PROTECTION ENSURING CD-ROM included YOU TODAY AND FAMILY’S TOMORROWS FOR YOUR THE A living trust is the best way to protect your assets, keep creditors away and keep your family financially safe Written in straightforward, understandable language, The Complete Living Trust Kit makes it easier than ever to create and maintain a living trust With all the forms you need to set up your trust, as well as to keep it up-to-date, you can put into place everything you need to take better control of your finances and keep your family secure A living trust is inexpensive to create, easy to maintain and: • limits creditor claims • permits flexibility • ensures privacy • is difficult to contest • prevents unintended disinheritance • simplifies the continuation of your business • minimizes emotional stress on your family • controls assets during incapacity • directs timely distribution of assets • provides a guardianship alternative • avoids probate administration • allows for better asset management and income flow Includes 33 forms on CD-ROM! Saving your money and protecting your family has never been easier ® AN IMPRINT OF SOURCEBOOKS, INC.® NAPERVILLE, ILLINOIS Personal Finance/ Legal Reference ISBN-13: 978-1-57248-589-1 ISBN-10: 1-57248-589-2 w w w S p h i n x L e ga l c o m $45.50 CAN £18.99 UK Get Started The Now with Every Form You Need on Complete CD-ROM Living Trust Kit AN ESSENTIAL GUIDE TO CONTROL YOUR ESTATE AND EASILY PASS IT TO YOUR FAMILY ➤ Creates an estate plan ➤ Helps avoid the time that easily achieves your goals and expense of probating your estate ➤ Shows you how to set ➤ Reduces or eliminates up a living trust estate taxes ➤ Aids in the transfer of ➤ Guarantees distribution property to your trust $34.95 U.S EAN SPHINX PUBLISHING UPC ISBN-13: 978-1-57248-519-8 ISBN-10: 1-57248-519-1 Ask Your Bookseller About This Other Bestselling Title COMPLETE LIVING TRUST KIT Every form is Ready-to-Use and modifiable for your needs SAVE TAXES, AVOID PROBATE AND ENSURE FINANCIAL SECURITY FOR YOUR LOVED ONES of assets as you wish ROLCIK KAREN ANN ATTORNEY ROLCIK AT L AW The Complete Living Trust Kit (+ CD-ROM) The Complete Living Trust Kit (+ CD-ROM) Karen Ann Rolcik Attorney at Law SPHINX PUBLISHING ® AN IMPRINT OF SOURCEBOOKS, INC.® NAPERVILLE, ILLINOIS www.SphinxLegal.com Disclaimer: This eBook does not include the ancillary media that was packaged with the original printed version of the book Copyright © 2007 by Karen Ann Rolcik Cover design â 2007 by Sourcebooks, Inc.đ All rights reserved No part of this book may be reproduced in any form or by any electronic or mechanical means including information storage and retrieval systems—except in the case of brief quotations embodied in critical articles or reviews—without permission in writing from its publisher, Sourcebooks, Inc Purchasers of the book are granted a license to use the forms contained herein for their own personal use No claim of copyright is made to any official government forms reproduced herein Portions of this book were previously published in The Living Will Kit First Edition: 2007 Published by: Sphinx® Publishing, A Division of Sourcebooks, Inc.® Naperville Office P.O Box 4410 Naperville, Illinois 60567-4410 630-961-3900 Fax: 630-961-2168 www.sourcebooks.com www.SphinxLegal.com This publication is designed to provide accurate and authoritative information in regard to the subject matter covered It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service If legal advice or other expert assistance is required, the services of a competent professional person should be sought From a Declaration of Principles Jointly Adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations This product is not a substitute for legal advice Disclaimer required by Texas statutes Library of Congress Cataloging-in-Publication Data Rolcik, Karen Ann The complete living trust kit (+ CD-ROM) / by Karen Ann Rolcik 