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FAQs

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Q. What exactly is a Revocable Living Trust?

It is a separate legal entity set up to care for and manage property or funds for you or for the benefit of another.

Q. Will a Revocable Living Trust protect my estate if I have to go to a nursing home?

No. Many people think that putting their assets into a Revocable Living Trust would help them qualify for Medicaid because the assets would no longer be titled in their name. However, because a Living Trust is revocable and under your complete control, you have not "given anything away” according to the Medicaid Rules.   If you are looking for an estate plan that will protect assets from a nursing home, you should consider an Irrevocable Living Trust or purchasing long-term care insurance.

Q. If I set up a Trust is a Will also required?

Yes. A Will, called a "pour over" Will, is also drafted in conjunction with your trust. If you fail to transfer all your assets into the Trust, the Will picks up those assets at the time of your death and transfers them into your Trust for distribution. All assets "poured into" your Trust by your Will must go through the probate process first. Guardians for minor children are also named in the Will.

Q. Will my property taxes increase if I transfer my real estate into a Trust?

No. State law stipulates a special exemption for property placed into a trust for the benefit of the Trustor.

Q. Does my tax status change when I create a Revocable Living Trust?

No. As long as you are the trustee of your trust, any income generated by assets owned in your living trust are taxed as if they were still held in your name and reported on your personal 1040 form. No special taxpayer identification number and no special tax forms are required.

Q. Can I borrow against the assets in the Trust?

Yes. The Trust does not restrict your rights to borrow on assets in any way.

Q. What rights does the surviving spouse have in the Trust assets?

If the surviving spouse is a trustee, he/she has unlimited rights to buy, sell and transfer assets.

Q. Who manages the Trust?

Usually you name yourself to be the manager (trustee). However, you could name a friend, a child who is not a minor, or a corporate entity, such as a bank.

Q. Are Living Trusts valid in all 50 states?

Yes. A Living Trust is valid in all states and in most foreign countries.

Q. Will I have to rewrite my Trust if my personal circumstances change?

You can change or amend your Trust as often as you wish. We assist and include the documentation to make this process simple and easy to understand.

Q. How does the Trust end?

A Living Trust is dissolved when all of the assets have been distributed or it may be revoked by the Trustor at anytime.

Q. Will a Living Trust protect me against my creditors?

No. A Living Trust does not insulate your assets from the legitimate claims of creditors.

Q. Can I appoint a minor child as my Successor Trustee?

No. The minimum age for a Successor Trustee is eighteen years.

Q. What is the difference between a "Revocable" and
"Irrevocable" Trust?


A Revocable Trust can be changed at any time until a designated event occurs, usually one's death. An Irrevocable Trust cannot be changed once it has been created.

Q. Can the Living Trust buy new assets without making an amendment to the Trust?

Yes. Title to any assets purchased after the execution of your Trust should be purchased in the name of the Trust.

Q. Can a Living Trust save on income taxes?

No. A Living Trust provides no income tax advantages.

Q. What is an A-B Trust?

An A-B Trust is a Living Trust that can be used by married couples to utilize the $1,000,000 (2013) Massachusetts exemption and $5,000,000 (2013 and beyond) Federal exemption for each spouse and thereby minimize or eliminate estate taxes.

Q. Does joint tenancy always avoid probate?

No. Joint tenancy does not avoid probate upon the death of the last owner. For instance, if you and your spouse own your house as joint tenants and you die, the house passes to your spouse free of probate. However, when your spouse dies, or if you and your spouse die simultaneously, the property will be subject to probate because there is no surviving joint tenant. If the house is placed in the Living Trust, there will be no probate at either death.

Q. Does it make sense for an unmarried person to set up a Trust?

Yes. While one benefit of a Living Trust is to minimize or eliminate estate taxes by use of an "A-B" trust arrangement by a married couple, other benefits of a Living Trust are the ability to avoid probate and guardianships which apply to everyone.

Q. What happens on the death of a person who has set up a Living Trust?

The successor trustee should take steps to remove the decedent's name from accounts, etc. and substitute his or hers, as Trustee. This is usually not very complicated and typically involves about as much paperwork as if the property had been held in joint tenancy. If the estate of the deceased exceeds the "Unified Credit Equivalent", a Federal Estate Tax return must be filed within 9 months after the death.

Q. Should IRAs, 401's or Keogh plans be transferred into a Living Trust?

No. Under Federal law, such transfer might be considered a premature distribution on which not only income tax, but also a 10% penalty might have to be paid. Conceptually, such plans are already held in a specialized form of "Living Trust."

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