Questions and Answers

---

Q. Can a well drafted Will avoid Probate?

A.  No! All wills must generally be probated. 

Q. How can a Living Trust avoid Probate? 

A. The trust is a legal entity which holds title to your assets. Upon your death or incapacity, the legal entity survives and distributes assets according to your instructions.

Q. Do I retain control of assets in my Trust? 

A. Yes, during your lifetime, you are the Trustee of the Trust with full power to buy, sell, invest, etc. your own assets. Because the trust is revocable and amendable, you may terminate the trust or change its provisions at any time. 

Q. Can the Trust be altered or amended? 

A. Yes. You may amend, alter or revoke the Living Trust at any time. Blank amendment forms are included with each Trust. 

Q. Will I lose property tax exemptions?

A. No, the property tax exemption is for homestead, over-65 and disability continue until your death or the sale of the property. 

Q. Will the Trust be required to f'ile a separate income tax return?

A.  No, you will continue to report your income and deductions on your Form 1040. The trust is only required to file a separate return when it is made irrevocable by the death of the Trustee(s). 

Q. Can the Living Trust be used to avoid Estate and inheritance taxes?

A. Yes, through use of the unlimited marital deduction and the bypass provisions in the Internal Revenue Code, your estate can avoid being taxed on up to $1,500,000 of assets (up to $3,000,000 for a married couple).*

· Figures are subject to tax code changes.

1. I have a Will, so I am all set. Generally, wills and probate go together. The duty of the probate court is to validate your Will, pay your creditors and then distribute whatever is left over after attorney fees and costs to your heirs.
2. My estate is not very large – so probate should not take very long. The average probate without complications can be tied up in the court system for 9 months to 2 years freezing your assets during that time. The cost can range anywhere between 3 to      10% of your gross estate.
3. Our assets are less than $1,000,000 so we don’t need a Trust. The current federal estate tax exemption is over $10,000,000 per couple and over $5,000,000 per individual. The fact that your estate is less than that amount only indicates that the      estate will not pay federal estate taxes. It will still be subject to probate according to the probate laws of your state.  (Tax laws may be subject to change.)
4. We hold everything in Joint Tenancy so we will avoid probate. Yes, the estate will avoid probate upon the death of the first to die, but not on the death of the surviving spouse.
5. I can hold my property in joint tenancy with my children. This is true. By doing so, you subject your assets to collection for debts, IRS liens or judgments against your children as well as losing the stepped up valuation of the property resulting in capital gains taxes upon sale of the property/assets.
6. Living Trusts are important estate planning tools, but they are not for everyone. Research has shown that the costs of probate have the most severe impact on estates      of $100,000 or less. Every United States citizen has the right to choose how he or she wants to pass their estate to their heirs.
7. The purpose of the Probate Court is to settle a person’s final affairs. The      Probate Court will settle the final affairs, however, the Living Trust can accomplish the same task in a matter of hours or days, not months or years.
8. I will lose control of my assets by placing them in a Trust. With a well-written Trust, you have the same control of your assets in the Trust as you do owning them as an      individual.
9. The cost of a Living Trust is not tax deductible. The cost of creating a Living Trust can be deducted as tax/estate planning expense. Consult with your Tax Advisor.
10. It is expensive to settle a Living Trust. Settling an estate, when it is properly      organized, can usually be completed by the Successor Trustee with minimal amount of work.