1st ed p cm Includes index ISBN-13: 978-1-57248-737-6 ISBN-13: 978-1-57248-589-1 (pbk : alk paper) ISBN-10: 1-57248-589-2 (pbk : alk paper) Living trusts United States Popular works I Title KF734.Z9R638 2007 346.7305'2 dc22 2007000852 Printed and bound in the United States of America SB — 10 DEDICATION This book is dedicated to my two greatest sources of inspiration—my mother and my father They have been stalwarts—always giving encouragement, support, insight, and love From them I learned the importance of family, giving of myself, and sharing with others Now that Dad has gone to be with the saints, Mom has given of herself— twofold Dad, I miss you everyday Mom, I love you more everyday Contents How to Use the CD-ROM xi Using Self-Help Law Books xiii Introduction xvii Chapter 1: Probate The Good, The Bad, and The Ugly Understanding the Probate Process Understanding when Probate is Necessary Property Subject to Probate The Role of Your Will in the Probate Process Disadvantages of Probate Advantages of Probate Conclusion Chapter 2: Probate Alternatives and Beneficiary Designations Sidestepping the Probate Process 13 Benefits of Probate Alternatives Dangers of Probate Alternatives Methods of Holding Title to Assets Community Property Transfers of Property by Contract Gifts viii The Complete Living Trust Kit Chapter 3: Estate and Inheritance Taxes Is Uncle Sam a Beneficiary of Your Estate? 31 Federal Estate Tax Planning to Reduce Your Estate Tax Burden Chapter 4: Living Trusts The Nuts and Bolts 37 Trusts Trust Types Parties to a Trust Living Trust Advantages Living Trust Disadvantages Comparison of Intestacy, Wills, and Living Trusts Chapter 5: Your Assets What Do You Have and How Much Do You Have? 51 Calculating Your Net Worth The Worksheet Identify Your Assets Retirement/Employment Related Plans Identify Your Liabilities Calculate Your Net Worth Net Worth Worksheet Net Worth Summary Personal Contacts Worksheet Chapter 6: Creating Your Living Trust Putting It All into Action 67 The Trustee The Beneficiaries Executing Your Living Trust Amending the Living Trust Revocation of the Living Trust Chapter 7: Funding Your Living Trust If You’ve Got It, Fund It! 85 Deciding which Property to Transfer Title Taxpayer Identification Number Contents ix Asset Ownership Transferring Assets to Your Living Trust Living Trust Recordkeeping Chapter 8: Estate Tax and Probate Savings of Living Trusts You Earn It, You Keep It! 95 I Love You Wills Case Studies Estate Tax Planning with Living Trust Family Trust Appreciation Guardianships—the Living Probate Chapter 9: Ancillary Documents to Avoid Living Probate Complete Your Planning with All the Documents You Need 105 Powers of Attorney—Guardianship Alternatives Living Will Declaration of Guardian in Advance of Need Designation of Guardian for Minor Children Chapter 10: Administration of Your Living Trust after Your Death The Final Steps 111 Obtain Death Certificates Gather Personal Information Contact Social Security Administration Safe-Deposit Box Obtain Tax Identification Number for Trust Contact Life Insurance Companies Inventory Assets Identify Debts of Decedent Final Income Tax Return Trust Income Tax Returns Distribution of Assets to Beneficiaries Epilogue 117 Glossary 119 Appendix A: Tax Explanations and Charts 131 x The Complete Living Trust Kit Appendix B: State-by-State Laws 135 Appendix C: The Design of the Forms 149 Appendix D: Blank Forms 159 Index 339 About the Author 345 How to Use the CD-ROM Thank you for purchasing The Complete Living Trust Kit In this book, we have worked hard to compile exactly what you need to create a living trust To make this material even more useful, we have included every document in the book on the CD-ROM in the back of the book You can use these forms just as you would the forms in the book Print them out, fill them in, and use them however you need You can also fill in the forms