An Overview of Revocable Living Trusts

A Revocable Living Trust is usually the essential foundation of any estate plan.  One of the most important features is that it can help you avoid the substantial cost and time of going through Probate.  A Living Trust is a legal document that allows you to determine how your assets will be managed upon your death or incapacity.  It also provides for the efficient distribution of your estate to your loved ones, including providing appropriately for minor children.  A Revocable Living Trust Portfolio will also include important related documents such as a Pour-Over Will, Durable Power of Attorney, Advance Health Care Directive, Instructions for retitling assets, and simple instructions for settling a trust estate without the need for probate.

Who Needs a Living Trusts

If you meet one of the following qualifications, you need to call us. We can guide you through the process and educate you on how an AmeriEstate Living Trust can protect you and your family.

  1. Homeowners
  2. Own property in another state.
  3. Parents of minor children
  4. Possess $$ assets greater than state probate limit
  5. Singles with assets titled in their name
  6. Married with wishes separate from spouse
  7. Involved in second or later marriage
  8. Have specific wishes for beneficiaries
  9. Wish to donate part of assets to charities
  10. Want to keep financial and other matters private
  11. Have special-needs dependent
  12. Desire to plan in case of incapacity.

Advantages of a Living Trust

Here are just some of the primary benefits of an AmeriEstate Living Trust.

  • Safeguard your assets during your lifetime and beyond
  • Protect your privacy
  • Gain Peace of Mind
  • Stay in control while keeping all of your options open
  • Choose someone to oversee your affairs and your care
  • Protect your family from creditors and solicitors
  • Eliminate family quarrels
  • Ensure proper use of assets
  • Avoid Probate Court, especially in multiple states
  • Save your family time and money
  • Plan for Minor Children or Special-Needs Dependents
  • Provide for Children from prior marriages
  • Make sure your wishes are honored


Probate is the legal process through which the court supervises the implementation of your Will. The Court will order your assets to be inventoried and appraised; will make sure that your debts, including court costs, attorneys and executor fees are paid; referee any challenges or contests to your Will; and finally, relinquish the remaining estate to be distributed to your heirs. If you don’t have a valid Will, your estate must still go through the Probate system before being distributed to your heirs as defined under state law.

A Living Trust can help you avoid Probate because assets are placed in your trust during your lifetime so that the trust, and not you personally, own the assets when you die.

Estate Taxes

Federal Estate Taxes are imposed on the transfer of assets from a deceased person to anyone other than his or her spouse.  The IRS provides an exemption and only taxes the estate in excess of the exemption amount.

Year Exemption Max Tax Rate
2006 $ 2,000,000 46%
2007 $ 2,000,000 45%
2008 $ 2,000,000 45%
2009 $ 3,500,000 45%
2010 unlimited No Tax
2011 $ 5,000,000 35%
2012 $ 5,000,000 35%
2013 $ 5,000,000 55%

A Will that leaves all assets to a surviving spouse outright will lose the available exemption for the deceased spouse. A Living Trust may help married couples minimize or avoid estate taxes through the use of “Credit Shelter” provisions in their Living Trust.  This allows both spouses to maximize the exemptions available.


I have a Will, why would I want a Living Trust?

Contrary to what most people have heard and have been led to believe over the years, a Will is probably not the best way to plan your Estate – primarily because a Will does not avoid Probate when you die. In fact, a Will is a one-way-ticket to Probate – all Wills must be verified by the Court before they can be enforced.

Also, because a Will can only go into effect after you pass away, it provides no protection if you become physically or mentally incapacitated, a real concern of millions of older Americans, and you could easily end up under the control of the Probate Court before you die.

Fortunately, there is a simple and proven alternative to a Will – The Revocable Living Trust.  Assets placed in Trust pass outside of Probate and that you keep control of those assets while you are living and makes sure your plan won’t be altered by the court or disgruntled relatives at your passing or incapacity.

What is Probate?

Probate is the legal process through which the court supervises the implementation of your Will. The Court will order your assets to be inventoried and appraised; will make sure that your debts, including court costs, attorneys and executor fees are paid; referee any challenges or contests to your Will; and finally, relinquish the remaining estate to be distributed to your heirs. If you don’t have a valid Will, your estate must still go through the Probate system before being distributed to your heirs as defined under state law.

What’s so bad about Probate?

It is expensive.  Legal/executor fees and other costs are currently estimated by the AARP at 8-10% or more of an Estate’s gross value (before debts are paid).  These costs must be paid prior to your Estate being distributed to your heirs.  Also, if you own property in other states, your family could face multiple Probates.

