In this 4 mints video, https://www.youtube.com/watch?v=LFFpeyqqKo0 Suze Ormon ex
ID: 2601953 • Letter: I
Question
In this 4 mints video, https://www.youtube.com/watch?v=LFFpeyqqKo0
Suze Ormon explains living revocable trusts. Consider: What is involved in the probate process? What is the purpose of a living revocable trust in terms of probate? What does it mean for the living trust to be revocable? How does this differ from irrevocable living trusts discussed in an earlier video link? Do living revocable trusts affect the amount of estate taxes due upon the donor's death? (Note: this is an important TAX distinction between revocable and irrevocable living trusts!) What does Ormon say you use Form 709 to do?
Explanation / Answer
Ans: This can be explained well with an example
CASE 1: PROBATE: A legal procedure in tranferring the property in other's name when the person dies.
Mr A dies and writes down a will (assume a house) in the name of B.
If B wants the house of Mr A
a.He needs to take the will to a lawyer
b.lawyers takes the will to the court where the judge has to authenticate or validate the will. If the will is not validated it is considered to be just a piece of paper with no validity
There will be a fees charged for the whole process (some percentage of total assets of the dead person) called as Probate, which will be very high. Moreover the whole procedure is time consuming . It can take around 6 months to 2 years. Compulsory statutory fees needs to be paid. If Mr B doesnt have money to pay, the property will be sold out.
CASE 2: Living revocable trust
With same example. If Mr A had made a living revocable trust document. Here Mr B will gets the money in two weeks. No probate fees charges and no cost incurred. living revocable trust is created when the person is alive and can be changed any time. Mr A can make a living revocable trust documents in the name of B. Mr A can name Mr B as trustee (one who gets to make all the decision when A dies).Mr B will get inchrge of his house without any legal complications.
Tax: Mr B has to pay state tax (any amount more than 1 million dollar from 2011) in either of the condition, but he can skip probate fees if it is a Living recovable trust.