Online Business & Finance: Estate Planning Tools: Living Or ...

By Keith Maderer

For some individuals, an estate plan needs to be more complex in order to properly handle their administration and distribution needs properly. For these situations, a trust arrangement may be the easiest and most cost-effective way to get the job done.
Living trusts are established while you are alive and testamentary trusts are detailed as part of your Last Will and Testament, then established upon your death as part of the administration of your Will. Either way, trusts can become very specific in many ways which allow the trust grantor and trustees to handle a wide variety of issues.
We will look at six factors that you need to consider if you believe a trust arrangement will be necessary to handle your financial affairs in the event that something should happen to you.
Six Factors To Consider:
1. Living Versus Testamentary: The first issue to consider is whether you feel the need to give your trust a trial run while you are alive. Many people are finding that they prefer to establish the a living trust now so they can see first hand how it is working and make sure that if there are any modifications necessary, they can handle them while they are alive. If you use a testamentary trust, you will not be around to check how well it is working. But if you have some needs that are based on minor children, your trust may not need to be established if you live long enough to have your children reach the age of majority, so a testamentary trust may be advisable here.
2. Trustees: For a living trust, you can be your own trustee while you are alive and healthy. Your successor trustees or alternate trustees will only need to take over if you become physically or mentally incompetent or pass away. Make sure that your trustee selections are individuals that are caring, trustworthy and financially knowledgeable. In most cases it is also a good idea to nominate trustees that are younger that yourself, for obvious reason.
3. Trust Funding: A trust can be in existence, but it really is ineffective until it is funded. By funded, we mean that you have your assets placed into the trust or changed to the trust ownership. The funding process can take some time, but make every effort to start with your largest assets first and then work your way down to the smaller ones. Make a complete list of assets and take them one by one until you are finished.
4. Beneficiary Provisions: With a living trust, it remains revocable as long as you are alive, unless you have chosen otherwise. But upon your death or with testamentary trusts, which are irrevocable, the beneficiary provisions cannot be changed because you are no longer around to do it. So make sure that you review your beneficiary provisions regularly to make sure that they are exactly as you wish and make any changes promptly in order to ensure that your wishes are carried out.
5. Trust Dissolution: Selecting a date or event that will allow your trust to dissolve and make any final distributions to your beneficiaries is usually a good idea. If you want to have the trust take care of your children until the youngest turns age 30 or until the death of your last child, you can spell out these provisions of dissolution. If you have a child or family member with special needs, you can also establish some event that would terminate their special needs as an additional dissolution event.
6. Cost Comparisons: As with any estate planning document, preparation and administration costs should always be part of your analysis. Setting up a testamentary trust as part of your Last Will and Testament is relatively inexpensive. A living trust can cost thousands to set up initially, but a testamentary trust may cost even more after you are gone. While you are alive, you can interview the attorney and negotiate a fair price, but after you are gone, if the trust is necessary, it has to be done.
Summary: If you feel that your estate plans need to consider a trust arrangement, do your research, buy a legal software package that deals with trusts and get familiar with what you need. A good financial or estate adviser can also help with this process. Once you have your affairs in order, interview a few trust or estate attorneys and select the one that you feel most comfortable with. Then take their advice on getting it set up, funded and administered.
To discover additional financial, estate and income tax strategies, check out my blog or download your FREE Wealth Expansion Kit by clicking here. The first step to creating wealth is knowing where you are and then charting a path that will enhance your financial strengths and correct your weaknesses.

Keith Maderer is a financial expert and has been a investment and tax adviser in the Western New York area for over 30 years. He is the owner of SENIOR Financial and Tax Associates and the founder of the Maderer Foundation, a private scholarship program.
Keith is also the author of "How To Get Your College Education For Less". Available on Amazon.com - ISBN No: 978-1-4538-2053-7.
You can get your FREE Wealth Expansion Kit, or check out his blog by visiting http://www.sftaweb.com Article Source: http://EzineArticles.com/?expert=Keith_Maderer

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