It takes time.  Normally 9 months to 2 years.  During this time, your assets are usually frozen so an accurate inventory can be taken.  Nothing can be distributed or sold without the court’s and/or executor’s approval.  If your family needs money to live on, they must request a living allowance which may be denied.

Your Family has no privacy.  Probate files are open to the public, so anyone (including a business competitor) can see what you owned and whom you owed.  This also invites unhappy heirs to contest your Will and exposes your family to unscrupulous solicitors.

Your Family has no control.  The Court has control.  Having someone tell them who gets what and when – and having to pay for this outside supervision – can be very frustrating for your family and often leads to disputes.

But I don’t have that much, why should I be concerned about Probate?

You might be surprised at how much even a modest Estate costs, especially if real estate is involved – and don’t forget the other costs (time, lack of privacy, etc.)  Verify your state's laws.

Doesn’t joint ownership avoid Probate?

Not really – it usually just postpones it.  When one of the joint owners dies, ownership will transfer to the other without Probate.  But when the “second” owner passes on, or if both should die at the same time, the assets must be Probated before distribution.  Watch out for the other risks too!  When you add someone as a co-owner to your assets, you lose control.  You expose it to the other owner’s debts.  Also, you need your co-owner’s signature to sell or refinance; and if he/she is incapacitated you’ll have to get approval from Probate Court – even if your co-owner is your spouse.

Why would the Probate Court get involved if someone were incapacitated?

If you can’t conduct business due to mental or physical incapacity, i.e. Alzheimer’s, stroke, heart attack, The court will appoint a conservator to act on your behalf and must approve all decisions made, even if you have a Will.  Remember, a Will can only go into effect at your passing.  The Court, not your family, controls how your assets are used to care for you.  This can be expensive, time consuming and difficult to end if you recover.  And it doesn’t replace Probate at death – your family would have to go through the court system twice!

Does a Durable Power of Attorney prevent the Court’s involvement at incapacity?

A Durable Power of Attorney lets you name someone to manage your financial affairs if you are unable to do so.  A Durable Power of Attorney for Health Care empowers the person you named to make certain medical decisions on your behalf if you are unable to do so.  Properly prepared Durable Power’s of Attorney will prevent the Court from having to make decisions on your behalf.  A well prepared Living Trust portfolio will include these documents for you.

What is a Living Trust?

A Living Trust is a legal document that, like a Will, contains your instructions for what you want to happen to your assets when you die.  But, unlike a Will, a Living Trust avoids Probate at death, can control all of your assets and prevent the Court from controlling your assets at incapacity.  Because there is no Probate with a Living Trust, all expensive Court proceedings and delays are eliminated.  Your privacy is preserved and the emotional stress on your family is minimized.  It can reduce/eliminate estate taxes through the use of credit shelter provisions in the Trust, is extremely hard to contest and even provides very effective prenuptial protection.

How does a Living Trust avoid Probate and prevent Court control of assets at incapacity?

When you set up a Living Trust, you transfer assets from your name to the name of your Trust, which you control – such as from “Bob and Sue Smith, husband and wife” to “Bob and Sue Smith, Trustees for The Bob and Sue Smith Family Trust.”  All the assets transferred are no longer your property (they are assets of the Trust) and are not subject to Probate when you die, and are not subject to court-imposed guardianship if you become disabled. The concept is very simple, but this is what keeps you and your family out of the Courts.

Do I lose control of the assets in my Trust?

Absolutely not.  You keep full control.  As Trustee of your Trust, you can do anything you could do before – buy/sell assets, change or even cancel your Trust during your lifetime, (that’s why its called a Revocable Living Trust).  You even file the same tax returns.  Nothing changes but the title to your assets.

Is it hard to transfer assets into my Trust?

No, it is very simple.  Your attorney, banker, Trust officer, financial advisor, investment broker, insurance agent, etc. can assist you, if need be.  Make sure you change titles on all real estate (local and out-of-state) and other property with formal titles (checking and savings accounts, stocks, CD’s, insurance, mutual funds, etc.)    Most Trust documents automatically include personal property without formal titles, (such as jewelry, clothing, art, home furnishings).

Doesn’t this take a lot of time?

It will take a little time, but not a lot.  It should only take a few weeks to prepare the legal documents after you make the basic decisions.  You can do it now or pay the courts and attorneys to do it for you later.  One of the benefits of a Living Trust is that all your assets are brought together under one plan.  Don’t delay “funding” your Trust.  Your Trust can only protect assets that have been transferred into it.

