Our Offices

The Law Office of
John W. Harmon

John W. Harmon, Esq.
JW@attorneyharmon.com
Fax: (508) 377-4442

Main Office
649 Massachusetts Avenue
Suite 8
Cambridge, MA 02139
phone: (617) 274-8256

232 Central Street
Leominster, MA 01453
phone: (978) 401-0660

Trusts

pic A Living Trust is a document that you set up to begin operating while you are alive. You should transfer most of your assets to the Trust. You do not need to transfer certain assets to the Trust (Our office will advise you as to what assets should be transferred to the Trust). Usually, you are the Trustee of the Trust while you are living. The Trustee manages the day-to-day operations of the Trust. While you are alive, the Trust is revocable. This means that you can spend all the money in the Trust, cancel the Trust, change the terms of the Trust, and/or change the beneficiaries of the Trust. The Trust contains provisions for a successor Trustee. This is the person or persons who will manage the Trust after you are no longer able to do so.

If you become incapacitated, which means that you can no longer manage your financial affairs, then the successor Trustee steps in and manages the Trust for you. This is a very helpful estate planning tool. This is a way to avoid a conservatorship proceeding. If you become incapacitated, the successor Trustee can make distributions to you or for your benefit. If you are married, the successor Trustee is usually your spouse. If you are not married, the Successor Trustee can be one of your children, another person, or a bank.

When you pass away, if you have transferred all of the proper assets to the Trust, your estate does not go through Probate. This could result in a significant savings to your heirs. Normal Probate fees range between two percent and ten percent of your estate.

If you are married, the Trust can be set up to save a substantial amount of estate taxes. Each spouse or single person is allowed to transfer a certain limit during their lifetime, or after their death, tax-free. This is called the unified credit. This means that if a married couple's estate plan is set up properly, then that couple can transfer a certain amount tax-free. If the married couple does not set up their estate plan properly, for example if one spouse leaves all of his or her estate to the other spouse, then that couple loses one of their unified credits.In order to take advantage of both unified credits, the Trust is set up in what is called an AB Trust. When both spouses are alive the Trust is totally revocable. The income or principal can be paid out to both spouses. When one spouse passes away, the Trust is divided into two Trusts. One Trust is called the Decedent's Trust and the other Trust is called the Survivor's Trust. The Decedent's Trust contains the deceased spouse's share of the assets. The Decedent's Trust becomes irrevocable on the death of the first spouse. This means the surviving spouse cannot change this portion of the Trust. The income of the Decedent's Trust will be paid out to the surviving spouse. The principal of the Decedent's trust will be paid out to the surviving spouse if he or she needs it for his or her health, education, support or maintenance. When the surviving spouse passes away, the remaining balance of this Trust is paid out to the beneficiaries of this Trust.

The second Trust is called the Survivor's Trust. This Trust remains revocable by the surviving spouse. Again, this means that he or she can spend all the assets in this Trust, can change the Trust, can change the beneficiaries, can cancel the Trust. All of the income and principal of this Trust are paid to the surviving spouse. When the surviving spouse passes away, the remaining balance of this Trust is paid out to the beneficiaries of this Trust, which may or may not be the same as the beneficiaries of the Decedent's Trust.

One major benefit of this estate plan is that both spouses receive their unified credit. This results in a significant tax savings.
The other major benefit of this plan is that this plan avoids Probate. This can result in a savings of between two and ten percent of the estate. It also will avoid the hassles and time delay involved in the Probate process.



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