Living Trusts can facilitate Control over AssetsLiving trusts facilitates you in having a complete control over the distribution of your Assets. In fact certain trusts enable to lessen or even completely avoid taxes and fees to be imposed in the event of your death. Trust is a legal agreement involving three parties – the trustee who shall be managing the assets on behalf of the trustor, the actual owner of the assets for the benefit of beneficiary, the third party. In a revocable Living Trust you are permitted to be the trustor, the trustee as well as the beneficiary. When a living trust is established the ownership of the assets in question gets transferred from the trustor to the trust. In the eyes of the law, you do not remain the owner of those assets anymore. But since you are also the trustee, you have complete control over the assets and you can buy, sell or even give them away. Assume that you have passed your assets to a revocable trust. In the event of your death, the need for getting a probate done can be completely avoided as your assets are now owned by the trust. In such a scenario, since you have properly established a Living Trust, your heirs will immediately receive their respective shares upon your death without getting into the hassles of probate. There are different trust strategies that serve different estate needs. One of the most commonly used trust strategies is living trust with A-B provision. It helps to pass on up to twice of the exemption amount, free of taxes, to your loved ones. In an A-B Trust, two separate trusts are created upon the death of the first partner. The assets shall be divided into two trusts, the survivor’s trust i.e. “A” trust and the trust of the decedent or “B” trust. Thus, two taxable entities shall be created with each permitted to utilize its personal exemption. The surviving partner not only remains in charge of his or her trust but can also withdraw principal and receive income from the Trust of the deceased spouse. This can be done for meeting health or maintenance expenses. In the event of the death of the surviving spouse, assets shall get transferred to the heirs by avoiding probate entirely. In case if each trust contains less value than the exempted amount, the assets shall pass on to the heirs without any federal tax. |
