With the changes in the value of our investments, now more than ever it is important to have the most cost-effective method of having the right person handle your assets if you become ill or if you die. RevocableLiving Trusts are very useful for assuring access to assets due to illness or death. However, for a Trust to be useful and effective, assets must be retitled in the name of the Trust. The title or ownership should reflect that the Trustees own the property; for example: “John and Jane Doe, as Co-Trustees, of the Doe Revocable Trust dated [insert date of signature].” The date that the trust agreement is signed becomes part of the name of the Trust, even if the trust agreement is later amended.
A qualified retirement account cannot be owned by the Trust, but the designated beneficiary can be the Trust. Similarly, the trust can be listed as the beneficiary of life insurance or an annuity. If the benefits are going to a minor child, then having the Trust as the beneficiary avoids the need for court intervention. A minor child cannot receive more than $10,000 in any year without a trust or court created Conservatorship. Such Conservatorship are expensive to initiate and continue to have annual court and attorney fees. Many married couples have trusts that automatically split in two when one dies. Normally, this helps to avoid or limit estate taxes. However, if the married couple’s assets do not exceed the amount that can be passed estate tax free, then the automatic split is not needed and is more bothersome than helpful. A trust amendment to make the split optional instead of automatic should be considered. Further, the Arizona Trust Code which was adopted in the end of 2009 provides helpful language for trust administration. However, if your trust is not amended to address these provisions, the new law could be more trouble than good. In order to live up to your living trust, it is important to have trust titling and the trust agreement reviewed from time to time.
Sharon Ravenscroft, Esq., The Cavanagh Law Firm, PA, with offices in Phoenix and Sun City, can be reached at 602-922-6378 or [email protected]. Sharon’s practice focuses on the preparation of wills, trusts, domestic partnership agreements and premarital agreements, along with trust and estate administration. For more information, see www.sharonravenscroft.com.