Frequently Asked Questions
What is a Revocable Living Trust?
A Trust is a legal arrangement whereby one person, the Trustee, owns property given by another person, the Grantor (also referred to as a Settlor, Trustor, or Trust Maker) for the benefit of a third person, the beneficiary. Perhaps the most common type of Trust is the "Revocable Living Trust." Revocable Living Trusts are fully revocable and amendable at the request of the Grantor and you generally are the Grantor, Trustee and Beneficiary while you are alive and able. Assets transferred (or “funded”) into a Revocable Living Trust can be withdrawn at any time. "Living" refers to the fact that it is established while you are alive and remains under your control until your death or incapacity. Revocable Living Trusts can be excellent vehicles for disability planning, privacy, and probate avoidance. A Revocable Living Trust provides no asset protection for the Grantor during his or her life.
What is a Will?
A Will – or a “Last Will and Testament” – is a legal document that tells the probate court how you want your property distributed after you die, and who has the power and responsibility to wrap up your affairs. It is purely a death instrument and is only effective when "probated." Because the Will takes effect only after a court determined that it is a valid document, a judge must act before your executor can step in and manage your estate.
What is Intestate?
Persons who fail to plan during their lives and die without creating a Will die intestate. Each state has laws that dictate how an intestate person’s property will be distributed leaving you with absolutely no control. Property may go to people you don’t want and in ways that you never intended.
What is Probate?
Probate is a court-supervised process for distributing the individually owned assets of a deceased person. If there is a Will, the court will review the Will to ensure that it complies with local law and is authentic. The court will then appoint a Personal Representative (sometimes referred to as the "Executor") to administer the estate. If there is a Will, the Will governs the priority of persons seeking appointment, if not state law controls. Creditors are paid and then assets are distributed to beneficiaries in accordance to the instructions written in the person's Will. Probate is a public process and can be slow and expensive. Probate occurs wherever assets are located, thus if assets are located in multiple states, multiple probates may be required.
What is an Irrevocable Life Insurance Trust (ILIT)?
Life insurance is a unique asset in that it serves numerous diverse functions in a tax-favored environment. Life insurance proceeds are received income tax free and, if properly owned by an Irrevocable Life Insurance Trust, life insurance proceeds can also be received free of estate tax. An Irrevocable Life Insurance Trust (ILIT) is one of the most popular wealth planning devices. It is a Trust designed to own a life insurance policy, usually on the lives of you and your spouse. You gift funds to the Trust periodically and the Trustee uses the funds to pay premiums on the life insurance policy. The Trust is designed to produce one or more of the following benefits:
• Make current gifts to family members.
• Accumulate assets outside your taxable estate.
• Protect assets from claims of creditors.
• Avoid income tax on the accumulation of funds.
• Avoid estate tax upon the distribution of funds to the family.
• Create a source of liquidity to cover estate taxes or expenses.
• Replace assets that may have been given to charity.
A Trust is a legal arrangement whereby one person, the Trustee, owns property given by another person, the Grantor (also referred to as a Settlor, Trustor, or Trust Maker) for the benefit of a third person, the beneficiary. Perhaps the most common type of Trust is the "Revocable Living Trust." Revocable Living Trusts are fully revocable and amendable at the request of the Grantor and you generally are the Grantor, Trustee and Beneficiary while you are alive and able. Assets transferred (or “funded”) into a Revocable Living Trust can be withdrawn at any time. "Living" refers to the fact that it is established while you are alive and remains under your control until your death or incapacity. Revocable Living Trusts can be excellent vehicles for disability planning, privacy, and probate avoidance. A Revocable Living Trust provides no asset protection for the Grantor during his or her life.
What is a Will?
A Will – or a “Last Will and Testament” – is a legal document that tells the probate court how you want your property distributed after you die, and who has the power and responsibility to wrap up your affairs. It is purely a death instrument and is only effective when "probated." Because the Will takes effect only after a court determined that it is a valid document, a judge must act before your executor can step in and manage your estate.
What is Intestate?
Persons who fail to plan during their lives and die without creating a Will die intestate. Each state has laws that dictate how an intestate person’s property will be distributed leaving you with absolutely no control. Property may go to people you don’t want and in ways that you never intended.
What is Probate?
Probate is a court-supervised process for distributing the individually owned assets of a deceased person. If there is a Will, the court will review the Will to ensure that it complies with local law and is authentic. The court will then appoint a Personal Representative (sometimes referred to as the "Executor") to administer the estate. If there is a Will, the Will governs the priority of persons seeking appointment, if not state law controls. Creditors are paid and then assets are distributed to beneficiaries in accordance to the instructions written in the person's Will. Probate is a public process and can be slow and expensive. Probate occurs wherever assets are located, thus if assets are located in multiple states, multiple probates may be required.
What is an Irrevocable Life Insurance Trust (ILIT)?
Life insurance is a unique asset in that it serves numerous diverse functions in a tax-favored environment. Life insurance proceeds are received income tax free and, if properly owned by an Irrevocable Life Insurance Trust, life insurance proceeds can also be received free of estate tax. An Irrevocable Life Insurance Trust (ILIT) is one of the most popular wealth planning devices. It is a Trust designed to own a life insurance policy, usually on the lives of you and your spouse. You gift funds to the Trust periodically and the Trustee uses the funds to pay premiums on the life insurance policy. The Trust is designed to produce one or more of the following benefits:
• Make current gifts to family members.
• Accumulate assets outside your taxable estate.
• Protect assets from claims of creditors.
• Avoid income tax on the accumulation of funds.
• Avoid estate tax upon the distribution of funds to the family.
• Create a source of liquidity to cover estate taxes or expenses.
• Replace assets that may have been given to charity.
