Family circumstances
For example, if a spouse has children from a previous marriage, a separate trust makes it possible to provide income to the surviving spouse for life, while preserving the remaining funds for his or her children.
Primarily, the lack of flexibility in a joint trust can be a problem, especially if the two spouses don't agree about who should ultimately be a beneficiary or how much they should receive.
If you created a revocable living trust with your spouse, you can change the whole trust or part of the trust following the his or her death. A living trust allows to you make any changes to the terms by creating amendments or by creating a new trust entirely.
Individuals may find it challenging to keep up with the constant updates and changes required, leading to potential confusion and complications down the line. Another aspect that draws complaints is the impact of transfer taxes and the need for refinancing when assets are transferred into a living trust.
Suze Orman, the popular financial guru, goes so far as to say that “everyone” needs a revocable living trust. But what everyone really needs is some good advice. Living trusts can be useful in limited circumstances, but most of us should sit down with an independent planner to decide whether a living trust is suitable.
Assets held in a Trust, unlike a Will, are not subject to the probate process. A Living Trust allows you to set up protection for your property during your lifetime. A Trust gives a Trustee the right to manage assets on your behalf indefinitely. A Will allows you to name guardians for your minor children.
A beneficiary designation generally overrides a trust in the same way it overrides a will.
You can't name an executor in a living trust. In your living trust, you name a successor trustee who will manage just the property left through the trust.
Simple Living Trusts for Married Couples
Simple living trusts are often considered the easiest kinds of trusts to set up and keep. In a simple living trust, a couple can share the control and benefits of the trust while they are living. Once one spouse dies, the other spouse will have total control over the trust.
Trusts offer amazing benefits, but they also come with potential downsides like loss of control, limited access to assets, costs, and recordkeeping difficulties.
In other words, regardless of the existence of a living trust, so long as it is revocable, a divorce in California will proceed pretty much as any other divorce, but the trust may need to be dissolved and assets removed from it.
Yes, you can create a trust without your spouse. This is often done to maintain control over assets or protect inheritances for children from a prior marriage.
Q: Do trusts have a requirement to file federal income tax returns? A: Trusts must file a Form 1041, U.S. Income Tax Return for Estates and Trusts, for each taxable year where the trust has $600 in income or the trust has a non-resident alien as a beneficiary.
In most states, a surviving spouse automatically inherits community property assets. This generally includes all property, such as the couple's home, bank accounts, and cars, that the couple comes to own during their marriage. However, property owned before the marriage, gifts, and inheritances are still separate.
If your spouse built up entitlement to the State Second Pension between 2002 and 2016, you are entitled to inherit 50% of this amount; PLUS. If your spouse built up entitlement to Graduated Retirement Benefit between 1961 and 1975, you are entitled to inherit 50% of this amount.
Selecting the wrong trustee is easily the biggest blunder parents can make when setting up a trust fund. As estate planning attorneys, we've seen first-hand how this critical error undermines so many parents' good intentions.
The main way that the two differ is in how flexible and thorough they are. TOD accounts are faster and more convenient, but a revocable trust offers a stronger plan for you and your beneficiaries that covers the myriad elements of passing away.
This is a fundamental concept of trust law: the separation of legal and equitable title. In other words, while the trustee has the legal authority to manage and control the assets, they do so not for their own benefit, but for the beneficiaries.
Like a Will and a testamentary trust, a Living Trust lets you decide specifically what will happen to your property after you die. You can also use a trust to control how your beneficiaries will spend their inheritance (to reduce the risk they may "blow it" on expensive vacations, cars, gambling, etc.).
A trust will allow you to achieve multiple objectives that will cannot. That said, these benefits may come at a price. Whether setting up a living trust is better than writing a will depends on the additional benefits and whether they outweigh the costs.
Many advisors and attorneys recommend a $100K minimum net worth for a living trust. However, there are other factors to consider depending on your personal situation. What is your age, marital status, and earning potential?