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Living Trust More Certainty as to Distribution also be lost by the use of joint tenancy and other probate This pamphlet is based on Kansas and is published at Death avoidance devices. to provide general public information, not specific legal advice. The facts involved in a specific case determine By ensuring that all property is properly titled in Increased Paperwork the application of the law. a living trust, there is greater assurance that all of A trust may involve more paperwork than when proper- your property will be governed by its terms. Since ty is owned individually. For instance, if you are not the Referral Service wills only govern probate assets, assets that pass out- of your own trust, the trust may be required to Is a (800) 928-3111 side the probate process, such as those held in joint file a separate tax return, although no additional income Contact the Kansas Association (KBA) Lawyer tenancy or under beneficiary designations, are often taxes would be owed. The trustee is usually directed to overlooked. Referral Service for the name and contact information of account to the grantor or beneficiaries. In addition, or- a lawyer with experience in a particular area. Living Trust dinarily extra documents must be prepared to transfer What are the disadvantages of to the trust. Ask-a-Lawyer a living trust? (800) 928-3111 for Drafting Expenses Do you give up control of your Ask-a-Lawyer will connect you with an attorney who can Your attorney will charge a fee to draft your trust. offer immediate legal advice about your legal problem, property in a living trust? for a modest fee of $2 per minute, billed to your Visa, As living trusts contain provisions applicable during As long as you are competent, you can retain as much MasterCard, Discover, or American Express. You? lifetime as well as at death, this fee is generally more control as you desire. You can change , change expensive than the fee for a will. There may also be the provisions of the trust, direct your trustee on Pamphlets additional costs and legal expenses in titling your investments and distributions, and even terminate a liv- As a public service of the KBA and the assets over to your living trust. There will also be ing trust if you are unhappy with the arrangement. in your community, the following pamphlets are charges associated with drafting a “pour-over” will. available in limited quantities through the KBA However, these wills are not as complicated as trust How do I set up a living trust? office, 1200 SW Harrison St., Topeka, KS 66612-1806; (785) 234-5696. agreements and probably will not substantially in- See your attorney. A living trust is a legal document with What is a trust? crease drafting costs. complex property, , and tax consequences and Aging and the Law • The Automobile Accident What kinds of living trusts are there? Administration Expenses should not be entered into without consideration of your overall objectives. People are sometimes • Child Custody, Support & Visitation Rights • A Does a living trust replace a will? Should you choose a professional fiduciary during Death in the Family ... What Should I Do? • Domestic encouraged to set up trusts without advice from their your lifetime, there will be fees for administering the Violence – A Practical Guide for Victims • Domestic How do I set up a living trust? attorney, but this is not advisable. Your loved ones may trust. Should you wish to manage the trust yourself, Violence – A Practical Guide to Working with Sur- not be properly protected and you may lose the oppor- you may serve as your own trustee and avoid these vivors • Violencia Domestica – Guia Practica para las tunity for tax planning and other advantages if the trust fees. Victimas • Divorce – An IRS Perspective • Introducing document is not appropriately drafted. An attorney ex- Your Lawyer • Is a Living Trust for You? • Joint Ten- Potential Loss of Some Income Tax perienced in estate planning is the person best equipped ancy • Juror: Your Rights and Duties • Living Wills Advantages to analyze your estate and discuss all appropriate estate and the Durable Power of Attorney for Health Care Some income tax advantages after your death may be planning devices. If a living trust is appropriate, your Decisions • Marriage & Divorce • Small Claims Prepared & issued as a public service by lost by using a living trust rather than having your attorney will be able to prepare a trust document that • Stop, Look, and Check Before Buying a Home • Ways to Settle Your Dispute • What is Probate? • What is so property go through probate, such as the ability of addresses your situation. For many, a living trust is the Important About a Will? your estate to elect a separate tax year and to use certain best estate-planning vehicle. estate losses for income tax purposes. These income tax disadvantages, however, are usually insignificant, particularly when balanced against the increased costs of the probate process. The income tax advan- tages of having property go through probate would

Revised: 10/2013 IS A LIVING TRUST FOR YOU?

