Legal Briefs

V

Avoiding Probate, Part 2: Living Trusts and
Designated Beneficiaries

by Susan Murray and Beth Robinson V

In last month’s column we discussed the ad- 4

vantages and disadvantages of creating “joint

tenancies” in order to avoidcprobate. Assuming ,

you’ve decided that you want to avoid‘ probate,
there are a few other common things you can do.

First, if you have a life insurance policy, you
can -name your partner as the beneficiary on the
policyirather than simply naming your “estate.”
This has the advantage of allowing the insurance
proceeds to go directly to your beneficiaryupon
your death, without the need for approval by the
probate court. Further, unlike a joint tenancy, you
can change your beneficiary designation at any
time. This “beneficiary designation” technique can
also be used for any other assets that allow such
designations, such as a capital account in a part-
nership or perhaps a‘ retirement or pension account.

You can also use a bank account to create a
simple “pay on death” trust or “bank account trust;”
this is also known as a so-called “Totten Trust.” To
set up sucha trust, you simply deposit your money
into a bank account and, on the appropriate bank
form, indicate that you are the “trustee." You can
then name a specific person —— your partner or any
other person — as the beneficiaryof the account.
That person then inherits whatever money is in the
account when you die, and the account does, not
have to go through the probate process. During your
lifetime, you would retain exclusive control over
the account; you could deposit money into it or
withdraw whatever amount you wished, or you
could close the account altogether.

If you have more property than just a bank ac-
count, there is another kind of trust you can create
to avoid probate: the so-called “inter vivos” or “liv—
ing” trust. A living trust can be “revocable” or
“irrevocable.” The most common living trust is the
“revocable” trust; like the simple “bank account
trust,” a revocable living trust can be revoked or

, canceled by you at any time before your death.

To create a revocable living trust, you need a
trust document with a specific title indicating that
it is your trust. In the trust, you would be named
the “settlor” or creator of the trust, and would also
name yourself the “trustee” or manager of the as-
sets in the trust. A second person must also be
named as a “successor trustee” to manage the trust
after you die or become incapacitated.

In the trust you would also identify the benefi-
ciaries, as you would do in a will. These are the
people who will inherit the property in the trust
after you die. Finally, you must identify the assets
which you are putting into the

them at any time. You can also cancel the revocable
trust altogether.

Upon your death," the trust does not have to go
through probate. Instead, your “successor trustee”
(who can also be a beneficiary, such as your lover
or partner) will simply execute all the documents
necessary to transfer the assets to the beneficiaries.

Some people may decide to set up an “irrevo-
cable” living trust rather than a “revocable” one.
As the name-implies, you cannot revoke or cancel
an irrevocable trust after you set it up, and, unlike a
revocable trust, you cannot remove any property
from an irrevocable trust after the property has been
transferred to the trustee’s name.

Why would anyone set up such a trust? The most
common reason is for estate tax purposes. If you
put property into an irrevocable trust, the IRS says
that this property is no longer considered yours, so
upon your death that property will not be counted
toward the total value of your estate for purposes of
calculating estate taxes.

Most people don’t have to worry aboutiestate
taxes, though, so revocable trusts will usually be
adequate. Currently, estate taxes ‘are charged only
if the total value of the estate is over $600,000. (You
should note, however, that all life insurance pro-
ceeds are counted toward this $600,000, even if
those insurance proceeds are distributed directly to
your beneficiary, outside your Will.)

Estate taxes are extremely high, so if there is a
possibility that your estate will be close to or over
$600,000 upon your death, you should consider
getting estate planning legal advice to determine
whether you should be setting up an irrevocable liv-
ing trust or utilizing some other estate planning
techniques. V

Susan Murray and Beth Robinson are attorneys
at Langrock Sperry & Wool in Middlebury, Ver-
mont whose practices include employment issues,
family matters, estate planning, personal injury and
worker ’s compensation cases, and general civil liti-
gation.

This column features timely information about
legal issues of interest to our community. We hope
to provide information about important laws and
court cases that may ajfect our rights, as well as
practical nuts and bolts advice for protecting our-
selves and our families. If you ’d like to see us cover
a particular topic, please feel free to "write OITM
or call us at 388-6356.