directly on your computer Just identify the form you need, open it, click on the space where the information should go, and input your information Customize each form for your particular needs Use them over and over again The CD-ROM is compatible with both PC and Mac operating systems (While it should work with either operating system, we cannot guarantee that it will work with your particular system and we cannot provide technical assistance.) To use the forms on your computer, you will need to use Microsoft Word or another word processing program that can read Word files The CD-ROM does not contain any such program Insert the CD-ROM into your computer Double-click on the icon representing the disc on your desktop or go through your hard drive to identify the drive that contains the disc and click on it Once opened, you will see the files contained on the CD-ROM listed as “Form #: [Form Title].” Open the file you need You may print the form to fill it out manually at this point, or you can click on the appropriate line to fill it in using your computer This page intentionally left blank Form 31 333 This page intentionally left blank Form 32 335 This page intentionally left blank Form 33 337 338 The Complete Living Trust Kit Index A accounting, 4, 75 administrator, 2, 10, 11, 96 Affidavit of Trust, 91, 93, 94, 95, 96, 115, 116 Amendment to the Living Trust, 86, 87 ancillary probate, 44, 48 annuities, 3, 15, 23, 37, 40, 54, 61, 63, 64, 88, 96, 98 antiques, 8, 19, 60, 63, 64, 84, 92 appreciation of assets, 107 Assignment of Personal Property, 92, 96 attorneys, 1, 3, 4, 7, 8, 9, 12, 19, 26, 27, 45, 47, 64, 65, 72, 77, 83, 88, 94, 100, 109, 110, 111, 112, 113, 117 B bankruptcy, 18 banks, 3, 5, 6, 14, 15, 16, 17, 18, 19, 23, 24, 26, 29, 41, 54, 55, 71, 75, 77, 85, 89, 91, 92, 93, 95, 97, 116 basis, 8, 34, 35, 42, 45, 56, 75, 112, 118 beneficial interest, 39, 43 beneficiaries, 1, 2, 3, 4, 5, 6, 8, 9, 10, 11, 12, 17, 21, 30, 32, 34, 35, 37, 39, 40, 42, 43, 44, 45, 46, 47, 49, 50, 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 84, 85, 86, 87, 91, 95, 101, 102, 103, 104, 105, 106, 107, 115, 116, 117, 118, 120 bond, 2, 6, 7, 18, 44, 45, 51 brokerage account, 3, 16, 29, 41, 54, 55, 73, 76, 90, 91, 95, 105 business interests, 56, 62, 87 C carryover basis, 34 cash accounts, 92 Changes to Schedule of Trust Assets, 97 charitable donations, 38, 40, 84 Children’s Trust, 81 co-trustees, 72 commingling, 76 community property, 18, 22, 105 340 The Complete Living Trust Kit contesting a will, 5, 44, 46, 50 contingent beneficiaries, 43, 95 continuation of business, 44, 48 contract, 22, 23, 27, 29, 30, 39, 71, 85, 96 control of assets, 44, 46 costs of probate, 7, 40, 100 creditors, 3, 6, 8, 9, 11, 15, 16, 50, 76, 79, 80 D death certificates, 115 debts, 3, 6, 10, 11, 45, 50, 53, 54, 64, 100, 118, 120 decedent, 1, 2, 3, 4, 5, 6, 9, 12, 15, 28, 32, 34, 35, 40, 49, 50, 115, 116, 117, 118 disability, 48, 66, 86, 87, 88, 121 distributions, 2, 3, 4, 5, 6, 8, 10, 12, 15, 32, 39, 40, 42, 44, 45, 46, 48, 49, 71, 72, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 87, 91, 96, 115, 117, 120 divorce, 17, 18, 20, 47, 86, 105 double taxation, 34 dry trust, 40 E Economic Growth and Tax Relief Reconciliation Act, 33 equal ownership, 15 escheats, estate stacking, 35 estate tax, 4, 12, 28, 30, 32, 33, 34, 35, 37, 49, 50, 56, 64, 79, 80, 91, 94, 98, 99, 100, 101, †102, 103, 104, 105, 106, 107, 117, 118 executor, 2, 8, 10, 11, 45, 49, 50 expenses, 3, 4, 6, 9, 10, 11, 16, 45, 50, 75, 76, 89, 100, 104, 108, 109, 111, 113, 120 F fair market value, 3, 9, 35, 76 Family Trust, 79, 80, 90, 104, 106, 107, 116, 120 fiduciary duty, 41 filing fees, financial institutions, 3, 23, 115 flexibility, 15, 44, 47, 51, 75, 79 Form SS-4, Application for Employer Identification Number, 50, 90, 116 fraudulent conveyance, 50 funds, 17, 24, 29, 53, 55, 57, 62, 77, 104, 109 G gifts, 6, 14, 19, 30, 78, 84, 85, 120 