Should I consider a Corporate Trustee?

Although you can be a Trustee of your own Trust, some people select a Corporate Trustee (bank or trust company) to act as their Trustee or Co-Trustee, especially if they don’t have the time, ability or desire to manage their own Trusts, or if one or both spouses are ill.  Corporate Trustees are in the business of managing Trusts – they are reliable, objective, government regulated and experienced investment managers. Their fees are usually very reasonable.

If something happens to me, what happens?

If you or your spouse are Co-Trustees, either can act and have instant control if one becomes incapacitated or passes away.  If something happens to both of you, or if you are the only Trustee, your selected Successor Trustee(s) will step in.

What does a Successor Trustee do?

At physical or mental incapacity, your Successor Trustee(s) looks after your care and manages your financial affairs for as long as necessary, using your assets to pay your expenses.  When you recover, you automatically resume control.  When you pass away, your Successor Trustee(s) pays your debts and distributes your assets according to your instructed wishes.

Who can be a Successor Trustee?

Successor Trustee(s) can be individuals (adult children, other relatives or trusted friends) and/or a Corporate Trustee.  If you choose an individual(s) as your Successor Trustee, you should name at least one other choice in case that individual is unable to serve.  If you do not have an individual capable of handling the duties of a Trustee, you may want to consider the Corporate Trustee option.

Does my Trust end when I die?

Unlike a Will, a Trust doesn’t have to die with you.  Assets can stay in your Trust, managed by the Successor Trustee or Corporate Trustee you have chosen until your beneficiary(ies) (including minor children) reach the age(s) you want them to inherit, or to provide for a loved one with special needs.

How does a Living Trust save on Estate Taxes?

If you are a married couple, one of the most important aspects or benefits of your Living Trust is the ability to avoid significant Federal Estate Taxes. Federal law allows every individual to transfer a specific amount during his or her lifetime, or at death, to one or more beneficiaries other than a spouse. This is known as the “unified credit amount”. This amount is $5,000,000 in year 2011 and 2012, and is scheduled to return to $1,000,000 in 2013. The unified credit amount will be $5,000,000 in 2011 and 2012, only to be backed down to a maximum of $1,000,000 in 2013 and beyond. Married couples can transfer unlimited amounts to each other at death under the “unlimited marital deduction”, but this may subject the estate to unnecessary Estate Taxes at 50% upon the surviving spouses death.  The way for most couples to avoid this problem is to establish an A-B Trust as the integral part of their Estate Plan.

Doesn’t a Trust and a Will do the same thing?

Not quite. A Will can contain wording to create a Testamentary Trust to save Estate Taxes, care for minors, etc., but because it’s part of your Will, this Trust cannot go into effect until after you die and the Will is Probated.  So it does not avoid Probate and provides no protection at incapacity.

Is a Living Trust expensive?

Not when compared to the costs of Probate.  How much you pay for your Trust depends on how complex your Estate is (type and amount of your assets) and whether you need additional tax planning.  Be sure to ask for an estimate in advance.

Should I have an Attorney do my Trust?

Absolutely – preferably one who specializes in Estate Planning.  An experienced Attorney can provide valuable guidance and assistance for your situation and assure the legal documents are prepared properly.  Avoid generic “Do it Yourself” kits and form books.  They can’t and don’t address every family’s unique needs and can be very dangerous.

If I have a Living Trust, do I still need a Will?

You should have a Pour Over Will in case you forget to retitle any assets in the name of your Trust.  The Will “catches” the assets and sends them into your Trust after your death.  Those assets will probably still have to go through Probate first, but at least they can then be distributed as part of your overall plan.

Is a “Living Will” the same as a Living Trust?

No.  A Living Trust is for financial and medical affairs – it lets others know how you feel about life support in terminal situations.

Are Living Trusts new?

Not at all.  In fact, they have been used effectively (in one form or another) for hundreds of years.


Abstract of Trust

The “Abstract,” while not disclosing personal family information such as beneficiaries and distribution instructions, does contain key provisions which inform the various interested parties of the Trustee(s) powers.

Advance Health Care Directive

This document empowers the person you name to make certain medical decisions on your behalf if you are unable to do so.  Usually you will also name one or more backups in case your first choice is unavailable.


One for whose benefit the living trust is created and funded.  The person or persons such as husband and wife are the primary beneficiaries of their own trust.  After the death of the primary beneficiaries, the trust serves to benefit the Successor Beneficiaries Selected by the Trust’s creator, known as a Grantor, Trustor or Settlor.


