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Subject: The Living Trust

Using a little foresight, let's say, you've writing a will to distribute 
your assets to your
children after your death and now you are pretty secure that you've 
safeguarded your
children's inheritance. But this may be a false peace of mind. You may be 
living for your
children months, even year, of agony in probate court, whopping attorney's 
fees, hassles
with court officials and emotional anxiety of waiting for their 
inheritances. Surprisingly,
there's a simple solution to this problem and a growing number of people, 
are taking
advantage of it.

Revocable Living Trust
Like many Americans, Jane learned the value of a revocable living trust 
firsthand, but
paid a heavy price for it. When her father died four years ago, he left his 
business, family
residence, a vacation home in Arizona and other assets to her. Fortunately, 
he had left a
will and at first it seemed everything would go smoothly. But the problems 
started
cropping up almost immediately. Although Jane, an accountant by profession, 
was name
the executor and sole beneficiary of the estate, she had to hire an attorney 
to probate the
will. She was fairly familiar with her father's financial affairs, but, when 
it came to
probate, there was very little she could do to expedite the process. It 
seemed like the
court and the attorney were getting involved in every decision. Finally, the 
probate was
over more than two years later but took a heavy financial and emotional toll 
on Jane. The
once-thriving business was pretty much ruined.

After this experience, it did not take much to persuade Jane and her husband 
to set up a
revocable living trust. All of their assets were transferred to the trust, 
with both of them
acting as trustees. Because the trust is revocable, they can change its 
terms, even cancel it
at any time. When one of them dies, the surviving spouse will continue to 
act as the
trustee and control and manage their assets. In the event of incapacity or 
in competence,
the living trust will allow them to avoid lengthy and costly guardianship 
and
conservator-ship court proceedings. As Jane put it, "I want everything to be 
as easy as
possible for my kids if something is happened to me. I wouldn't want them to 
go through
what I did with my father's estate."

Flexibility
Beauty of revocable living trust is its flexibility. In setting up the 
trust, you transfer
legal ownership of the assets to the trust. But you name yourself as the 
trustee of trust. 
Thus, although you've relinquished the nominal ownership of the assets, you 
continue to
be the beneficial owner. You can manage, sell, mortgage or give away your 
assets as you
please and the trust won't interfere. If some point in time you wish to 
change terms of
the trust, including designation of beneficiaries, or even revoke it in 
entirety, you can do 
so.



 Advantage Over Will
Many estate planners swear by living trusts; their advantages over wills are 
many. The
problem with a will is that it must be proved valid, in the probate court. 
To probate will,
you will definitely need to hire an attorney and attorney's fees can run 
into thousands of
dollars. There may be executor's commissions and other court cost. 

Califonia's probate fees - set by law, are about average among states. For 
an estate of
$500,000 (by no means a small or uncommon estate where home prices start 
around
$200,000), the cost of probate in terms of attorney's fees and executor's 
commissions
would range around $22,300. This is a big chunk out of your children's 
inheritance.

Worse than the financial blow, the probate can exact an emotional toll on 
the surviving
family.
Your heirs may have to wait several months and sometimes years to collect 
their
inheritance, depending upon the efficiency of the executor, attorney, and 
probate court.
However, delays of eighteen months to two years are not at all unusual.

Probate records are public records and are available to all kinds of 
salespeople,
scrupulous or otherwise. Many a widow has been persuaded to make unwise or
unsuitable investment under pressure from fast-talking hucksters.

Living trusts, on the other hand, require no court proceedings; a successor 
trustee (who
may also be a beneficiary) simply distributes the assets according to the 
trust's
instructions and dissolves the trust. "The process is much quicker, cheaper, 
and more
private than settling a will, and it may save on taxes, too," according to a 
well-known
authority on trust in Atlanta.

Few Disadvantages
According to most estate planners, the revocable living trusts have few 
disadvantages.
Inertia may be the biggest foe in most cases. Most trust instruments are 
relatively simple
to prepare, and you'd need to formally transfer the title of various assets 
to the trust. This
requires some paperwork and you'd need to contact your banks, brokers, 
insurance
agents, etc. In most cases, they are familiar with revocable living trusts 
and you'd get
excellent cooperation from them. Once paperworks are complete, the trust 
will not affect
the way in which you control or manage your various assets.

Along this line, your setting up a revocable living trust will have no 
effect on your
income tax situation. If you act as the trustee of your own trust, as is 
normally the case,
you wouldn't need a separate taxpayer identification number. You would 
continue to
report all trust income, losses and deductions on your individual income tax 
a return
under your own social security number.     





