Trust Certifications

Thursday, June 16, 2016

Using Life Insurance Trusts and Related Taxes in Estate Planning

Is it practical to use life insurance trusts in estate planning?

The terms of using life insurance trusts in estate planning have changed in several ways over the last two decades. Whereas 20 years ago the exemption from the federal gift and estate tax was $600,000 and estate planners routinely advised their clients with life insurance policies to implement a trust to hold them, now that the exemption has increased to $5.45 million, such trusts are not implemented as frequently.

A life insurance trust refers to an irrevocable trust designed to take title of a life insurance policy during the insured's lifetime in order to protect that policy from being considered part of the owner's assets.  By creating such a trust, the imposition of federal estate tax on the policy is prevented.

Read more . . .

Tuesday, February 17, 2015

Challenges to a Revocable Trust

What is a revocable trust?

A revocable trust is used for estate planning because it allows a transfer of assets to someone during a person’s life (a transfer after death would happen through a will). The assets become the legal property of a trustee, who is supposed to manage them and carry out the wishes of the person creating the trust, the settlor. The trustee is not supposed to profit from the trust; those profits need to go to the beneficiaries (though the trustee could be paid for his or her services).

Sometimes, people name themselves as the trustee and thereby maintain control of their assets during their lifetime. A successor trustee can be named to manage the trust's assets if the trustee becomes unable to do so.

The settlor can revoke or change the trust at any time. After the settlor dies, the trust becomes irrevocable and cannot be changed or ended, unless the trust language provides for that or if there are no more assets in the trust.

A revocable trust can be challenged by a beneficiary under certain circumstances. The settlor's mental capacity at the time the trust was created might be challenged. California law requires evidence of a deficit in mental functions, such as alertness and attention, information processing and thought processes.

Also, a trustee might be challenged as unfit to administer the trust. Someone who is not named as a beneficiary to the trust might challenge it, just as individuals cut out of a will contest that document.

Contact OC Wills & Trust Attorneys today at (949)347-5256 to learn whether a revocable trust is right for your estate plan. Brian Chew has more than 20 years of experience with trusts administration and can provide you the sound advice you need when devising a plan to protect your assets and provide for your heirs.

Monday, March 4, 2013

Trust Certifications

You’ve been responsible, consulted a qualified Estate Planning Attorney, created a Trust, correctly transferred your assets.  And now you want to purchase or refinance a home that will be held in your Trust.  In order to do so, you will need a Trust Certification and Legal Opinion letter, which can only be produced by a licensed attorney.


Trust Certification

A Trust Certification involves an attorney reviewing your Trust and making a legal determination that according to the terms of the Trust the Trust assets can be encumbered and that the Trustee has the legal authority to encumber the Trust assets.  This generally refers to the ability to purchase a home or refinance your existing mortgage.  With a Trust Certification your property remains in your Trust.


Legal Opinion

A legal opinion letter refers to a letter written by an attorney which states that as of the day of review and according to the terms of the Trust, the Trust assets can be encumbered and that the Trustee has the authority to encumber the assets.  Only an Attorney can provide a Trust Certification and Legal Opinion Letter.     



By keeping the property in a trust, the property is not exposed to any potential complications.  If you take the property out of the Trust, and something happens to you, your property could be exposed to the probate process, thereby defeating all of your Estate Planning efforts.  Taking the property out of the Trust also involves the added expense of recording the deed additional times.  And, there is always the possibility of forgetting to put the property back into your Trust. 

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