Establish your Living Trust in Scottsdale, AZ or any other Arizona city.
What is a Living Trust?
A Living Trust (aka a revocable trust) is a legal instrument used to minimize estate taxes and avoid probate. A Living Trust also provides the Grantor (creator of the trust) with maximum flexibility by allowing the Grantor to change the terms of the trust at anytime, and as often as desired. The Grantor has the flexibility to distribute the assets in the trust to whomever he or she chooses, and may specify at what ages money or assets will be distributed.
The Grantor is also able to include additional provisions in the terms of the trust that are personalized for specific beneficiaries. Such terms might include a beneficiary’s distribution being contingent on his or her successful completion of college, or perhaps specifying a minimum grade point average.
During the interim between distributions of principal, the Trustee (appointed to manage the trust) may provide additional money to the beneficiary for health, education, maintenance and support as needed, depending on the trust terms. This ensures that the child or beneficiary will be provided for in a manner established prior to the Grantor’s death, yet prevents the beneficiary from spending excessive amounts of money on frivolous items.
- Avoid probate
- Reduce or eliminate estate taxes
- Provide asset protection for the ultimate beneficiaries
A common misconception about a Living Trust in Arizona is that assets are protected from claims or judgments. The Grantor of the trust does not receive asset protection, but a Living Trust will protect the ultimate beneficiaries of the trust for as long as assets are held in trust for the beneficiary. The trust must have a spendthrift provision to protect the beneficiary’s trust share. In the event that a beneficiary is going through a divorce or a legal matter in which the beneficiary may receive a judgment against him, this judgment cannot be attached to the beneficiary’s trust share since it is held in trust and protected under its terms.
Each person receives the right to pass on an amount equal to the Federal Estate Tax Exemption of $5,250,000 in 2013, estate tax free. A married couple with an A-B Trust can pass on a total of $10,500,000 in 2013, estate tax free. Additionally, a married couple may receive an unlimited marital deduction, which allows for an unlimited amount of assets to be left to the surviving spouse estate tax free until the surviving spouse’s death.
Property held in joint tenancy rather than a trust may prolong a probate, but it does not prevent it. Additionally, joint tenancy does not provide the surviving joint tenant with a step-up in cost basis, unlike a trust, will or beneficiary deed.