tax, 28, 30, 87, 105 grandchildren, 5, 29, 47, 83, 86 grantor, 37, 40, 41, 42, 43, 44, 45, 46, 49, 50, 70, 71, 72, 75, 76, 77, 82, 85, 86, 87, 88, 90, 91, 104, 115, 116, 118 guardian, 7, 11, 17, 28, 47, 50, 51, 108, 109, 111, 113, 114 in advance of need, 113 guardianship, 11, 28, 44, 46, 47, 48, 108, 109, 110, 113 H health, 43, 80, 81, 87, 108, 110, 111, 112, 113, 121 Index heirs, 1, 2, 4, 6, 9, 10, 11, 21, 46, 50, 107 homestead exemption, 94 I I Love You wills, 35, 99 in trust for (I/T/F) account, 23, 37, 48, 79, 80, 81, 82 incapacity, 41, 42, 44, 46, 47, 50, 51, 52, 53, 75, 78, 88, 89, 108, 109, 110, 111, 113, 114, 121 income taxes, 3, 8, 28, 29, 30, 34, 49, 50, 96, 118, 120 individual retirement accounts (IRAs), 29, 55, 59, 95 inheritance, 4, 7, 31, 32, 33, 35, 44, 47, 48, 50, 51, 53, 56, 79, 81, 87, 117 inheritance tax, 32, 50, 53, 56, 117 inter vivos trust, 40 Internal Revenue Service (IRS), 32, 50, 110, 117, 120 intestate, 4, 12, 51 investments, 15, 32, 39, 46, 53, 55, 57, 61, 62, 64, 72, 73, 74, 75, 76, 81, 105 irrevocable trust, 40 341 life insurance, 3, 14, 15, 23, 27, 28, 37, 53, 56, 61, 62, 63, 70–71, 77, 88, 95, 98, 115, 116, 117, 118 living probate, 108, 109, †110, †112, 113 living will, 111, 112, 113 M Marital Trust, 80, 90, 104, 116, 120 marriage, 20, 22, 81, 86, 105 medical assistance, 88 minor children, 5, 7, 11, 43, 44, 48, 51, 78, 81, 109, 113, 114, 115, 118 N net worth, 48, 53, 54, 56, 57, 58, 59, 60, 61, 62, 63, 64, 70, 87, 97, 99, 105 Net Worth Worksheet, 54, 56, 57, 58, 59, 60, 61, 70, 97, 99, 105 O Omnibus Budget Reconciliation Act, 111 J jewelry, 5, 60, 63, 64, 91, 92 joint tenancy with rights of survivorship (JTWROS), 6, 16, 17, 18, 19, 20, 89 L land trusts, 23, 26, 27 lawyer See attorneys Letters of Administration, liabilities, 3, 53, 54, 63, 64 P parents, 5, 14, 32, 42, 71, 76, 79, 81, 82, 85, 112 pay on death (POD) account, 23, 24, 25, 39, 89 per capita, 83 per stirpes, 83 personal property, 3, 5, 18, 19, 21, 63, 64, 84, 91, 92, 96, 120 personal representatives, 2, 3, 4, 6, 7, 8, 9, 10, 11, 12, 27, 28, 51, 76 342 The Complete Living Trust Kit personal residence, 37, 87, 93 pets, 85 pourover will, 12, 114, 121 powers of attorney, 110, 111, 113 primary beneficiaries, 14, 40, 43, 78, 79, 95, 96 privacy, 9, 10, 12, 15, 42, 44, 45, 46, 50, 51, 52, 78, 81, 91, 110 probate process, 1, 2, 4, 5, 6, 7, 9, 12, 13, 15, 16, 17, 19, 20, 21, 22, 23, 26, 27, 29, 30, 45, 46, 88, 98, 104, 108, 114, 120 prudent expert rule, 74 prudent person rule, 73, 74 Q quitclaim deed, 93, 94 separate property, 18, 22 Social Security, 50, 90, 110, 115, 116 sole beneficiary, 14, 18, 28, 80 special needs, 44, 48, 82, 84 Spendthrift Provision, 79 spouse, 5, 9, 10, 14, 16, 17, 18, 19, 20, 21, 22, 27, 29, 30, 32, 33, 34, 35, 43, 50, 71, 74, 78, 79, 80, 82, 86, 91, 95, 96, 99, 100, 102, 103, 104, 105, 106, 107, 108, 109, 111, 112, 113, 115, 118 statutes, 2, 5, 6, 10, 11, 12, 24, 26, 39, 47, 50, 111, 112, 113, 114 stepped-up valuation, 34 stocks, 10, 16, 24, 29, 53, 55, 57, 62, 73, 75, 77, 84, 94 street account, 94 substance abuse, 86 successor trustee, 41, 42, 46, 47, 48, 49, 50, 66, 71, 72, 78, 86–87, 90, 91, 92, 97, 110, 111, 115, 116, 117, 118, 120 R real estate, 5, 10, 16, 17, 19, 20, 26, 44, 49, 53, 55, 56, 59, 62, 64, 70, 73, 75, 77, 84, 87, 93, 94, 96, 105, 115, 118 recordkeeping, 97 removing a trustee, 77 retirement plans, 3, 14, 15, 23, 29, 32, 53, 54, 55, 59, 62, 71, 77, 87, 88, 95, 96, 98, 115 revocable trust, 40, 93 revocation of a living trust, 88 rule against perpetuities, 82, 83 S safe-deposit box, 53–54, 92, 95, 116 Schedule of Trust Assets, 97 securities, 5, 23, 24, 55, 73, 94, 95, 116, 118 T taxes, 6, 9, 11, 12, 28, 31, 32, 33, 35, 49, 50, 53, 61, 63, 71, 76, 87, 94, 104, 107, 120 exemptions, 30, 32, 33, 94 taxpayer identification number, 28, 49, 50, 90 tenancy by the entireties, 6, 16, 19, 20, 21, 22 tenancy in common, 16, 21 testamentary trust, 