Page 6 July 2011 This month’s report from Arcadia lawyer Bob Jones There is a great deal of confusion regarding the need for and use of trusts. This article is by no means intended to provide a comprehensive review of the use of trusts, but hopefully will provide basic information to allow consideration and discussion with an estate-planning specialist. Generally, trusts take two forms, revocable and irrevocable. A revocable trust allows for modi fi cations/amendments after the trust agreement is fi nalized. An irrevocable trust may not allow for any modi fi cation. There are strong reasons, both from the standpoint of taxes and of family planning, for using one of the two different types of trusts. A revocable trust is commonly referred to as a grantor, inter vivos and living trust. The person forming the trust is the trustor and the person or entity legally responsible for administering the trust is the trustee. Bene fi ciaries are the persons entitled to the bene fi ts under the trust. A revocable trust lends itself to use as an estate-planning vehicle. If used correctly, it can provide estate-tax planning, asset protection for bene fi ciaries other than the trustors such as children and grandchildren, and avoidance of the probate process. The use of a revocable trust is much more ef fi cient and fl exible than providing in a will for a trust to be formed following the death of the testator, which is generally called a testamentary trust. If a revocable trust is used, the accompanying will or wills are normally pour-over wills meaning that if the assets are not already in the trust at the death of the trustor the trustor’s will directs that they be distributed to the trust. The general approach is to make sure the assets end up in the trust so they are controlled by the trust’s terms and the designated trustee. The estate planner will in most situations recommend that all probatable assets be placed in the revocable trust following its execution to avoid the necessity of probating the assets into the trust at the death of the trustor. A revocable trust properly drafted and executed is a legal entity recognized to hold title to assets and to provide how assets are to be administered on behalf of the trustors and other bene fi ciaries. There are many alternatives when considering using a trust, and the trust should be drafted to fi t the speci fi c needs of the trustors and their family by a competent estate planner. An irrevocable trust is drafted speci fi cally not to be amendable or revocable, which may provide immediate tax advantages in gifting situations and avoidance of future estate taxes. Both of these reasons are complex and must be fully understood before making use of an irrevocable trust. A revocable trust is usually drafted to become irrevocable at some point in time, which again may provide tax bene fi ts and allows the trustor to provide how assets will be administered for the bene fi t of the bene fi ciaries. By becoming irrevocable, a trust can provide asset protection for children and grandchildren, and designate the person or legal entity empowered to make decisions concerning trust investments and distributions to the bene fi ciaries. Trusts have many uses and should be carefully considered before implementation. Jones is a 19-year Arcadia resident and shareholder at Gallagher & Kennedy law of fi ces. Brian A. Serbin, DVM • Anthony Gilchrist, DVM Rachel Bart, DVM • Kristen Levine, DVM Y" - % 1Y!21Y ' 0 "1Y#6-2' !1 Y WWW.INGLESIDE.COM Check Out Our New State-of-the-Art Facility! 4855 East Thomas Road • Phoenix AZ 85018 602-840-3446 (HOSPITAL) • 602-952-1754 (GROOMING) Monday-Friday: 7am–6pm • Saturday: 8am–3pm Member Since 1959 Medical • Dental • Surgery • Boarding • Grooming • Obedience Training Lara Broadrick 602.628.7332 lara.broadrick@russlyon.com larabroadrick.com lara lara Broadrick REALTOR ® Experience. Networking. Results. 4115 4115 North North Jokake okake 5337 5337 EastCalle del Medio EastCalle del Medio Grand Opening Celebration 10% off With every $50 purchase get a FREE Bag Pipes T-shirt 602-954-3880 3632 E. Indian School Rd. Phoeni x , AZ 85018 M-F 10am-8pm Sat 10am-6pm smoke accessories & custom hand blown glass k

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