Revocable Living Trust and Pour-Over Wills
In California, this is the standard “work-horse” of estate
planning. Due to the high cost of probate (an estate of $100,000
is a minimum $4,000 probate fee), a Revocable Living Trust is
essential for anyone with even a moderate estate, and
particularly if you own real estate. The trust, when created
properly, avoids probate and provides for a detailed
administration of your property in the event of your death or
incapacity. A “pour-over” will simply provides that any assets
not already in your trust will be “poured over” into the trust
and administered in accordance with the terms of the trust.
Thus, your estate plan is also private as only the will, but not
the trust, becomes public.
Special Needs Trust
If one of your beneficiaries now or in the future should be
incapacitated and dependent on government aid, a Special Needs
Trust can be utilized to provide for certain needs of the
beneficiary without also causing the beneficiary to be
disqualified from receiving government help.
Multi-Generational “Dynasty” Trusts
Because there is, in addition to estate tax, a
“generation-skipping transfer tax,” gifts to grandchildren or
other persons more than one generation removed from the donor,
require special planning. The law currently provides for an
exemption from the generation skipping transfer tax of
$2,000,000 per donor and thus, for certain estates, careful
planning and creation of multi-generational trusts that leverage
the exemption amounts can be an important aspect of the overall
plan. In addition, such multi-generational trusts can protect
family wealth from creditors.
Life Insurance Trusts
Most people believe that life insurance proceeds are
“tax-free.” While in many cases life insurance proceeds are
income tax free, they are not estate tax free. If you
own life insurance on your life, as many people do in order to
provide for their loved ones, the proceeds are included in your
estate for purposes of determining estate tax. A life insurance
trust can be utilized to own insurance outside your estate and
can be a very useful way to provide the liquidity necessary to
pay estate taxes and provide for your family at your death.