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Aug 6th, 2022
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How to Work in formula in the Revocable Living Trust

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Estate planning attorney Paul Rabalé discusses nine common mistakes related to living trusts in this video. The use of a revocable living trust to avoid probate or succession after someone passes away is a popular topic in estate planning, with many resources devoted to it. The appeal of using a revocable living trust lies in its ability to simplify estate settlement for survivors, not just for the wealthy but also for the middle class.

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Some of the Cons of a Revocable Trust Shifting assets into a revocable trust wont save income or estate taxes. No asset protection. Although assets held in an irrevocable trust are generally beyond the docHub of creditors, thats not true with a revocable trust.
One major disadvantage is that they can be complicated and expensive to set up. Although the idea of avoiding probate costs is attractive, its important to realize that trusts come with their own costs, including legal fees and compensation for the trustee, if needed.
Property interests passing to a surviving spouse that are not included in the decedents gross estate do not qualify for the marital deduction. Expenses, indebtedness, taxes, and losses chargeable against property passing to the surviving spouse will reduce the marital deduction.
A revocable trust provides a way to ensure the continued management and preservation of your assets, should you die or become incapacitated, and allows the avoidance of a probate court proceeding after your death.
Flexibility. One of the benefits of a revocable living trust is its flexibility. Because you create it, fund it, and manage it yourself as a trustee while you are alive, you can adjust how it works and what assets are inside it over time. This means you still have access to your money if you need it.
Marital Pecuniary Formula. The marital pecuniary formula provides for the least amount necessary to result in zero estate tax at the first death to pass to the Marital Trust and the remainder to the Family Trust.
What assets cannot be placed in a trust? Retirement assets. While you can transfer ownership of your retirement accounts into your trust, estate planning experts usually dont recommend it. Health savings accounts (HSAs) Assets held in other countries. Vehicles. Cash.
A pecuniary formula funds a specific dollar amount. For example, a pecuniary formula would direct the trustee to distribute to the marital trust the smallest amount that, if allowed as a marital deduction, would result in the least possible federal estate tax.
The marital deduction is determinable from the overall gross estate. The total value of the assets passed on to the spouse is subtracted from that amount, giving us the marital deduction.
What assets cannot be placed in a trust? Retirement assets. While you can transfer ownership of your retirement accounts into your trust, estate planning experts usually dont recommend it. Health savings accounts (HSAs) Assets held in other countries. Vehicles. Cash.

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