A living trust can be an important estate planning tool, but it is also a very precise one. This means that if one or more crucial components are missing from your living trust package, your financial goals will not be adequately met. Just what are these crucial components? Read on to find out.
- Comprehensive Transfer Document:
A statement of intent (by you) that all of your assets (in addition to your personal property) are owned by the trust. As a result of a 1993 California court case upon which this document is based, the transfer of assets into a trust after the death of the owner may be allowed without the need for probate-provided that this document is included in the trust.
- A Bill of Sale:
This is used to transfer general/personal property into the trust, and most commonly applies to jewelry and household items. Advance Health Care Directive: This document is a statement of your express wishes concerning your end-of-life and other medical related decisions, and names an agent who is authorized to make these decisions for you if you are unable to do so.
- Community Property Agreement:
This allows a surviving spouse to obtain a full step-up in a tax basis for appreciated property following the death of another spouse. This document has the potential to result in substantial tax savings for the living spouse, but must be analyzed by your certified financial planner in order to determine the specifics of your situation.
- “Pourover” Will:
This type of will is used to transfer assets into a trust after the death of the owner if said assets were not transferred during the owner’s own lifetime. It is important to note, however, that probate may still need to be involved in the transfer of assets into the trust using the will.
- Schedule of Assets:
This is a listing of all of the assets included in the trust, and a properly drafted schedule will allow you to transfer without having to list each asset individually. The schedule of assets may also be used to transfer assets without the involvement of probate.
- Durable Power of Attorney for Financial Matters:
In the event that you become incapacitated, this crucial document names an agent who is authorized to make financial and other decisions on your behalf.
Discovering your Living Trust Options
All of these documents, and several others, will most likely need to be included in your living trust, and your certified financial planner and/or tax professional is the resource that you should turn to for sound advice to help you protect your assets at all times-regardless of the circumstances that may arise.