Table Of ContentINCLUDES
SAVE TAXES, AVOID PROBATE AND ENSURE
EVERY FORM
Doesn’t Your Family Deserve More? YOU NEED! FINANCIAL SECURITY FOR YOUR LOVED ONES
◆ Did you know that the government may be
The
able to take nearly half of the assets you
The
leave your family?
◆ Did you know that your family could have to
wait to access the funds you saved for them?
A Living Trust can do so much more than a will to ensure that money
is not lost or wasted, to kep your family out of court and to kep Living
creditors away. Let The Living Trust Kit teach you all the advantages
a Living Trust offers.
A Living Trust is inexpensive to create, easy to maintain and:
◆ limits creditor claims ◆ permits flexibility
TRUST KIT
◆ensures privacy ◆ is difficult to contest
◆ prevents unintended ◆ maintains continuation
disinheritance of business
◆ Creates an estate plan that goes beyond a will and
◆ minimizes emotional stress ◆ controls assets during
on family incapacity achieves your goals ◆ Shows you how to set up a living
◆ directs timely distribution ◆ provides a guardianship
trust ◆ Provides worksheets as an easy way to estimate
of assets alternative
◆ avoids probate and ancillary ◆ allows for continuity of asset your net worth ◆ Aids in the transfer of property to your
probate administration management and income flow
trust ◆ Helps avoid the time and expense of probating your
estate ◆ Addresses marital and community property laws
NO OTHER TOOL CAN DO MORE TO SAVE YOU ◆ Guarantees allocation and distribution of assets as
MONEY AND PROTECT YOUR FAMILY! you wish ◆ Reduces or eliminates estate taxes
SPHINX® PUBLISHING
AN IMPRINT OF SOURCEBOOKS, INC.® Personal $21.95 U.S. CONTAINS THE LATEST TAX LAW CHANGES INCLUDING
NAPERVILLE, ILLINOIS Finance $32.95 CAN
www.SphinxLega l . com THE ECONOMIC GROWTH AND TAX RELIEF RECONCILIATION ACT
KAREN ANN ROLCIK, Attorney at Law
INCLUDES EVERY
FORM YOU NEED!
Living TRUST KIT ROLCIK
SAVE TAXES, AVOID PROBATE AND ENSURE FINANCIAL SECURITY
UPC
EAN
THE
LIVING TRUST
KIT
Save Taxes, Avoid Probate,
and Ensure Financial Security
for Your Loved Ones
By Karen Ann Rolcik
Attorney at Law
®
SPHINX PUBLISHING
AN IMPRINT OF SOURCEBOOKS, INC.®
NAPERVILLE, ILLINOIS
w w w. S p h i n x L ega l . c o m
Copyright © 2004 by Karen Ann Rolcik
.™
Cover design © 2004 by Sourcebooks, Inc
All rights res e r ved. No part of this book may be rep r oduced in any form or by any electronic or mechan-
ical means including information storage and ret r i e v al systems—except in the case of brief quotations
embodied in critical articles or rev i e ws—without permission in writing from its publisher, Sou r ce b o o k s ,
Inc. Pur chasers of the book are granted a license to use the forms contained herein for their own per-
sonal use. No claim of copyright is made to any official government forms rep r oduced herei n .
First Edition, 2004
® ®
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 sub-
ject 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 living trust kit : save taxes, avoid probate, and ensure financial security for
your loved ones/ by Karen Ann Rolcik.-- 1st ed.
p. cm.
ISBN 1-57248-449-7 (pbk. : alk. paper)
1. Living trusts--United States--Popular works. I. Title.
KF734.Z9R64 2004
346.7305'2--dc22
2004019172
Printed and bound in the United States of America.
VHG — 10 9 8 7 6 5 4 3 2 1
D E D I C AT I O N
This book is dedicated to my two greatest sources of inspiration—my mother
and my father. They have been stalwarts—always giving encouragement, sup-
port, 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
Using Self-Help Law Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xiii
Chapter 1: Probate
The Good, The Bad, and The Ugly . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
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
Side Stepping the Probate Process. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Benefits of Probate Alternatives
Dangers of Probate Alternatives
Methods of Holding Title to Assets
Community Property
Transfers of Property by Contract
Gifts
vi The 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
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
Asset Ownership
Transferring Assets to Your Living Trust
Living Trust Recordkeeping
Contents vii
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
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
Appendix B: State-by-State Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
Appendix C: The Design of the Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
Appendix D: Blank Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353
About the Author . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 359
Using
Self-Help
Law Books
Before using a self-help law book, you should realize the advantages and disad-
vantages of doing your own legal work. You should also understand the chal-
lenges and diligence that doing your own legal work requires.
The Growing Trend
Many people have decided that they want to handle their own legal matters.
This may range from writing their own will, incorporating a business, manag-
ing their divorce, handling landlord/tenant issues, or representing themselves in
small claims court. In some states, more than seventy-five percent (75%) of
divorces and other cases have at least one party representing him- or herself.
The reason for this growing trend is the rising costs of legal services. Courts
struggle to make it easier for people to represent themselves. There are, howev-
er, judges that frown upon people who do not use an attorney. Judges and
courthouse staff cannot give legal advice and therefore must be very careful as
to what information they give to individuals who are handling their own legal
matters. There are some judges that have established their own rules about par-
ties representing themselves. In some courts,the judges simply do not allow it—
They require that all parties use attorneys. This is unfair and, in the opinion of
many people, violates not only state law but also the United States Constitution.
At Sphinx, self-help books are written to give people an alternative to the often
complicated and confusing legal books found in most law libraries.Our authors
strive to make the explanations of the law as simple and easy to understand as
possible. Of course, it is impossible for every situation to be addressed.
