There are many forms of Wills and Trusts that can be created
to fit the needs and
complexities of each individual and family. Only a qualified
attorney with knowledge of
specific federal and state law requirements should draft all such
documents. The more
common documents are listed below:
Simple Will A basic or simple Will generally gives
(transfers) all property
owned by the deceased spouse to a surviving spouse, children or
other heirs. Sometimes
called an "I love you" type Will.
A Will with Contingent Trust The simplest of the
"complex" Wills. This
trust is generally created by terms of the Will in situations
involving minor children. It
is a trust that will pass everything to the spouse, if living,
and if not, to an asset
management trust for the minor children until they become more
mature and assets can be
distributed.
"Pour-over" Will This type of Will is
generally used when an
individual with a living trust wishes to merge assets not
transferred to the living trust
during the person's lifetime and "pours" them into
the trust. The assets will
generally be subject to probate administration.
Credit Shelter Trust A trust which can reduce federal
estate taxes otherwise
likely to be paid on the death of the surviving spouse. By
placing assets into the trust
with a value equal to the Federal Estate Tax Credit ($600,000)
upon the death of the first
spouse, assets can be passed to beneficiaries without having to
pay taxes at the second
death. Subsequent estate taxes may then be saved by having it
not included in the estate
of the death of the subsequent spouse. The surviving spouse can
have "beneficial
use" of the income and principal (as needed) during his or
her lifetime. This
important planning technique is thus aimed at taking advantage
of each spouse's unified
credit amount rather than passing all funds to the surviving
spouse and getting one credit
amount upon the spouse's death.
Living Trust without Tax
Planning Currently a popular
planning technique; however, while avoiding the expense of
probate, it does nothing to
avoid federal estate taxation. Properly structured, the
surviving spouse has full control
of the principal and income with this trust. This type of trust
also can play an important
role in the management of assets in the event that
beneficiaries are not yet ready to
inherit the assets outright, or because they still lack
experience in financial and
investment matters.
Qualified Domestic Trust Transfers of assets and
property of a non-U.S. citizen
spouse will not qualify for the Marital Deduction unless the
assets pass to a Qualified
Domestic Trust (QDT). The QDT rules require a U.S. Trustee and
other measures that help
ensure collection of a death tax at the surviving non-citizen
spouse's later demise. Other
more complex trusts, for example, an Irrevocable Life Insurance
Trust, are created to
remove assets from the taxable estate to reduce the tax
liability and maximize the estate
transferred to heirs.
Family Real Estate Limited
Partnership This is a great way
to reduce your Real Estate holdings by up to 30%. This is not
an advantage if your estate
is less than 1.2 million in net worth when you have a living
trust and are married.
Charitable Remainder Trust
Ideal for someone with a large
net worth who needs income and tax benefits now. The
limitations are simple you are
disinheriting your heirs for whatever amount you give to the
charity.
