Protecting
Families
educator Corner
By Dr. Michael Mobley, Executive Director of the Center for Integrated
Science, Engineering & Technology at Grand Canyon University
With a Trust
by Sharon Ravenscroft, Esq.
W
ith all of the changes in
tax and investment laws,
now more than ever, it
is important to have the most costeffective method of having the right
person handle your assets if you
become ill or if you die. Revocable
Living Trusts are very useful for
assuring access to assets due to
illness or death.
With only a Will, court involvement in the form of a
conservatorship is necessary for any distribution to a minor
that exceeds $10,000 in a year. Conservatorships limit the
use and investments of the funds and then release the funds
when the minor reaches 18. With a trust, a parent can choose
who will oversee the funds, how to invest, use and distribute
the funds – delaying distribution to 21, 25, 30 or more. A
Revocable Living Trust agreement is the preferred way to
handle assets held in 401k’s, IRA’s, life insurance, real estate and
other investments.
The trust agreement can have provisions which encourage
a college education, promote living a drug-free life, and
encourage gainful employment. The parent who knows what
is best for the child can choose the right person to oversee the
child’s finances and guide the distributions instead of leaving it
to the courts.
Many married couples who have a trust now, have outdated
provisions which do not incorporate the Arizona Trust
Code which can limit court involvement if there is a dispute;
or require that upon the death of one spouse the trust
automatically split into two trusts. While having an automatic
split can limit estate taxes, in some cases, if the married couple’s
assets do not exceed the amount that can be passed estate tax
free, then the automatic split is not needed. Having two trusts
can be more bothersome than helpful, especially when the
surviving spouse may survive the deceased spouse by decades.
A trust amendment to make the split optional instead of
automatic should be considered.
The creator of the trust is referred to as the “Settlor” and is
normally also the “Trustee” or owner of the trust assets. The
creator is the initial beneficiary of a revocable living trust. If
the creator becomes incapacitated or dies, then the Successor
Trustee takes control of the trust assets for the benefit of the
initial beneficiary or the designated contingent beneficiaries.
When using a trust, the title or ownership should reflect
that the Trustees own the property; for example: “John and
Jane Doe, as Co-Trustees, of the Doe Revocable Trust dated
[insert date of signature].” The date that the trust agreement is
signed becomes part of the name of the Trust, even if the trust
agreement is later amended.
Sharon Ravenscroft, Esq., The Cavanagh Law Firm, A