When property is left outright to children or other beneficiaries, all in a single lump sum, that property may or may not be invested wisely depending on the choices the beneficiary makes. If the beneficiary is free to make decisions with respect to the entire amount left to the beneficiary, then one mistake could cost that beneficiary his or her entire inheritance. One way to avoid this difficulty is to leave property in trust, at least for a period of time, and then allow payouts to be made on an installment basis. That way only the portion of the property that is distributed free of trust would be lost because of a poor investment choice or because the beneficiary was scammed by an unscrupulous person. The property which remains in trust, if it is properly designed, will have a Cotrustee to prevent this sort of tragedy form occurring.

12. Maintenance of family values through

If the surviving spouse remarries after the death of the first spouse, the spouses in this new marriage may, without really thinking about it, title some or all of their property in joint tenancy or create marital property interests.  If the original surviving spouse is the first to die in the remarriage, the property titled with a marital interest in the new marriage will pass automatically to the new spouse who then has no obligation to pass that property to the children of the original couple.  Although the children of the original marriage were meant to receive the property, it will likely be passed to the family of the new spouse. The children of the first marriage were "disinherited" simply because the parents did not understand the impact of joint ownership. In addition to the inadvertent possibility of joint ownership causing problems, the surviving spouse who receives his or her property outright may simply choose to give some or all of the property to the new spouse.

As we can see, transferring property outright leaves the surviving spouse with the ability to transfer the inherited assets, either mistakenly or intentionally, to a new spouse thus preventing the property from ending up in the hands of the children of the original marriage.  This is not what most couples intend. The most effective solution to these problems is for each spouse to leave property to the other in trust, rather than outright.  Property left to the surviving spouse in trust can contain the simple directions that the surviving spouse may control, use and enjoy the property but only for himself or herself and the children. Property in a properly designed trust cannot inadvertently end up as joint tenancy property nor can it be gifted to a new spouse. When the surviving spouse dies, the trust provides that any of the property not consumed by the surviving spouse or the children will pass, according to the terms of the trust, to the couple’s children or other designated beneficiaries. The use of a trust also prevents the surviving spouse from being free to give the property to a new spouse at death.

Thus, with a trust, the first spouse of a couple to die can eliminate the possibility that either through inadvertence or intention his or her property will end up in the hands of a new spouse or the new spouse’s family, rather than the original couple’s family. For most couples, it will be the most effective way to meet the basic estate planning goal.

As families and estate planners work through this era of tax uncertainty, the revocable living trust transcends the potential for estate tax repeal and provides a mechanism to meet the diverse and complicated issues of both tax and family planning.  For those who do not thoroughly understand trust planning, the assumption has been that trusts are only for large estates. While tax planning is an important facet of estate planning, planning for incapacity, avoiding probate, nominating guardians for children, and inheritance protection are just a few of the other reasons a revocable living trust is so important for everyone.

Spouses can combine their annual exclusions to double the size of the gift.  For example, this year a married couple with a child who is married and has two children could make a joint cash gift of $26,000 to the adult child, the child’s spouse and each grandchild – four people – providing the family with $104,000 a year. Gifts that exceed the limit count against the lifetime exclusion, which this year is $5.12 million ($10.24 million for married couples).

If you exceed the limits, you could wind up owing gift tax of up to 35%.  Even if you don’t, your lifetime gifts would reduce how much you can pass tax-free through your estate plan.

Now is the best time to start gifting in order to reduce your estate and avoid estate taxes because next year the whole system may change.  Unless Congress acts before the end of this year, the current $5.12 million per-person exclusion from the federal estate and gift tax will automatically dip to $1 million and the tax on transfers above that amount will go up to 55%.

The following are five helpful facts about lawsuits brought against trustees:

1. Trustees can be sued both in a personal capacity and as the trustee of a trust.
2. An trustee can be sued personally for illegal or improper administration of the trust.
3. Minors can sue trustees, provided an adult files the lawsuit on their behalf.
4. Common causes of action for lawsuits against trustees include fraud, self-interest, conflict of interest, and embezzlement.
5. Lawsuits against trustees are typically brought in the California probate court.

