General: Trust based Estate Planning usually includes a Revocable Trust, a Will, a Durable Financial Power of Attorney, an Advance Medical Directive with Medical Power of Attorney, and a HIPAA release. It may also include deeds, recommendations on retitling assets or changing beneficiary designations, and assistance with funding the Trust. OK, what do these mean?

Revocable Trust
A trust is a contract between one person, called a Grantor (or Settlor or Trustor or Trustmaker), and a Trustee. The Grantor can be (and usually is) also the Trustee. The Trust lays out what the rights and duties of the Grantor are, and what the rights and duties of the Trustee are, regarding the assets owned by the Trust.

Let's break that sentence apart.
Rights and duties of the Grantor: typically the Grantor, while competent, has the right to tell the Trustee what to do with the assets owned by the trust. The Grantor, while competent, has the right to amend the trust, to revoke the trust, to remove the Trustee and to appoint a new Trustee. If the Grantor is incapacitated, the ability to amend or revoke the trust, or direct the Trustee, is suspended, and the Trustee is to use the trust assets for the best benefit of the Grantor.
Rights and duties of the Trustee: typically the Trustee has the right to invest, spend, and (sometimes) gift the assets owned by the trust. The Grantor may limit this in the terms of the trust.
Beneficiary: usually, a Trust names the Grantor as the beneficiary. This means that the money in the trust can only be used for the benefit of the Grantor. The trust may, but does not need to, also name other persons who can benefit from the trust during the lifetime of the Grantor. The Trust will also name contingent beneficiaries who will benefit from the trust upon the death of the Grantor.
Investment standard: the Trust may allow the Trustee to invest as the Trustee sees fit, or may place restrictions on the investments made by the Trustee.
Gifting: generally, trusts do not allow the Trustee to give away Trust assets. The exception is that the trust may (but does not have to) allow gifting in accordance with the Grantor's lifetime habit of giving, or may allow gifting if the Grantor is in need of long term nursing home care and Medicaid or Aid and Attendance planning is desired.
Accounting: the trust can state who is entitled to know what is happening with trust assets. The Grantor, while competent, always has a right to know. However, if the Grantor is incapacitated or deceased, the trust can direct who in the family can know what is happening (and who cannot know).
At Susan I. Jean & Associates, we will work with you to tailor the trust to grant the authority needed.
 

1. Estate planning questions for a married couple. 2. Estate planning questions for singles. 3. Asset analysis for married couple. 4. Asset analysis for singles.

Regarding the assets owned by the Trust: to get the most benefit from a trust, it is important that many (although not all) of your assets be transferred so that they are titled in the name of the trust. Thus, your checking account, your savings account, your home and other real property, your certificates of deposit, etc. should be moved out of your name and into the name of your trust. This way, your Trustee is in charge of the assets.

Who is the Grantor? We use both joint and single trusts. A joint trust is a trust created by husband and wife, in one document. A single trust is a trust created by one person, who may be either single or married.

Who is the Trustee? In a joint trust, normally, both husband and wife are the Trustees. In addition (or instead), a child, or a professional Trustee may be named. The Grantor will also name alternate Trustees, who can act if the original Trustees cannot.

 We know nothing in life is all good (except maybe our grandchildren) or all bad. What is bad about a revocable trust?
Cost. A trust based plan is more expensive than a will-based plan (at least in the short run).
Inconvenience. The trust requires you to retitle assets. In effect, you do during your lifetime what your Executor would have done at your death. So, basically, either you do it during lifetime, or your Executor (usually one of your children) does it at death.

Pour-Over Will
 You know what a Will is. It directs who inherits from you (your beneficiaries), who manages the inheritance (your Personal Representative or Executor), and outlines how the Personal Representative must administer your estate. A Pour-Over Will does all of these things. However, the beneficiary of a Pour-Over Will is your trust.

 We discussed that many of your assets should be titled so that they are owned by the trust. However, there are other assets that can not and should not be transferred to the trust during life. The Pour-Over Will states that, whatever assets you own that have not been transferred to your trust, are transferred to your trust at your death.

Durable Financial Power of Attorney
 First, let's discuss what a Power of Attorney is. A Power of Attorney is a document by which one person, called a Principal, allows another person, called an Agent, to take action on behalf of the Principal. As an example, an Agent may be able to sign checks for the Principal, deal with investments for the Principal, make medical decisions, and make other decisions on behalf of the Principal. A Power of Attorney may be effective when signed, or may be effective only when the Principal is determined to be incapacitated. As with the trust, there are many ways that the power given to the Agent can be tailored. We at Susan I. Jean & Associates will work with you to tailor the document to grant the authority needed.

 What is a Financial power of attorney? As you have already guessed, it is a power of attorney that addresses only financial issues.
 What is a Durable financial power of attorney? Durable simply means the document continues to be in effect if the Principal becomes incapacitated.
 The Trustee can manage the assets titled to the trust. The Agent under the Durable Financial Power of Attorney can manage the assets not titled to the trust. Often, but not always, they are the same person.


Advance Directive and Medical Power of Attorney
 An Advance Directive (also called an Advance Medical Directive or Living Will) lays out your medical wishes in case you become incapacitated, and are at the end of your life. Generally, an advance directive states that you do not wish to be hooked up to tubes or a respirator, but that you do wish to have pain medication.
 A Medical Power of Attorney names someone to make medical decisions for you if you can't, and if you are not at the end of your life.

HIPAA Release
 A Health Insurance Portability and Accountability Act (HIPAA) release names people to whom your doctors can speak regarding your medical care.

Retitling Assistance
 It may include deeds, recommendations on retitling assets or changing beneficiary designations, and recommendations regarding funding the Trust. What is funding the trust? That means transferring title to bank accounts, investment accounts, home and other real property, timeshares, life insurance, and other assets so that the trust owns the asset. Generally, non-tax qualified assets (i.e., non-IRA, non-401(k), etc.) assets should be owned by the trust. This is how we get probate avoidance: at your death, you don't own the asset, the trust does. The trust never dies, and so avoids probate. However, the trust will tell the Trustee what to do with the assets owned by the trust when you pass away.