WHAT IS A TRUST?
A trust is a legal document created by a Settlor(s) to hold title to assets for the benefit of a Beneficiary(s). The trust's assets are managed by a Trustee.
WHAT IS A REVOCABLE LIVING TRUST?
A Revocable Living Trust is the most popular type of trust used for Estate Planning purposes. As the Settlor of a Revocable Living Trust, you create the trust during your lifetime and remain in charge of the trust until you die. As such you are the Grantor, Trustee and Beneficiary of the trust all at the same time. While you are alive you still enjoy all the ownership benefits of the trust assets that you did before the trust was created.
The trust designates a “Successor Trustee” who will manage the trust upon your passing and distribute the trust assets pursuant to its terms. The trust will also name one or more “Successor Beneficiaries," who will receive the assets.
A Revocable Trust accomplishes the same goals as a Will, except a trust does not have to go through a court process known as probate after death. Probate can be a lengthy process; a minimum of 8 months in South Carolina but is usually closer to a year. Probate can also be an expensive process, depending on the size of the estate. It also can be considerably inconvenient to one's family due to the time limitations of the court and the various documents that must be gathered and submitted to the court. During the probate process, all beneficiaries and relatives who would have inherited if there was no Will are notified and are given the opportunity to challenge the Will. While this process is ongoing, with few exceptions, the beneficiaries do not have access to your funds until the process and any and all challenges to the Will are complete.
A trust bypasses the Probate process in its entirety for assets that are placed into the name of the trust because they are not considered "probate assets," or assets held in your individual name. That means that upon your death the trustee has immediate access to your assets without going to court. Oftentimes Personal Representatives of a Will have to wait months before being able to access the deceased person's assets. This can be a difficult and extremely unwelcome burden placed on the surviving family members who are already going through a difficult time when their loved one has just passed.
With a Revocable Trust, as the name implies, you can revoke or amend the trust at any time while you are alive. After your death, the trust terms become “irrevocable” and the successor beneficiaries named in the trust get the assets designated to them according to your specifications in the trust document.
Example: George is getting up in years and has two grown children, Frank and Faye. George creates a Revocable Living Trust and designates himself as both Trustee and Beneficiary. Frank lives close by, whereas Faye lives several states away. He names Frank as successor Trustee and both Frank and Faye as his successor Beneficiaries. While George is alive he still controls all of his assets. When George passes, Frank can immediately take over the trust as successor Trustee and almost immediately distribute the trust assets to himself and Faye as successor Beneficiaries.
WILL A TRUST REALLY AVOID PROBATE ENTIRELY?
You will only avoid probate entirely if you have no probate assets when you die. Probate assets are those not placed into the name of the trust. Because you will most likely keep acquiring assets after you create a trust, sometimes assets that require a legal designation of ownership (like a vehicle) can slip through the cracks and become a probate asset (in your individual name) instead of a trust asset. Those assets would then have to be probated. This is why it is so important to stay up to date with your trust and remember to transfer as many assets as you can to your trust before you die if you want to truly avoid probate completely. A Pour-Over Will, which is included with our trusts, helps "catch" any non-probate assets and directs them back to the trust, but does not in itself avoid probate. Our firm will help guide you with properly funding your trust so your family actually does avoid probate.
WHY DO I NEED A POUR-OVER WILL IF I HAVE A TRUST?
Even when a trust is in place, it's possible (likely, really) that you will keep acquiring assets until you die. If an asset is not properly placed in the name of the trust before you die, it becomes subject to probate. We always recommend having a Pour-Over Will as part of creating a trust because a Pour-Over Will directs that those assets at least be transferred back to the trust, to be distributed along with the rest of the trust assets according to the terms of the trust. Alternatively, if you only had a trust and no pour-over will, the probate court will distribute those probate assets under the state's intestate rules, which may not necessarily be the way you would have wanted. A Will is also the appropriate place to nominate a guardian for any minor children.
HOW DO LIFE INSURANCE POLICIES AND RETIREMENT ACCOUNTS FACTOR INTO A TRUST?
Because life insurance policies already avoid probate, the only question is whether to name the trust as a beneficiary of the policy, versus naming only individuals. The answer will depend on your particular situation as there are several things to consider. With retirement accounts, we never recommend attempting to retitle the accounts into the name of a revocable living trust as there may be serious tax implications. There is a very good chance the IRS would consider this a 100% withdrawal; thus, it would be taxable on your next income tax returns, which defeats the main purpose of such tax-deferred accounts. In addition, you may also be subject to the 10% early withdrawal penalty if you have not yet reached age 59 ½. However, just like insurance policies, you can name a trust as a beneficiary and whether to do so will depend on your situation.
We can help you decide how to use beneficiary designations to coordinate with your overall estate plan and goals.
HOW MUCH DOES A REVOCABLE LIVING TRUST COST?
We charge $2000 for a Revocable Living Trust. There is no additional charge for married couples.
*Includes necessary recording fees
*Included with the Estate Planning Package is a custom faux leather portfolio binder:
WHAT IS THE ESTATE PLANNING PACKAGE?
The Estate Planning Package includes the following documents and costs $2650. There is no additional charge for married couples.
Last Will & Testament (Pour-Over Will)
*Includes a complimentary 1-year DocuBank membership
Contact the Carr Law Firm, LLC
If you would like a free consultation, please contact us or call (843) 619-2222.
201 Sigma Drive
Summerville, SC 29486
1156 Bowman Road
Mt. Pleasant, SC 29464
6650 Rivers Avenue
North Charleston, SC 29406
*Principal office **By appointment
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