Will, Living Trust & Estate Planning Dictionary
LIVING TRUSTS
All of our Estate Plans include a Living Trust, sometimes called a Revocable Trust. We provide several types of Living Trusts all of which are customized to satisfy your needs. The type of Living Trust that your Estate Plan will include depends upon your marital status and your net worth.
- Living Trusts for Single Persons
If you are single, legally separated, going through a divorce or otherwise planning for only yourself, your Estate Plan will include our Single Trust. If your net worth exceeds $1,000,000 you will require Advanced Estate Tax Planning if you desire to minimize your estate taxes.
- Living
Trusts for Married Persons
If you are married, the type of living trust that your Estate Plan will include depends upon the net worth of you and your spouse:
- ;If your net worth is expected to be less than $1,000,000 at the end of your life, your Estate Plan will include a Simple Trust.
- If your net worth is expected to be more than $1,000,000 but less than $2,000,000 at the end of your life, your Estate Plan will include a Disclaimer Trust, sometimes called an "A-B Trust"
- If your net worth is expected to be more than $2,000,000 at the end of your life, your Estate Plan will include a Complex Trust and you will require Advanced Estate Tax Planning if you desire to minimize your estate taxes.
POUROVER WILL
If you forget or fail to transfer certain assets into your Living Trust during your lifetime, upon your death those assets will be tranferred into your Living Trust by your Pourover Will. In this respect, your Pourover Will is like a safety net to protect you from failing to transfer an asset into your trust.
FINANCIAL MATTERS POWER OF ATTORNEY
This type of power of attorney is used to designate an agent to make financial decisions for you in the event you are unable to make them for yourself.
HEALTH CARE POWER OF ATTORNEY
This type of power of attorney is used to designate an agent to make health care decisions for you in the event you are unable to make them for yourself.
COMMUNITY PROPERTY AGREEMENT
Only married persons require a community property agreement. The purpose of the agreement is to identify which assets are community property and which are the separate property of either spouse. This agreement is often used to when there are children by a prior marriage and the couple wants to make clear what property will belong to a surviving spouse and what property will be immediately passed to the children.
SPECIAL NEEDS TRUST
Because a disabled person generally cannot receive government benefits if they have personal assets that could be used for their support, an inheritance or gift may halt their benefits or prevent them from obtaining the benefits in the first place. A Special Needs Trust permits a disabled individual to receive gifts and inheritances without being disqualified from receiving government benefits. A special needs trust is managed by a third party trustee for the benefit of the disabled person.
ADVANCED ESTATE TAX PLANNING
There are several tools available to minimize or eliminate estate taxes. If you are in an estate tax situation and you desire to reduce your estate taxes, you will require an Advanced Estate Tax Plan.
FAMILY LIMITED PARTNERSHIPS
A Family Limited Partnership is an effective method for a person to make gifts to their heirs and other beneficiaries if they are in an estate tax situation. A FLP has general partners (the grantors) and limited partners (the beneficiaries). Because the limited partner's interest is subject to restrictions the IRS allows the amount of the interest to be discounted for estate tax purposes. FLP's are effective tools for transferring interests in real estate, businesses and other appreciated assets.
GRANTOR RETAINED ANNUITY TRUST
A Grantor Retained Annuity Trust is an irrevocable trust that allows the grantor to transfer property to the trust and retain an income interest for a period of years before passing the property to the heirs at the end of that period. The property is subject to gift tax, not estate tax (unless the grantor dies in which case it would be included in their estate). The amount of the gift and the associated tax is discounted because of the grantor's retained interest.
CHARITABLE REMAINDER TRUST
Charitable Remainder Trusts combine an opportunity for tax-free accumulation of income by the trust with a current income tax deduction for the grantor for the value of the remainder interest which will eventually transfer to the charity. The grantor can be included as a beneficiary and receive distributions from the trust, subject to certain limitations.
QUALIFIED PERSONAL RESIDENCE TRUST
A Qualified Personal Residence Trust is an irrevocable trust which the grantor transfers their residence to while retaining the right to use the property for a period of years. The transfer is subject to gift tax and not estate tax, unless the grantor dies during the period of years, and the amount of the gift is discounted to reflect the grantor's retained interest.
ASSET PROTECTION STRATEGY
Many of the advanced estate planning techniques also offer Asset Protection from third party creditors as assets are transferred to irrevocable trusts and not subject to execution by creditors.
LIFE INSURANCE
Life Insurance is used in estate planning to finance anticipated estate taxes. It serves as a good investment vehicle during your lifetime and can satisfy estate taxes for pennies on the dollar on your passing.
IRREVOCABLE LIFE INSURANCE TRUST
An Irrevocable Life Insurance Trust is an excellent vehicle for transferring wealth to your heirs and for financing anticipated death taxes.
GIFTING PLAN
Each individual is permitted to transfer by gift up to $10,000 annually to any other individual without gift tax consequences. The gift can be in the form of cash, real estate, business interest or other assets. A properly prepared and executed Gifting Plan will permit you to transfer assets to your heirs without incurring a gift tax or a reduction of your unified credit.
TRUST ADMINISTRATION
Upon the death of the trustors of a trust, the trust must be administered. Trust Administration includes collecting an inventory of the assets of the trust, satisfying debts and creditors of the trust and trustors (including tax liabilities), and distributing the remaining assets to the designated beneficiaries.
How to Contact San Diego Law Firm
We handle matters throughout California, and new clients are always welcome. For more information or to make an appointment, please contact us either by:
Telephone: (619) 794-0243
E-mail: contactus@SanDiegoLawFirm.com
We can be reached by telephone Monday through Friday, 9:00 a.m. to 5:00 p.m. You may also use the
form below to contact us. This form is answered Monday through Friday during
the work day. Please remember that for us to become your attorneys, we must first have a written attorney-client agreement signed by both of us, so please do not email any confidential information at this point. After we have reached an agreement with you, we can then exchange information freely. We look forward to helping you.