Do You Need a Living Trust?

Revocable Living Trusts have increasingly become a popular tool used in estate planning. A revocable living trust is a legal arrangement created for the purpose of holding ownership to an individual's assets during the person's lifetime, and for distributing those assets after death.

The individual who creates the trust (the grantor) names a person who will serve as trustee and will follow the trust's terms after the grantor dies. While alive, the grantor usually may serve as a trustee and control the assets even though they belong to the trust.

Although a revocable living trust is not a substitute for a properly drafted will, it may be appropriate for you in any of the following situations:

• You own out of state property. If out of state property is held in a living trust, you will not be required to probate your estate in multiple states. Probate in one state can be a big headache. Imagine probating an estate in multiple states!

• You want to avoid the probate process. Probate is a legal proceeding whereby the courts determine the allocation of your property based on your will or state laws. The probate process is a matter of public record and can be a hassle to your executor and somewhat costly. By allocating property to a revocable living trust, the probate process can be avoided.

• You would like to appoint someone to manage your assets or property in the event of your incapacitation. Trusts allow a great deal of flexibility in carrying out your own wishes. Making a child or other individual a successor trustee of your trust means that they can make decisions on your behalf in the event you are physically (or mentally) incapable.

The assets in a living trust are considered the grantor’s and thus all income or capital gains (and losses) continue to be reported on the grantor's personal income tax return. Also, the assets held in the trust are considered part of the taxable estate for estate tax purposes

For more information, please contact Chip Hymiller, CFP® or Erin Campbell, CPA/PFS, CFP®, with Beacon Financial Strategies at (919) 321-8625.

Beacon Financial Strategies is an independent financial planning, tax and investment advisory firm. Beacon works with clients on a consultative and objective basis to help them achieve their personal financial goals. Beacon professionals specialize in the following areas of financial planning: retirement feasibility planning, estate planning and coordination, tax minimization strategies, and wealth management services. For more information, visit Beacon's Web site at www.BeaconFinancialStrategies.com.