Revocable Living Trusts

true

All property not subject to specific bequest goes to the trust. true or false

All assets

Assets in estate for estate tax purposes include: Residence only Investments only All assets All assets except LI

Health Care Power of Attorney

Authorizes an agent (family member or other designated person) to communicate for you concerning medical treatment A physician makes the decision that you are not capable of making your own health care decisions

General Power of Attorney

Authorizes an agent to transact business for you should you become incapacitated Pay bills Manage checking account File & monitor health insurance claims Manage credit card accounts

Eliminate need for Will

Benefits of a RLT include all of the following except: Continuity of management Grantor retains control of property Eliminate need for Will Flexibility in distribution

$15,000

Current Annual Gift Tax Exclusion is: $1,000 $12,000 $15,000 $18,000

Living Will

Declaration of a your wishes regarding resuscitation, desired quality of life and end of life treatments, including those you do wish to receive. Provides guidance to your doctors and relatives

Potential increase in income tax

Disadvantages of a RLT include all of the following except: Potential Legal fees Potential increase in income tax Time and expense to transfer assets Potential fees to corporate trustee

Legal and accounting fees Fees to corporate trustee (if applicable) -1.5% of 2% of trust assets Administrative issues -Transfer of future assets to trust -Transfer of mortgage to trus

Disadvantages of a Revocable Living Trust

Greater flexibility in distribution than with life insurance settlement options Unification and income distribution from diverse assets Trustee will invest and manage life insurance proceeds for the policy beneficiaries

Distribution of Assets

Gift Tax

Each spouse may gift $15,000 annually, to an unlimited number of people, with no gift tax

Estate Tax:

Estate tax repealed in December, 2009 but reinstated in January, 2011 with $5.0 million exemption per person and 35% estate tax rate Estate tax revised January 1, 2013 to 5.0 million exemption per person and 40% rate. Current exemption is $11.2 million per person.

true

General Power of Attorney is necessary in addition to a Health Care Power of Attorney True False

Estate tax rate

Gifts in excess of $15,000 annually and the lifetime exemption of $11.2 million are taxed at: Ordinary income tax rate Capital gains tax rate Estate tax rate Not taxed in gifted to a minor child

To beneficiaries based on state law

In the absence of a legal Will, property at death is distributed: To the State of legal residence To beneficiaries based on state law To beneficiaries based on federal law To the County Probate Court

Unification of assets:

LI, Real Estate, Investments combined in single trust for management and income distribution

Property Eligible for Trust

Life Insurance Cash Stocks Bonds Residence Any other assets

Created during lifetime Written trust document is necessary Grantor can revoke trust at any time, until death Can hold any assets of grantor Trust can be beneficiary of life insurance Can receive property at death by Will (Pour-Over Will) No impact on income taxes - not a tax shelter May have impact on estate taxes

Living Trust

What is the Job of the Trustee?

Manage and invest assets of trust Make appropriate payment to beneficiaries Any natural person or corporation can be trustee Grantor can be trustee Co-trustees can be named Successor trustee(s) should be named Corporate trustee can be named

All of the above

Property eligible to be placed in Trust includes: Life Insurance Investments Secondary home All of the above

Trust Document

Specifies how assets are to be invested and managed Who receives income and principal How income and principal is paid When income and principal is to be paid to beneficiaries

true

The Grantor of the RLT can also be the Trustee? True False

false

The Grantor of the RLT can not be the Beneficiary? true or false

true

Trust is less likely than a Will to be successfully challenged. true or false

RLT is used to minimize probate fees

Which of the following is True? Revocable Living Trust (RLT) provides an income tax shelter RLT is used to minimize probate fees RLT has no effect on estate tax Property can not be transferred to Trust at death

Grantor Other primary beneficiaries: Named beneficiaries (spouse, child) Class beneficiaries (children and grandchildren) Charity or other institution

Who Can Be the Beneficiaries?

Management of assets Conservation of assets Distribution of assets Estate Planning

Why Set Up a Revocable Trust?

Grantor

______ usually is the trustee

Grantor

________ retains lifetime control of property

Successor trustee

__________ continues to manage property if grantor incapacitated or deceased

no

are Privacy-terms of trust public knowledge?

Family Trust B

life income for spouse; income to children and distribution of assets to children at spouse's death -Minimize estate tax at death of second spouse

Marital Deduction Trust A

outright distribution to spouse