October 1996

You Know You’re 0UTWhen...

Find out just how OUT you really are by adding up all the points that might
apply to you. The more you get, the out-er you are!

You’re at a restaurant and.'.. _ ~
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the meal. (3 pts.) _
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, pts.) . .

. You look around the room, watching for the signal to start the “kiss-

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The security alarm gets set off by all your piercings and you have to
calmly explain why you can’t remove ALL of them there in the
passenger line. (4 pts.)

You don’t care and proceed to remove them anyway.’ (5 pts.)

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You and your partner hold hands and kiss each other every time you
_ walk past the White House. (5 pts.) V

G/L/B Film Festival Premieres
in Northeast Kingdom

ST JOHNSBURY -- Catamount Arts of St. Johnsbury will present a
Gay/Lesbian/Bi Film Festival the week of October 25-31. This is the
first festival of its nature in the Northeast Kingdom.

The program includes the regional premiere of “Stonewall,” the
recent film about that historic event. Also included are “The Celluloid
Closet” and a collection of award—winning shori lesbian films from
around the world entitled “Girlfriends." Two other noted films, “Bar
Girls” and “Before Stonewall,” fill out the festival roster.

The festival will beginat 7:00 p.m. Friday evening with a screen-
ing of “The Celluloid Closet.” Singer/songwriter/female illusionist
Noel will perform at 9:15. Noel will bejoined by the Bad Puppy Trio.

Saturday’s events begin at 1:00 with a screening of the Emmy-
winning documentary “Before Stonewall,” followed by a discussion
with the film's producer, John Scagliotti. At 3:00, “Stonewall” will
premiere. The evening shows begin at 7:00 with “Girlfriends” and
continue with a second showing of “The Celluloid Closet" at 9:00.

Sunday show times begin at 2:00 with the hit lesbian film “Bar
Girls,” followed at 4:00 with “Girlfriends.” Evening‘ show times are
7:00 with “The Celluloid Closet” and “Stonewall” at 9:00.

The remainder of the week willrfeature “Stonewall” on Monday
and Wednesday evenings at 7:00 and “Girlfriends” on Tuesday and
Thursday at 7:00.

For further information, ticket prices, and directions to Catamount
Arts, call 748-2600 or (800) 805-5555. V ‘

trust, such as investment ac-
counts, antiques, or your house.
Any property that actually has a
legal document oftitle (such as
the title to a car, or the deed to
your house, or the passbook for
a bank account) must actually be
transferred into the name of the

- '1 D ti t
trust. Pam: y en 5 ry
If you want to transfer your Middle Street 802-7234300
house into the trust, you will need 30- B°X 425 (V I) 1 3003390227
Island Pond, Vermont 05846 FAX 802-723-4544’

to have a deed prepared and have a

 

Laurie Ann Forest, D.D.S.

Island Pond
Health Center

A division of Northern Counties Health Care, Inc.

Golden Threads

Discreet’ Contact Publication for

Lesbian Women over 50,
and younger

    

Sample Copy $5
P. O Box 65. Richford. VT 05476-0065

it recorded in the land records.

This will trigger a Vermont prop-
erty transfer tax (the tax is $500
on a $100,000 home, $1,125 on
a $150,000 home, and $1,750 on
a $200,000 home).

During your lifetime, a revo-
cable trust is essentially a “paper
transaction” that will have no
practical effect on how you man-
age your affairs or your assets.
You can spend the assets in the
trust, or give them away, or sell

The Great Gray 01-ientzi|.tion:

How can I find a gay friendly doctor/lawyer/etc.

October 23. 6:30-9:00 PM @ Ilia Fletcher Fran lilirani in Burlington

Part of a monthly series of workshops and forums
co-sponsored by The Men's Health Project
& The Young Men’s Group @ Outright Vermont

What's out there in the community?

How can I get involved?

lilL3JJlL".l_1§§ §L9_!|13.[_|l§ll|1ll9LT_l9 7.3. ULILHS

Susan McKenzie MS.‘

Licensed Psychologist—Master

Experienced therapist specializing in the individual and
relationship issues of Lesbian. Women and Gay Men

Quechee Montpelier Norwich

802 295-5533

Insurance Accepted-Sliding Fee Scale