39 testimony, time-consuming, 1, 9, 45, 51, 70, 78, 108 title, 3, 14, 15, 16, 18, 20, 24, 26, 39, 41, 49, 53, 73, 89, 90, 92, 93, 94, 95, 96, 97, 117 Totten trusts, 23 Index transfer on death (TOD) account, 23, 25, 26 transferring property, 89 trust assets, 39, 40, 41, 42, 43, 44, 45, 46, 50, 70, 71, 73, 75, 76, 77, 78, 79, 80, 81, 82, 89, 97, 104, 115, 117, 120 trustees, 39, 41, 42, 45, 50, 70, 71, 72, 73, 76, 77, 85, 86, 87, 89, 93 U unfunding a living trust, 88 United States savings bonds, 93 unlimited marital deduction, 33, 34, 35, 80 343 W ward, 109 wills, 1, 2, 4, 5, 6, 7, 9, 10, 11, 12, 18, 35, 39, 40, 44, 45, 46, 47, 48, 50, 51, 52, 84, 99, 113, 117 About the Author Karen Ann Rolcik received her bachelor’s degree from Butler University and law degree from Indiana University She is licensed to practice law in Texas and Ohio She has practiced in the areas of probate, estate planning, and trust litigation for nearly twenty years Ms Rolcik has been a member of various Estate Planning Councils during the past ten years and has been a member of various committees of the Real Property, Probate and Trust Law Section of the State Bar of Texas She has written several self-help titles, including Living Trusts and Other Ways to Avoid Probate and How to Probate and Settle an Estate in Texas PROTECTION ENSURING CD-ROM included YOU TODAY AND FAMILY’S TOMORROWS FOR YOUR THE A living trust is the best way to protect your assets, keep creditors away and keep your family financially safe Written in straightforward, understandable language, The Complete Living Trust Kit makes it easier than ever to create and maintain a living trust With all the forms you need to set up your trust, as well as to keep it up-to-date, you can put into place everything you need to take better control of your finances and keep your family secure A living trust is inexpensive to create, easy to maintain and: • limits creditor claims • permits flexibility • ensures privacy • is difficult to contest • prevents unintended disinheritance • simplifies the continuation of your business • minimizes emotional stress on your family • controls assets during incapacity • directs timely distribution of assets • provides a guardianship alternative • avoids probate administration • allows for better asset management and income flow Includes 33 forms on CD-ROM! Saving your money and protecting your family has never been easier ISBN-13: 978-1-57248-519-8 ISBN-10: 1-57248-519-1 Ask Your Bookseller About This Other Bestselling Title COMPLETE LIVING TRUST KIT Every form is Ready-to-Use and modifiable for your needs SAVE TAXES, AVOID PROBATE AND ENSURE FINANCIAL SECURITY FOR YOUR LOVED ONES The ® ISBN-13: 978-1-57248-589-1 ISBN-10: 1-57248-589-2 with Every Form Complete CD-ROM Living Trust Kit AN ESSENTIAL GUIDE TO CONTROL YOUR ESTATE AND EASILY PASS IT TO YOUR FAMILY ➤ Creates an estate plan ➤ Helps avoid the time that easily achieves your goals and expense of probating your estate ➤ Shows you how to set ➤ Reduces or eliminates up a living trust estate taxes ➤ Aids in the transfer of ➤ Guarantees distribution of assets as you wish AN IMPRINT OF SOURCEBOOKS, INC.® NAPERVILLE, ILLINOIS w w w S p h i n x L e ga l c o m Now You Need on property to your trust SPHINX PUBLISHING Get Started ROLCIK KAREN ANN ATTORNEY ROLCIK AT L AW ... like to look up estate values in the courthouse and contact the family offering services to assist the family in their time of need 10 The Complete Living Trust Kit Should your family need to. .. reproduced in the book or on the CD-ROM You are free to modify the forms and tailor them to your specific situation The author and publisher have attempted to provide the most current and upto-date... to this situation If the value of your estate or the combined value of your estate and your spouse’s estate exceeds the applicable credit amount, and you wish to avoid estate taxes, there are