At our firm, we draft many documents as part of your estate planning, however, your Revocable Trust is the foundation of your estate plan. It contains your instructions for your own care and the care of your family should you become disabled, and for the distribution of your assets upon your death. Your Revocable Trust allows you to keep your instructions and financial affairs private and ensures that your instructions are carried out efficiently and without unnecessary judicial involvement.
Trust Funding:
At our firm we do all of the trust funding by filling out all change of beneficiary forms for your life insurance polices and retirement plans to reflect your Trust. In most circumstances we reccommend changing the ownership of bank accounts such as savings, checking, and money market accounts into the name of your trust.
Some clients require advanced asset protection due to their specific needs. With that we transfer your IRA's, 401k's, Roth's, and any other retirement plans by doing change of ownership and/or change of beneficiary forms reflecting specific trust designed for those accounts.
Our advanced asset protection plans include the following:
Retirement Plan Trust:
The Retirement Plan Trust is a sophisticated estate planning device in which the designated beneficiaries on your IRA and qualified plan assets are your Retirement Plan Trust. It is designed to act as a conduit for the distributions from your retirement plans after your death. The conduit occurs when your Trustee accepts distributions from the plans and passes them directly to your beneficiaries in distributions stretched out over the beneficiary's remaining life expectancy, rather than the forced and shortened distribution period in the absence of a trust.
The Retirement Plan Trust also has a feature wherein your Trustee or Trust Protector can switch or "toggle" from being a conduit to allowing funds in the Retirement Plan Trust to accumulate. In other words, it allows the Trustee to assess the situation and the needs of your beneficiaries prior to making the distribution. The Trustee can accumulate the retirement plan distributions in the Trust rather than simply distributing them as they are made from the plan to the Trust beneficiary. This feature is helpful if the Trust beneficiary is a "problem" beneficiary – i.e., a spendthrift, substance abuser, etc.
Irrevocable Life Insurance Trust:
An Irrevocable Life Insurance Trust (often abbreviated as "ILIT" and pronounced "eye-lit") have several benefits of transferring the ownership of a life insurance policy to an ILIT. In order to enjoy the significant estate tax benefits, the IRS requires that the ILIT be created with certain legal requirements and follow a particular method for the transfer of the policy into the Trust. The other important caveat is that in order for the policy to be excluded from an estate, the person must not die within three (3) years of the date of the transfer of the policy into the ILIT.
In addition, there are ongoing administrative procedures to follow to ensure that your assets does not have what the IRS deems are "any incidences of ownership in the policy." To meet these IRS tax rules, these procedures include having you paying for the insurance premiums in a special way. Rather than transfer money directly to the Trustee which can trigger a gift tax, you essentially gives a gift in the amount of the policy premium to the ILIT's beneficiaries via the Trust's Trustee. The Trustee must then notify each beneficiary that a gift has been received on his/her behalf and unless he/she elects to receive the gift now, the Trustee will invest the funds by paying the premium on the insurance policy.
Although this procedure may seem a bit complex, it truly is not, particularly since we provide you with a template for the various notifications that must be done on a yearly basis.
In order to discuss or inquire about these scenarios in more detail please contact our office.
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