Attempting to remove a trustee or take other action against him or her without the guidance of an experienced trust litigation attorney could be costly. Each day that a biased trustee remains in control of the estate assets, the greater the chances of wrongdoing.

A frequent scenario in such cases is this: A family member or caretaker brings in an elderly client, stays with the client during the planning meeting, may even pay for the attorney's or other professional's services, and becomes the main beneficiary or heir. The beneficiary may or may not be related to the client.

When a court makes a determination of whether undue influence has been exercised, it considers a variety of factors, including whether the transaction took place at an appropriate time and in an appropriate setting, and whether the testator was pressured into acting quickly or discouraged from seeking advice from others. Courts also consider the relationship between the parties and the "fairness" of the transaction.

With right of survivorship property, when one owner dies, full ownership usually transfers to the surviving owner without probate; but what if that surviving owner dies without adding a new joint owner, or if both owners die at the same time?  Then the asset must pass through probate before it can go to the heirs.  This could cause someone in your family to become unintentionally disinherited when the property transfers automatically on death because a will does not control most jointly owned assets.

Moreover, avoidance of probate is not guaranteed with non-probate transfers.  If "my estate" is listed as the beneficiary, or if a valid beneficiary is not named, the affected non-probate assets will have to go through probate, which will determine who gets what part of the estate.  So, too, if a minor is the beneficiary, the asset holder will probably insist on there being a court-appointed and supervised guardian to receive the assets and manage them for the minor.

There is, however, one kind of non-probate asset system that has been demonstrated to work exceedingly well to meet all of the client’s estate planning goals:  the revocable living trust.  Property that is held in a client’s revocable living trust will bypass probate and can be used by the trustee to care for the incapacitated owner without court involvement or interference.  Other non-probate assets that name the client’s revocable living trust as the beneficiary will also bypass probate.

A living trust-centered estate plan plans for your disability, provides for your loved ones, contains your caring instructions, addresses your fears, and reflects your love and values.  It can also avoid probate, is valid in every state, and is more private and confidential than a will.  For all these reasons, a living trust-centered plan has become the centerpiece for modern estate planning.

Some trustees won't make distributions because they've done something wrong and they're hoping to cover it up by not making the distribution.  The trustee may have mismanaged trust assets or, in some cases, wrongfully taken trust assets for themselves.

Every case is different but the one piece of advice I give to every beneficiary who calls me saying they can't get their inheritance is don't wait, do something about it now!  Have the trust reviewed by a trust litigation attorney.  It's unlikely but maybe you are asking for something you aren't supposed to get from the trust. If the trustee is incompetent then they need to be forced to act or they need to be removed. If the trustee is acting fraudulently then you need to have your attorney get a trust accounting so you can find out if you have received everything to which you are entitled.

On November 22, 1963, when President John F. Kennedy died the separate trust that his parent’s created for him continued to be held in trust for his two children, Caroline and John, Jr.  There were no estate taxes or probate costs and his wife Jackie was not a beneficiary.  The Trustee was only able to distribute funds to Jackie, as the natural guardian, for health, education, maintenance and support of Caroline and John, Jr. Jackie remarried, but it did not affect the trust.  In1994 when Jackie died she was very much involved with a man who had modest wealth, but he did not get any of the assets in the trust when she died.

In 1999 when John F. Kennedy, Jr. died his estate was sued by his Father-in-Law and Mother-in-Law for the wrongful death of their two daughters.  Nevertheless the trust that Joe and Rose Kennedy created passed estate tax free and creditor claims free to Caroline where it is safe and sound today.

In 1970 when Senator Ted Kennedy was sued by the estate of Mary Jo Kopeckney for her wrongful death in the summer of 1969, the trust his parent’s created for him was protected from that lawsuit.  Fortunately for the Kopeckney estate Senator Ted Kenedy had about $350,000 in liability insurance and they settled out of court.  Some years later when Senator Ted Kennedy and his wife Joan got divorced, none of the assets in his trust were affected by the divorce.

Through proper estate planning, your living trust can accomplish the same.