A Conservator is a person or entity appointed by a court to oversee and has the legal duty to care for and maintain the person and/or property of an incapacitated adult.

Having a Conservator appointed over you can be expensive, restrictive and humiliating.  A properly prepared estate plan should prevent the court from getting involved in your personal or financial affairs.

Durable Power or Attorney

This is a legal document that allows you to nominate one or more persons to make personal, business and asset management decisions on your behalf if you are unable to do so.  Serves as sort of a companion document to your living trust, if established, in order to effectively deal with personal business or assets not owned by your trust, such as IRA’s and 401k’s.

Estate Taxes

The death taxes imposed by the federal government on the transfer of assets at death.  Estate taxes are generally paid by the executor of the probate estate or the trustee of a living trust.


The person or institution who is appointed by the testator or testatrix in his or her will to take care of the funds and property after death (also referred to as the “personal representative” of the estate).  The executor functions under the jurisdiction of the probate court.


The obligation to manage assets for another in the same way a prudent person would manage his own assets.

Final Arrangements

Your Living Trust Portfolio will provide a worksheet for you to provide information concerning burial or other preferred final arrangements.


Once your Living Trust is signed and notarized, your various assets must be “Funded” in order to avoid probate and be managed under the terms of the trust.  “Funding” is the process of transferring the title of real estate and financial assets from your individual name to the name of the trust.  Example.  Funding your real estate entails signing and recording a Grant Deed or Quitclaim deed transferring title from Bob Smith and Sue Smith, husband and wife, TO  Bob Smith and Sue Smith, Trustees of the Bob and Sue Smith Family Trust.  Bank and other financial accounts are similarly retitled so that ultimately you do not own your assets personally, but your trust owns them for you.


The person who has the legal duty to care for and maintain the person and/or property of an unmarried minor child.


A person who inherits property (according to state law scheme of distribution) from a person who dies intestate.


A situation where a person dies without leaving a valid will.


Lineal descendants of all degrees (e.g., children, grandchildren, great-grandchildren, etc.).

Joint Tenancy

A co-ownership of property by two or more parties in which each owns an undivided interest that passes to the other co-owners on his or her death (known as the “right of survivorship”).

Life Tenant

A trust beneficiary whose interest consists solely for the use of, and income flow from, the trust funds during his lifetime.

Living Trust

(Also “INTER-VIVOS” TRUST) A legal entity created to hold your assets for you.  Typically, under the terms of the trust, you appoint yourself as Trustee to legally manage all our your assets for your benefit during your lifetime.  In the event you should become incapacitated, you appoint a Successor Trustee to manage the assets held for you in trust, and upon your death, to manage and distribute your assets to your designated beneficiaries in the manner you feel is appropriate.  This document is revocable and may be amended or revoked, but only by you, during your lifetime.

Living Will

This is a signed statement by you concerning your wishes and instructions to your physician and family members on whether or not to continue heroic measures to keep you alive if such measures would only serve to prolong the process of dying.  What used to be a separate stand-alone declaration, your Living Will is now contained within your Advance Health Care Directive.  As such it allows your designated health care agent to carry out your desires to, or not to be put on a life support system.

Pour-Over Will

Frequently known as your LAST WILL AND TESTAMENT.  When used in combination with a Living Trust, your Will is known as a “Pour-Over Will” which leaves (Pours Over) all of your property which was not previously titled to the living trust so that any assets not previously transferred to the living trust may be administered under its terms upon your death.  The Pour Over Will serves as a ‘catch all’ instrument which should not be needed if all assets are properly transferred to your trust before you die.


The legal proceedings by which the probate court is given full jurisdiction over the assets of the decedent.  Probate starts with the filing of the decedent's will with the court, and ends after all taxes and debts of the decedent have been paid and the assets accounted for distributed in accordance with the terms of the decedent's will.  Probate usually lasts for at least nine months and can often endure for two years or more.


(If female, TESTATRIX) – A person who makes a will.


The person or institution who is responsible for holding, managing, and distributing money and other property contributed to the living trust for the exclusive use and benefit of the beneficiaries.  Most individuals who establish a Trust (aka the Settlors) name themselves as the initial Trustee.  The Settlors may name one or more individuals or a professional or corporate trustee to act as Trustee in the event of their own incapacity or death.


Parties who establish a trust by transferring property to a trustee to be managed for the benefit of another.