Revocable Living Trusts
Not long ago I contacted a guy at the Fool I've respected greatly for five years, TMF Taxes (Roy Lewis). In addition to his work with the Fool, he's an estate planner and tax guru. Since he turned me down as a client (because he's not familiar with the laws of my state), he instead helped me by explaining that to be in control of my personal finances it is essential that I read Understanding Living Trusts by Vickie and Jim Schumaker, an easy-to-read softback written in layman terms.
He also sent me a promotional piece that is essentially a watered down version of the book. That piece, Understanding Estate Planning and Living Trusts is available from professional estate planners. The publisher's website (the authors are self-published) at www.estateplanning.com might also have it online.
In the 20 minutes it took me to read the promotional piece, I learned that:
-- revocable living trusts (RLTs) should be considered by anyone with assets of any amount, by anyone who is concerned about ever becoming incapacitated, and by anyone who might want to leave assets to others upon death. In other words, it's difficult to imagine that anyone shouldn't consider an RLT;
-- RLTs are no longer the domain of those serving just the wealthy; most estate planners are thoroughly knowledgeable of them and the process of setting them up is relatively simple;
-- RLTs eliminate probate and the sometimes lengthy time needed to distribute assets of an estate;
-- RLTs can significantly or entirely reduce estate taxes, allowing greater assets to be passed on to heirs. As an example, current federal estate taxes begin at 37% and go as high as 55% on an estate's net value that is greater than $675,000. If a husband dies without an RLT in place, all assets transfer to the wife. When she dies, the estate is taxed on net assets greater than $675,000. However, if both a husband and wife set up an RLT, each person can essentially make use of the $675,000 exemption, making it possible for the estate's assets to transfer tax-free for assets up to $1,350,000.
-- Whereas wills are an invitation for the courts to take control of our assets, to expose information we would want kept private, and to make decisions for us in the event we become incapacitated, RLTs ensure that the control remains in our hands and the hands of those we choose to make important decisions for us if needed.
As you know, I'm not an expert at estate planning. Though the details explained above might be accidentally misleading, the generalities probably apply. I mentioned the above "bullets" because they motivated me to buy the book and set up RLTs for my wife and me this fall. I will be sending copies of the book to friends and family and encourage you to become aware of the basics of RLTs also.
--Mike Buckley
P. S. If anyone can suggest an estate planner in northern Virginia I should consider, please PM me. Thank you. |
