sum. When the trust
terminates, Sisters Hospital Foundation can use the percentage of the
remaining assets you designate to us for our important needs.
If you'd like to remember Sisters Hospital Foundation after your lifetime, share our sample language to add to your living trust with your estate planning attorney.
Learn more about leaving it all behind through your will and living trust.
Reasons to Choose a Living Trust
Here are some of the top reasons people choose to use a living trust in their estate plans.
Security. A living trust provides uninterrupted
management of your assets if you become ill or incapacitated and have
named a successor (back-up) trustee eliminating the need for the courts
to appoint a conservator or guardian.
Privacy. A living trust avoids the costs and
delays of probate the state-sanctioned system that oversees the
administration of your will. Avoiding probate means your heirs receive
your estate faster. Plus, a living trust is not subject to public
scrutiny, so your beneficiaries and the amounts they receive remain
confidential.
Flexibility. You have the freedom to amend, add to, or even completely revoke the trust agreement as you wish.
Professional management. You may choose to appoint
a professional trustee such as a bank trust department or trust
institution. This frees you from the worries of the day-to-day
management of assets. Yet, if you choose to remain as co-trustee, you
still may direct investment goals, including instructing your trustee
to change investment strategies.
Control. Living trusts allow you to control who
will be the trust's beneficiaries and the trustee. Most likely you will
name yourself as the trustee during your lifetime and maintain the
right to appoint and select successor trustees and beneficiaries. You
also control the income and principal and how much of it you wish to
use during your lifetime.
Tax savings. Although the assets in your living
trust are subject to estate taxes, the trust may be drafted just as a
will can be to make the most of federal estate tax exemptions ($3.5
million in 2009). Plus, after your lifetime, the value of any assets
distributed immediately to Sisters Hospital Foundation completely
avoids federal estate tax.
The Downside of Living Trusts
Initial expense. Legal fees for drafting a revocable living trust can be higher than those required to draft a will.
Administrative tasks. There are administrative tasks associated with a revocable living trust (such as filing tax returns and distributing income).
Tax considerations. Although assets inside a revocable living trust do avoid probate, they are still subject to estate taxes.
Asset management. Trust language only protects
assets held by the trust. Some assets cannot be transferred into a
revocable living trust, such as IRAs, retirement plans and jointly
owned assets. In addition, trust creators too often fail to transfer
their eligible assets into the trust. For any assets that were
inadvertently not transferred, a 'pourover' will is necessary.
Eliminating creditors. Creditors may not be
eliminated as quickly with a trust. Probate is not always a process
that should be avoided; in some states the process isn't expensive or
time-consuming, and the typical six- to 12-month claims period shuts
off estate creditors, thereby protecting your assets after the claims
period.
Adequate oversight. Without court supervision, there is no oversight, and trustees can fall guilty of fiduciary lapses.
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.