a will that “pours over” such probate property to your as to the investments and distribution from the trust for as your death without court proceedings. This feature is What is a trust? trust is recommended, no matter how carefully you have long as you are competent. particularly attractive when the trust owns A trust is an agreement between you (the settlor) and transferred your assets in trust. in more than one state or jurisdiction because it avoids another individual or entity (the trustee) who holds Whether an individual or a professional trustee is desir- multiple probate proceedings. legal title to property and manages it for the benefit able depends entirely on the circumstances. A professional of one or more individuals or organizations named in trustee is often able to offset a significant portion of its Flexibility During Incapacity the trust (the beneficiaries). A trust can be created in Can you do the same things in a fees through increased yield. Further, most professional fi- A revocable living trust is also advantageous during your will (a ) or can be created dur- living trust as you can in your will? duciaries are bonded, are experienced in the complexities your lifetime. If you become incapacitated, you may ing your lifetime (a living trust). The terms of a living of trust management, and offer greater financial security, not change your will. However, during incapacity, your Yes. You can instruct your trustee to pay your bills at trust, which can be very flexible, are set out in a trust objectivity, and continuity of management. On the other agent under a general durable power of attorney can death, leave burial instructions, sell your property, and agreement. hand, an individual may be more familiar with your fam- be given the power to change your trust. This can be designate a guardian and conservator for your minor ily situation and may be less expensive. important if tax or other laws affecting trusts and This pamphlet addresses only living trusts. children, just as you would instruct an under a estates change after you become incapacitated. will. You can also provide for longer-term trusts for the Trustee’s fees vary depending on services performed, the value of the trust, the nature of trust assets, and the party What kinds of living trusts are there? care of loved ones or to benefit charities without leaving Financial Management During Incapacity performing the services. Your attorney is able to counsel A living trust can be either revocable or irrevocable. A property outright to them at your death. you regarding this decision. A trustee can collect income and pay expenses in the revocable trust can be changed or terminated by the event of incapacity. Without a trust or power of attor- one setting up the trust at any time before the person’s Do you have to be wealthy to set What are the advantages of a ney, an individual may be subject to court proceedings death or incapacity. An irrevocable trust is permanent, up a trust? to determine if he or she is competent, and may have can seldom be changed or terminated, and has special No. You should consider the complexity of your estate, living trust? someone not personally known named as conservator. tax treatment. Absent unusual circumstances, most liv- your need for investment management, the availability Probate Avoidance If a conservatorship were needed, all further financial ing trusts used as one’s primary estate planning docu- of a reliable initial or successor trustee, and your family Assets transferred to the trust are not subject to probate. dealings would be subject to court (and therefore ment are revocable. A living trust can be established situation rather than wealth when you compare the ad- You can save expenses and fees because the trust contains public) scrutiny. and all of your assets transferred into its ownership vantages of a trust against a traditional will. As with any special instructions for distribution of your assets after immediately or can be established as a “standby trust,” estate planning decision, you should get specific advice Financial Management During ready to receive assets if the settlor becomes incapaci- tailored to your needs and other circumstances unique to tated. In such cases, someone needs authority to trans- Your Lifetime you and your family. fer the assets, usually as agent under a special or general Even if you are not incapacitated, your durable power of attorney. named trustee can manage assets, pay Who should be your trustee, and your bills, run a business for you, or Does a living trust replace a will? how much will it cost? take care of personal needs – whatever Not completely. If all your property is either titled in Naming a trustee requires careful thought. Most people you direct in your trust agreement. your living trust at the time of your death or has your will be trustees of their own living trusts, but a successor Protection for Beneficiaries trust named as the beneficiary, none of your property will have to be named for continuation after the death or Although a revocable living trust can- would go through the probate process. However, it is disability of the settlor or if you decide you no longer want not shield your assets from your own easy to overlook an asset that you intend to put in a to manage your assets. creditors, you can set up a trust to pro- trust, and you may acquire additional property prior to You might prefer to name another person, family member, tect your loved ones from their credi- your death, such as an . You might not have or a professional trustee, such as a bank, attorney, or trust tors, spouses, or inexperience. time to transfer that additional property to your trust. company, as a co-trustee or sole trustee. If you name a Privacy Your trust might also have been terminated, either vol- family member as the trustee, you may create a taxable sit- untarily or involuntarily, before your death. Without uation you had not anticipated if there are no limitations The terms of a living trust and the value a will, any of such overlooked property would pass on their trust powers. In all events, a properly drafted liv- of your estate are not subject to public through probate under the laws of the state rather than ing trust would require the trustee to defer to your wishes scrutiny. to the loved ones or charities of your choice. Therefore,