Common Questions and Answers About Trusts
Q. HOW LARGE SHOULD AN ESTATE BE BEFORE YOU HAVE A LIVING TRUST?
A. Everyone should consider setting up a trust, regardless of the size of your estate. For example, if you have a probate estate of $100,000.00 you may have $5,000.00 of probate costs and additional guardian costs. These costs could be avoided with a Living Trust.
Q. DO I NEED A WILL IF I HAVE A TRUST?
A. Yes, it is special “Pour-Over” Will used to distribute miscellaneous personal effects and other assets not otherwise placed in trust. This Is also a “safety net” in case any assets are overlooked.
Q. CAN I BE THE TRUSTEE, TRUSTOR, AND BENEFICIARY TO MY OWN LIVING TRUST?
A. Yes. provided you name a successor. Trustee and successor beneficiary of your assets.
Q. WILL I MEET WITH MR. STEWART AT THE INITIAL CONSULTATION?
A. Yes, not only will you meet with Mr. Stewart but he will also be the individual drafting your Living Trust and other necessary estate planning documents. All estate planning done and all documents prepared for your estate plan will be coordinated and completed by Mr. Stewart.
Q. CAN I SET UP A LIVING TRUST WITHOUT USING AN ATTORNEY?
A- Yes. but you may not use the proper language in establishing the trust and other estate planning documents. Having someone inexperienced and not licensed to practice law may cost you thousands of dollars in additional inheritance taxes and probate costs. Therefore, an experienced, licensed attorney specializing in the area of Living Trusts and estate planning should be utilized.
Q. IF I ALREADY HAVE A LIVING TRUST, SHOULD I HAVE IT REVIEWED?
A. Laws are always changing, and as such, we suggest an annual review of your trust or will by an attorney.
Q. WHY SHOULD A SINGLE PERSON UP A LIVING TRUST?
A. If you have a trust, and you become mentally or physically unable to act for yourself, guardianship proceedings are eliminated, as your pre-nominated successor Trustee will act on your behalf.
Q. CAN I ADD TO OR WITHDRAW ASSETS FROM MY TRUST AFTER IT HAS BEEN CREATED?
A. Yes, when the estate plan has been completed you will be given a special set of Instructions unique to your trust showing you how to transfer current assets, as well as future purchases, into the trust.
Q. CAN I CHANGE THE TERMS OF THE TRUST AFTER IT HAS BEEN SIGNED?
A. Yes. your trust is a revocable trust and can be amended.
Q. WHAT IF I MOVE TO ANOTHER STATE IS MY TRUST STILL VALID?
A. Yes, Living Trusts are valid in all 50 states. However. Mr. Stewart advises that you meet with a licensed attorney in that state to review the wording of your trust and to be advised of the laws of that state. Many attorneys, including Mr. Stewart, will meet with you free of charge for an initial consultation.
Q. ARE THERE ANY ON-GOING LEGAL EXPENSES ?
A. No, the complete estate plan is done for the fee quoted. There are no other maintenance or legal fees. However, Mr. Stewart or any other attorney would charge a nominal fee for any amendments or other changes to your trust or other estate planning documents.
Q. WHAT IF I HAVE REAL PROPERTY IN ANOTHER STATE, CAN I TRANSFER THAT PROPERTY TO THIS LIVING TRUST?
A. Yes, not only can a Living Trust hold real property in another stale, it should be done in order to ensure that probate does not occur on that property in the other state. Again, an attorney in that state should be consulted tor preparation of the deed conveyance to the trust.
Q. DOES THE TRUST CHANGE OR INCREASE MY INCOME TAX OR IT’S REPORTING?
A. No, assuming you are your own Trustee you only give out your own individual social security number and report your taxable income and deductions on your Form 1040 the same as you did before.
Q. WILL TRANSFERRING ASSETS TO MY TRUST SHIELD OR EXEMPT THEM FROM CREDITORS?
A. No, public policy prevents avoidance of creditors through use of a Revocable Trust which you create for your own benefit. In this respect, the trust leaves you in the same position as before the transfer.
Q. I AM A FLORIDA DOMICILE FOR TAX REASONS, BUT I ALSO HAVE ASSETS UP NORTH IN MY FORMER STATE OF RESIDENCE. SHOULD I HAVE A FLORIDA LIVING TRUST?
A. Definitely, you are wise to have Florida your domicile to save taxes. You should follow through with this plan to eliminate the possibility that your northern assets will have to be probated and/or subjected to high state inheritance taxes in that state. (See the exhibit to this handout regarding other state's inheritance tax rates.)
Q. IF I TRANSFER MY HOME OR CONDOMINIUM TO THE TRUST, WILL I LOSE MY HOMESTEAD EXEMPTION?
A. No, however, you must reapply in person and bring the Warranty Deed and trust document with you.
Q. ARE THERE ANY ASSETS WHICH WE SHOULD LEAVE OUT OF THE LIVING TRUST?
A. Your motor vehicles and other assets with a liability feature such as motor homes, boats, motorcycles, airplanes, etc., should be left out of the trust. In many cases, joint checking accounts with nominal average balances could be left out of the trust.
Q. SHOULD I PLACE MY IRA AND KEOGH IN MY LIVING TRUST?
A. Never change the ownership of a pension plan to the trust. You can name the trust as a primary or contingent beneficiary and, depending upon the size of your estate, your spouse could be the primary beneficiary.
Q. WHAT EFFECT DOES A DIVORCE HAVE UPON A LIVING TRUST?
A. In most cases, the husband and wife would revoke the trust and the property in the trust would be distributed to each person in his or her individual name then each person could set up his or her individual trust.
Q. DO I RECORD THE LIVING TRUST WITH THE COUNTY RECORDER?
A. No, only deeds and other instruments affecting real property are recorded with the county recorder.
Q. WHO KEEPS A RECORD OF ASSETS IN THE LIVING TRUST?
A. Since you are the Trustee, you keep a list of the assets currently in your trust. If you sell or purchase an asset, you make a notation on your schedule of assets that a particular asset was sold or purchased. There is no need to notify the attorney that you have added or removed assets from your trust.
Q. WHAT HAPPENS WHEN ONE SPOUSE DIES? DOES THE OTHER SPOUSE RECEIVE ANY GUIDANCE FROM YOUR FIRM?
A. Yes, Mr. Stewart will meet with the surviving spouse and any other successor Trustees to inform them and educate them regarding their responsibilities as Trustee and the procedures required to carry out the terms of the trust and your estate plan. There is no charge for this initial consultation.
Q. WHY SHOULD I CHOOSE THE LAW OFFICES OF LARRY M. STEWART TO PREPARE MY ESTATE PLAN?
A. Experience: Mr. Stewart has been concentrating his law practice in the area of estate planning for the last 45 years. Those clients who have worked with Mr. Stewart have come to realize that he takes a personal interest in their particular estate plan, prepares the Living Trust and other estate planning documents in a timely fashion and for a very moderate and competitive price. Mr. Stewart is also a charter member of the Estate Planning Council of Martin County. Mr. Stewart also practices in the areas of real property law and corporate and business law.
Service: With over 45 years of experience, you can be sure that Mr. Stewart will be there when you need him to answer questions and provide professional services.