Living Trusts in Pittsburgh & Western, PA


IS A LIVING TRUST THE RIGHT ESTATE PLANNING DOCUMENT FOR YOU?


YOU WILL LEGALLY RECEIVE UP TO FIVE TIMES MORE FDIC PROTECTION WITH A LIVING TRUST - READ BELOW!


LIVING TRUSTS AVOID PROBATE AND HAVE OTHER BENEFITS

Revocable trusts, commonly called "living trusts," are an effective estate-planning tool for avoiding the costs and hassles of probate, preserving privacy, and preparing your estate for ease of transition after you die.

A trust is a legal document that authorizes a trustee, who can be the grantor (or the creator of the trust), to hold title to and manage assets. The grantor retains the ability to revise the trust up until death.

Unlike in a will, assets in a living trust will generally pass to heirs sooner. Although probate in Pennsylvania is a very easy process, having a living trust does have advantages. Transferring assets into a trust could save months and thousands in legal fees - please note that this is not cookie-cutter, i.e. every case is different and whether you should have a will or a living trust depends on your specific needs, goals, objectives, family dynamics, and types of assets you own, among other factors.

Aside from easing the burden and cost to loved ones, there are a few facts about living trusts that might surprise you. For example, did you know that the limit for Federal Deposit Insurance Corp. protection on bank accounts within a trust is higher than it is for an individual? Or, that certain assets should not be titled in the name of the trust?

Assets with named beneficiaries such as pay-on-death bank accounts, retirement accounts, and life insurance policies will usually pass directly to beneficiaries without going through probate. For that reason many people don't title them in the name of the trust. But in some cases it makes sense to name the trust as the primary beneficiary. For example, if you name your child as primary beneficiary on a life insurance policy and that child is under legal age when you die, guardianship may be necessary to hold the proceeds. But if the trust is the beneficiary, you can specify exactly how and when you want the money to be distributed to that heir.

Care must be taken in determining whether or not you should name a trust as beneficiary of retirement assets because it is easy to make costly mistakes. If not handled properly, income tax on the IRA proceeds could be accelerated.

HOW A LIVING TRUST GIVES YOU MORE FDIC PROTECTION!

Typically, an individual receives FDIC protection against losses on bank accounts, up to $250,000 per account. But many older people are invested conservatively, with much more than that in bank accounts. With a living trust, they can maintain those accounts and still be federally insured.

According to the FDIC, each named beneficiary in a revocable living trust adds an additional $250,000 in protection. When 5 beneficiaries are added, the total trust protection maxes out at $1,250,000.

If the Living Trust is a joint trust, i.e. both husband and wife are the Grantors, then in that event the FDIC insurance is $250,000 per beneficiary times 2 or $500,000 per beneficiary for the first five beneficiaries for a max of $2,500,000! This alone is a good reason to have a living trust and well worth the reasonable fee that you would be charged to have the trust drafted.

In the case of 6 or more beneficiaries, each beneficiary adds the $250,000 in protection, but only if they each have an equal interest in the trust. If not, the limit on protection varies, so discuss this matter with us if you plan to name more than 5 beneficiaries.

TRUSTS ARE PRIVATE

Privacy is one of the benefits of a living trust. Because the trust does not go through the court probate process, it is not part of the public record. A will is public, however, and available to anyone who requests a copy from the courts.

In a living trust, beneficiaries are entitled to a copy of the trust after the grantor's death.

But there is a situation where terms of the trust could also be opened up to all interested parties, even beneficiaries who have been disinherited. If an heir or a disinherited party contests the estate and sues the trustee in court, in the course of discovery, the parties will get a copy of the trust. If the trust document is part of the court record, it likely would become public.

Even so, the trust is much more private than a will because it is not available to the public except in cases of litigation.

YOU STILL NEED A SPECIAL TYPE OF WILL EVEN IF YOU HAVE A LIVING TRUST

Creating a trust doesn't get you out of writing a will. Sometimes clients think they only need a living trust, but they need a pour-over will as well.

A will is necessary for naming guardians for minor children, which you might not be able to do in a living revocable trust without making it a public document if you have minor children at the time of your death.

If all of your assets are not titled in the name of the living trust at the time of your death, certain assets may need to go through the probate process to be poured into your trust after your death.

FEDERAL ESTATE TAXES AND PENNSYLVANIA STATE INHERITANCE TAXES

A Revocable Living Trust may diminish or even avoid the amount of Federal Estate Tax due and owing at the time of your death if properly drafted using Credit Shelter Trust and Marital Deduction Trust clauses. A Revocable Living Trust will not avoid Pennsylvania State Inheritance Taxes. However, an Irrevocable Trust may avoid both Federal Estate Taxes and Pennsylvania State Inheritance Taxes if drafted properly and managed properly. Just ask me for more details on this matter.

LIVING TRUSTS AND YOUR CHILDREN

As we all know, each of our children are different. Some are very thrifty and good with money and others are the proverbial sailor on payday. You will be able to literally manage your money from the grave with a Living Trust. If you don’t want your children to receive all of their inheritance in a lump sum immediately upon your death, you may have the trustee disburse the funds in staged payments. As an example you may leave your money to your children upon them attaining certain ages such as 25, 35, and 45. This is not being harsh, this is being a loving parent. The child will be just out of college/grad school at the age of 25 and the first installment will be a start in life. At 35 he or she may be married and this disbursement may assist with a down payment on a new home, mortgage payments, or their children’s education needs. The last disbursement at age 45 will hopefully be set aside and last your child into their golden years.

In the event your child has a valid need prior to attaining a disbursement age, your trustee will have the discretion of paying for the child’s health, education, maintenance, and support. The monies disbursed prior to a disbursement date will be accounted for and deducted from the next disbursement.

Other Types of Trusts

There are many different types of trusts, some of which include:

  • Asset Protection Trusts
  • By-Pass Trusts
  • Credit Shelter Trusts
  • Dynasty Trusts
  • Life Insurance Trusts
  • Special Needs Trusts
  • Spendthrift Trusts
  • Testamentary Trusts

Living trusts or wills can never be created too soon, which is why it's important to discuss your situation with a lawyer. If you would like more information on how I might be able to help, contact D'Onofrio Law Office, P.C. today. I always offer my clients a complimentary initial consultation.

Contact my law office today to discuss your future plans with a free case evaluation!

I service Moon Township, Allegheny County, Beaver County, Washington County, Butler County, Westmoreland County and all of Western Pennsylvania. Contact my law office today to get peace of mind.