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How a Trust is Like An Acre of Land

June 1, 2010

Having an acre of land may tell you what you have, but it says nothing about the value of the land.  Some land is worth $500 per acre and some is worth $5,000 per acre.  Having a trust is much the same.  Many folks know they have a trust, but the value of that trust depends on what it says and how it says it.  Some trusts say the right things and some don’t. Trusts that are incomplete, out of date or simply incorrect are of little value.

Our mission statement is “Effective Planning Made Easy”.  Here are some things to look for in your trust to help insure it’s as effective as it should be in meeting your planning needs:

 1.  Have you re-titled your property? In order to avoid probate your revocable living trust should be “funded” properly.  Funding is re-titling your property to the Trustee of your trust.  You are normally at least one of the Trustees of your trust.  Having assets titled in your individual name with no reference to your trust is a dead giveaway that your trust is not completely funded.  If you are married, you and your spouse usually each have your own trust with some assets/property titled in each trust.  Very few trusts are funded properly.  Remember that retirement accounts are treated differently and you should never change the name on your retirement account while you are alive.

 2.  If you are married, does your trust contain up-to-date estate tax planning?  There have been many law changes over the years and many existing trusts contain out of date language dealing with estate tax planning.  More and more farm families are having estates that will be subject to estate tax next year when the current law rolls back the exemption amount to $1,000,000.  It is vitally important that your trust contain current strategies for minimizing or avoiding estate tax.  Don’t pay needless tax dollars.

3.  Does your trust address disability issues?  Your trust should contain instructions dealing with a possible mental disability.  It should define when and how you would be determined to be mentally disabled so that a successor Trustee could take care of you and your assets.  The goal for many folks is to avoid the expense of going to Court to deal with disability issues.  A well-drafted trust will address these issues and provide for your care with your assets.

4.  Does your trust contain protective strategies?  In recent years, trusts are including increased asset protection for beneficiaries.  They also are being drafted to protect assets if your spouse should remarry after your death.  They can also protect assets if your child is divorced.

If your plan is gathering dust, you’re not alone.  You owe it to yourself and your family to have your plan reviewed and brought up to date.  Contact your estate planning attorney to learn what your trust can and should say.

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