Living trusts may be set up in any way that is desired by the person or people putting assets into the trust. Revocable living trusts allow you to amend any provision of the trust or to totally revoke the trust.

If all assets are held in the name of the living trust, a will is not used at the time of death. However, a will should be signed in conjunction with a living trust in case an asset is inadvertently left out of the trust. The will simply states that any property not already in the living trust should be transferred to the trust. This document is called a POUROVER WILL since it POURS assets over into the trust.

As long as the person or people who put the assets into the trust are the managers of the trust, the individuals will continue to file and pay income tax. in exactly the same way they did before the trust was created. Income generated by trust assets is simply treated as income of the individuals, so no extra tax returns are required.

Use of a living trust may save on income, gift, estate, and inheritance taxes, depending upon the value of the estate and the makeup of the assets. Other documents may also be used for tax planning, but the living trust incorporates both tax planning and probate avoidance.

Don't be fooled into thinking probate is not required because probate did not arise on the death of the first spouse. It is very likely that no probate was required on the first death since many couples own all property in joint tenancy. This form of ownership allows the surviving joint tenant to inherit property without going through the probate process. However, when only one joint tenant survives, probate will be required to transfer assets upon the remaining joint tenant's death.

One benefit of a living trust is that it allows assets to be transferred to beneficiaries with no court involvement. Prior to executing an estate plan, cost of completing the estate plan and expense of steps required upon disability and/or death utilizing various types of planning tools should be compared. Specific probate fees vary from state to state and from attorney to attorney.

Although administration of a living trust is generally less costly than probate, a trust will not eliminate all fees of administration since, even with a trust, when a death occurs titling must be verified, values determined, expenses paid, and distributions made. The trust does eliminate all court involvement, maintains more privacy than probate, eliminates notice requirements and waivers from beneficiaries, and, in many cases, simplifies implementation of tax planning techniques.

The benefit of a living trust also depends upon the personal desires and goals of each individual. In some cases, regardless of whether dollars can be saved in the long run, an individual may not want to spend time or money completing estate planning during lifetime. The right estate planning tool for you depends upon your personal goals.

In some cases, the desire to keep affairs private and to allow for transfer of assets without waiting periods required in probate may make use of a living trust beneficial regardless of the level of cost savings. The primary goal of any estate plan must be to achieve the individual's desired objective. No minimum estate value is required in order to benefit from a living trust. The type of assets involved and overall goals should be assessed to determine whether a living trust would be beneficial.

Costs of a living trust will vary substantially from attorney to attorney and from state to state, and costs will vary depending upon your particular estate planning needs. Many attorneys will provide an initial consultation at no charge to allow you to meet the attorney and to discuss your individual situation. At the conclusion of that meeting, a cost estimate should be made available to enable you to balance cost vs. benefit.

The cost of a living trust may exceed the cost of a will. However, a comprehensive estate plan, whether a will or trust is utilized, should include an analysis of titling and beneficiary designations on existing assets. Otherwise, the will or trust will not effectively transfer assets to the correct beneficiaries. If this analysis is properly completed, the investment for estate plans utilizing wills or trusts will not significantly different in cost.

In order for a living trust to work properly, it is important that the law office provide advice and forms to help in changing the name on the title of assets to the trust. It is also important that the living trust agreement is coordinated with a will, a durable power of attorney and various other documents which all work together to accomplish your goals. When comparing costs of living trusts, services provided should also be considered. If letters to transfer assets, consultations, and all documents are not included in the fees quoted, a bargain may not be such a bargain. Prior to deciding to invest in a trust, you should be aware of total cost involved.

Revocable living trusts, which allow you to continue to manage your own assets and which can be revised or revoked at any time, have been discussed in this booklet. Revocable living trusts will not shield assets from nursing home costs. Assets held in a revocable living trust will be considered to be your assets for purposes of Medi-Cal eligibility. Medi-Cal is the government program which covers costs of nursing home care for those eligible, but eligibility is available only to those whose income and assets are under allowable levels. If you can manage and control assets, the assets are considered as yours for purposes of Medi-Cal eligibility. Various planning techniques do exist to protect some or all assets from potential nursing home expenses.

Trusts are like any type of estate plan. They must be customized to your individual situation. As a client, what you pay for is individual advice and application of tax, probate, and other state and federal law to your specific needs and goals.