DO YOU HAVE QUESTIONS ABOUT COVID-19 AS AN EMPLOYEE OR EMPLOYER? VIEW OUR NEW FAQ.

Wills, Trusts, and Prenuptial Agreements

Creating your estate plan involves many moving parts.

It often includes the adoption of an Advanced Medical Directive, Power of Attorney and a Will, and it may involve a Trust Agreement, family partnerships, or limited liability companies that own family assets and sometimes marital agreements (pre-marital agreements known prenuptials or "pre-nup", and post marital agreements). Each of these items involves serious legal decision making and can affect other parts of your financial or other planning. 

Why might a Revocable Living Trust (RLT) be for you?

While you are alive a RLT can provide for the smooth management of YOUR assets, especially in your declining years when you either ca not, or would rather not manage your assets by naming a trusted successor trustee who can easily step into your shoes to manage, invest, sell, and liquidate your assets as you desire. You can also choose how you want your estate managed with any restrictions, conditions or intentions you wish to make known. Ultimately an RLT may help avoid the heavy cost seeking a court-ordered guardianship if you lose capacity.

After you die, RLT assets are not subject to probate, saving your heirs time, effort, and money in settling your estate. Other savings may involve avoiding extensive attorney assistance, avoiding court costs associated with probate process (filing an inventory and accounting) and distributing the assets. By avoiding probate, your heirs will not be required to disclose any assets owned by the RLT as it is a private document not open to the public that continues after your death, with income and principal distributed as described in the trust instrument.

If you die owning property in multiple states (for example, a beach house in Delaware or a lake house in Maryland) and you have adopted a will only, that real estate must go through a multiple state probate, along with multiplying the costs of probate. If all your property is owned by the RLT, there is no need for multiple state administration.

There are also "urban myths" and some down sides associated with RLTs. For example, RLTs in and of themselves do not "save" federal estate taxes or state inheritance taxes; in fact, most Americans are not affected by estate taxes at this time. However, while Virginia does not have an inheritance tax, it does have a state probate tax which CAN be avoided if your assets are in a trust. Additionally, trust assets receive a stepped-up tax basis at your death, providing your heirs the ability to avoid certain capital gains taxes.

Cost wise, you incur costs when the trust is created, you retitle assets, and retain counsel to prepare a solid trust agreement. Probate costs are not paid until after death. Trusts do require management while you are alive or incapacitated and if it is not properly or fully funded, the trust may not serve the purpose for which it was intended.

There are many other issues related to the RLT, but basic overview provides some insight in what some people think is a rather mysterious, far off legal concept. If you would like to set up an appointment to discuss your estate plan, please feel free to call us at Cook, Craig & Francuzenko, PLLC, 703-865-7480.

Follow us on Twitter and Social Media!

Complete the contact form or call us at 703-865-7480 to schedule your consultation.

Address
Contact Us

Please do not include any confidential or sensitive information in this form. This form sends information by non-encrypted e-mail which is not secure.

Submitting this form does not create an attorney-client relationship.