| Over the last ten to fifteen years, much has been | | | | available for immediate distribution after the death of |
| written about the Revocable Living Trust by estate | | | | the Grantor, subject to insuring sufficient assets are |
| and financial planners, some of which has been | | | | available to pay estate taxes; |
| factually accurate and some of which has been purely | | | | E. No gift tax consequences of making transfer of |
| fictional. By most accounts the Living Trust was first | | | | assets to the trust. |
| heavily promoted by estate planners in California | | | | F. Continuation of asset management of Trust assets |
| where the cost of probate and the length of time | | | | in the event of disability of Grantor/Beneficiary. |
| involved in probating a Last Will and Testament has | | | | DISADVANTAGES |
| been described as onerous. However, as a result of | | | | There are some disadvantages to utilizing a Living |
| extensive promotion, its popularity has spread | | | | Trust: |
| eastward over the last five years. Although it has not | | | | A. You must transfer all of your assets including title to |
| been widely embraced by attorneys in New York, its | | | | any real property to the Trust during your lifetime. |
| use as an estate planning tool has increased in | | | | Additionally, any assets acquired during the Trust's |
| popularity. | | | | existence must be transferred to the Trust; |
| WHAT IS A REVOCABLE LIVING TRUST? | | | | B. The cost of having an attorney prepare a |
| A Revocable Living Trust is a written instrument | | | | Revocable Living Trust is generally higher than the |
| created during the lifetime of the Grantor (the person | | | | cost of preparing a Last Will and Testament; |
| establishing the trust) and is effective during the lifetime | | | | C. There will be legal fees incurred in amending or |
| of the Grantor with respect to the assets which are | | | | modifying the Trust during your lifetime and you will still |
| placed into the trust. The trust is not effective until it is | | | | need a Last Will (commonly known as a "pour over" |
| funded with assets. The Revocable Living Trust is | | | | Will) in the event there are assets which have not |
| distinguishable from a testamentary trust which is | | | | been transferred to the Trust. |
| made a part of a Last Will and Testament, and only | | | | THE FICTION |
| becomes effective upon the death of the testator (the | | | | Many estate planning professionals in their |
| drafter of the Will). | | | | advertisements and writings relevant to Revocable |
| The Grantor of a Revocable Living Trust retains the | | | | Living Trusts have all too often exaggerated the |
| power to freely amend and revoke the trust as well | | | | estate tax advantages of utilizing a Revocable Living |
| as to reacquire its assets. It is distinguishable from an | | | | Trust rather than a Last Will. All the estate tax planning |
| Irrevocable Trust which cannot be amended or | | | | that can be implemented through the use of a |
| revoked by the Grantor. | | | | Revocable Living Trust can also be effectuated |
| New York now permits the same person to be both | | | | through the use of a Last Will. For example, the use of |
| the sole trustee and the sole holder of the present | | | | Credit Shelter Trusts can be implemented in a Last |
| beneficial interest so long as one or more other | | | | Will. In my opinion, the Revocable Living Trust has no |
| persons holds a beneficial interest. The beneficial | | | | advantages over a Last Will for estate tax planning |
| interest held by the other person can be vested or | | | | purposes. |
| contingent (present or future). A lifetime trust will be | | | | The Revocable Living Trust does not eliminate in its |
| deemed to be irrevocable unless it expressly provides | | | | entirety the need to have a Last Will. Even if you have |
| that is revocable. | | | | a Living Trust it is still advisable that you have a Last |
| ADVANTAGES OVER USE OF A LAST WILL | | | | Will. It is highly unlikely that you will have transferred all |
| The use of a Revocable Living Trust rather than a | | | | of your assets into a Living Trust prior to your death, |
| Last Will and Testament as an estate planning tool | | | | thus, creating the need for the existence of a Will to |
| provides the following benefits: | | | | transfer the assets that are in your name alone at the |
| A. Avoids the cost and time of probate and its | | | | time of your death. |
| attending expenses such as Court filing fees, legal | | | | Furthermore, the assets transferred to the Revocable |
| fees, guardian ad litem fees and executor's | | | | Living Trust are not protected for purposes of |
| commissions (but, will have trustee's commissions); | | | | Medicaid eligibility and long term care planning. Because |
| B. Helps avoid potential challenges to a Last Will and | | | | the trust is revocable the assets are considered an |
| Testament regarding issues of Testator's competency. | | | | available resource for Medicaid eligibility purposes and |
| Attacks on grounds of lack of due execution are very | | | | would be subject to a spend down to Medicaid eligibility |
| difficult, although standard of competency required to | | | | levels. In my opinion, this is perhaps the most significant |
| execute a revocable trust is higher, e.g.; capacity to | | | | drawback of utilizing this trust. |
| make a contract; | | | | In conclusion, it is advisable that one consult with an |
| C. Protects the Grantor's privacy. It is a private | | | | attorney before executing a Revocable Living Trust |
| document, and unlike a Will its provisions are not | | | | so as to be able to fully understand the advantages |
| accessible for public review; | | | | and disadvantages of its usage. |
| D. Assets in the Revocable Living Trust will be | | | | |