Sunday, November 4, 2012

Beat the Tax Man with a Living Trust

Living trusts are all about avoiding probate fees, which can be in the tens of thousands of dollars. Basically, you appoint a trustee before your death who transfers ownership of your estate to the beneficiaries you’ve  already selected. In many cases, the whole process takes only a few weeks and there are no attorney or court fees to pay.

Here are answers to common questions about living trusts:

Is it expensive?
The cost of creating a living trust depends on what you want to achieve. The more complicated a living trust is, the more expensive it will be. The value, however, is in the money and time you will save by avoiding probate court.

Is a trust document ever made public, like a will?
A will becomes a matter of public record when it is submitted to a probate court, a living trust does not.

Does a trust protect property from creditors?
No, a creditor who wins a lawsuit against you can go after the trust property just as if you still owned it in your own name.

After your death, however, property in a living trust can be quickly and quietly distributed to your beneficiaries. By the time creditors find out about your death, your property may already be dispersed. Trusts are not public record so, except for real estate, creditors have no way of knowing exactly what you owned and are unlikely to go after the beneficiaries.

Probate, on the other hand, can offer a kind of protection from creditors. During probate, known creditors must be notified of your death and given a chance to file claims. If they miss the deadline, they're out of luck forever.

Do I need a trust if I'm young and healthy?
If you don’t own real estate, probably not; a will and perhaps some life insurance is sufficient.

Can a living trust save taxes?
A simple probate-avoidance living trust has no effect on either income or estate taxes. More complicated living trusts, however, can greatly reduce your federal estate tax bill if you expect your estate to owe estate tax upon your death.

If you're wondering whether you need a living trust, call Allied Brokers. We'll help you figure out the answer.

Visit our website at for information about all the types of insurance we offer. Or call 1-888-505-7988 for a free rate quote.

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