What if you become sick?

Living Trust dictates who will make financial and medical decisions for you until you are able to. All your directives are written according to your wishes. Once you are well, you carry on as the decision maker. Living Trust is in place to avoid Probate in case there is an unfortunate circumstance, and you pass away.

Trusts and Bank / Stock Accounts Once the trust is set up

You will have full control of your financial institution accounts once you set up a trust. There will be no difference in how your accounts work as prior to your Living Trust being set up. If you have Co-trustees, joint accounts are not affected and can act independently or together.

Transferring real estate and accounts into a trust?

The process is not difficult. Financial institutions usually have forms for you to fill out. Financial institutions have experience with the process since it is not unusual for an account holder to transfer his/her assets into a Trust. You can also bring your Trust to your Financial institution, and they will guide you thru the process.

Are taxes affected by transferring a house into a trust?

Taxes are not affected by transferring real estate into a trust. Proposition 13 is not affected either. The reason it is not affected is because the beneficial interest of the property is not changing. It’s just a transfer from yourself to your Living Trust. Tax issues only arise if you transfer real estate to a third party. There are no county tax, state tax, or federal tax affected for transferring real estate property into a trust. 5

Tax Filing Requirements or changes Once the trust is set up?

Living trusts that are revocable are referred to as a grantor trust. The grantors of a Revocable living Trust are usually owners of the revocable trust. A Revocable trust can be changed or amended by the owner /grantor of the Trust. Beneficiaries or assets can be changed at any time the Trust owner is alive. The Trust Owner / Grantor can also revoke the Trust and its entirety at any time he is able to make a cognitive decision. There is no requirement for a new tax ID regarding a Grantors Trust. They are no additional forms required either. Income generated by the Trust, or any accounts placed in the trust are to be reported as earned income.

Spouse as a joint tenant on my property vs. getting a trust?

Without a Trust, a widower might remarry and possibly add their new spouse as a joint tenant. Your life’s hard work and assets including your house could end up transferred to another family instead of your Children or who you would have chosen as your beneficiaries. A Trust will eliminate the chance of this happening and Probate court.

When you should consider a trust?

There is not an amount of money or assets that should dictate whether you have a Living trust set up for yourself. It is important to have a trust in place If you have adult children, or minor children. Trust can protect either and also facilitates the transfer of assets according to your wishes. It will also help to avoid probate court or even more important a family feud that is typical when assets are distributes at the time of one’s death. Your assets such as Home / Bank accounts etc… will be distributed to beneficiaries chosen by you by an executor that you appoint. Trust also play a crucial role when you may need someone to make medical and financial decisions if you are sick or incapacitated without the courts involvement.

What happens when the trustees pass and what happens with taxes?

Once the Trustee (Living Trust owner) passes away, The trust can no longer be modified or changed since they are no longer alive to order a change. The trust assets and income held in the trust at that point will need to be distributed as directed and set in the directives of the deceased trust owner. A named successor trustee (when the trust was set up) executes the instructions of distribution set in the trust. All beneficiaries of the trust will need to provide a separate tax ID as it is to be set up for the trust. Trust income is reported, on Form 1041 which must be filed.