Can Save Taxes, Too
Living trusts can, with proper planning, save on federal estate taxes. If a 
couple has a so-
called "A-B" lives trust, with separate trust, for husband and wife, they 
can pass on up
to 1.2 million tax - free to their children, trusts attorney say. Under this 
method, each
trust can make the maximum utilization of the $600,000 federal estate tax 
exemption.
The surviving spouse can draw the trust income for life, and also, has the 
right to invade
the principal of the other trust, if there be need. When the second spouse 
dies, both trusts
go to the children. Without the A-B plan, the children would pay $235,000 in 
federal
taxes on the 1.2 million estate, says a tax attorney.

Trust Hard to Contest
When a will is probate, the executor of the estate is generally required to 
notify all
potential heir - whether they are named in the will as beneficiaries or not, 
that the will is
in probate. A disgruntled heir, rightfully or wrongfully denied his share of 
the estate, can
rock the boat at this time by alleging undue influence or lack of mental 
capacity. In many
instances, he may not even need to hire an attorney to start such a will 
contest. Facing the
prospect of a long, drawn-out court battle, oftentimes the executor or the 
other heirs will
settle with the disgruntled heir by giving in to the "blackmail."

This is exactly what happened when J. Seward Johnson, 87, of Johnson and 
Johnson
fortune died leaving the entire estate worth $500 million to his third wife, 
Basia, then 46.
Johnson's six children, disinherited by their father, contested the will. In 
a settlement, the
children and a charity got $169 million. The wife got to keep the remaining 
fortune and
the attorneys reaped a $24 million bonanza.

Living trust, on the other hand, is extremely hard to penetrate. A living 
trust is set up
during your lifetime and, presumably, you've been administering the trust 
for several
years. It would be difficult to challenge your competency to set up the 
trust under these
circumstances. 

Upon your death, the trust estate is distributed to the named beneficiaries 
almost
immediately, without the intervention of a probate court. Anyone wishing to 
contest, the
trust would have to sue each and every beneficiary - after they have 
received the assets,
ruling out the possibility of blackmail. 

Remember, the trust is an entirely private affair and no one, other than the 
beneficiaries,
needs to know the contents of the instrument. This precludes disgruntled 
heirs from using
the threat of a court battle to tie up the estate in years of litigation. 

Joint Tenancy Not a Solution
Most married couples (and often, a parent and a child) hold title to a 
property in joint
tenancy with the right of survivor-ship. Upon the death of one joint tenant, 
the surviving
joint tenant inherits the asset without going through probate.
  


So far so good, but when the second spouse dies, unless he or she has placed 
the property
in joint tenancy with someone else, that property will be probated. A living 
trust is one
sure way to avoid that problem.

Most estate planners advise against joint tenancy for a variety of reasons. 
For some
persons, in certain situations, joint tenancy may be a wise decision. 
However, in a vast
majority of cases, joint tenancy spells major disadvantages.
 
For instance, say you own your home and care in joint tenancy with your son. 
If the son
gets into an accident, and the injured person file a lawsuit, you'd be named 
a defendant
along with your son. If an adverse judgment is rendered, your personal 
assets are at risk.

Or take this scenario. You and your wife own all assets in joint tenancy 
with a view to
avoid probate when one of you dies. But your wife has to be put into a 
nursing home due
to Alzheimer's disease. Now you will need to go to probate court before 
being able to do
anything with the joint-owned assets. In this case, joint tenancy is 
actually turned out to
be a curse. 

Guardianship
Living trusts are well-suited to handle just such a contingency. A growing 
number of
Americans are putting their assets into living trust because they want to 
avoid being
placed under a court appointed the guardian if they become physically or 
mentally
disabled
and are unable to manage their affairs. "With a living trust, you can 
designate the person
(generally the successor trustee) who'll take over your affairs in the event 
you become
incompetent." Says an estate planner who advises senior citizens on a 
regular basis, This
avoids the cost and public embarrassment of a court conservatories or 
guardianship
proceeding.

Why Aren't Living Trusts Better Know?
If living trusts are such a wonderful device for passing on your inheritance 
to your
children, why aren't they better known?

Well, the truism is they getting increasingly more popular, more so in 
certain parts of the
country than others. You'll regularly find articles on living trusts in most 
major personal 
finance or money magazines and also in newspaper columns. These articles 
universally
laud the benefits of living trust against wills, or the scarier option of 
dying without a will.

This does not mean that every attorney in your city or town knows about 
living trusts, or
is willing to help you set up a living trust. Many simply do not know 
anything about
living trusts. These attorneys derive a substantial portion of their income 
from our
probate system and they are not about to kill the "cash-cow." These 
attorneys are building
a "will file;" each will they write, they hope, will ripen into a probate 
estate. 



Then there are some attorneys who've seen writing on the wall and have 
decided to
join the bandwagon. They have discovered that helping people set up a living 
trust can be
just as lucrative as probating an estate, especially if you can charge $595, 
$895 or $1,500
to set up a simple revocable living trust. They advertise free seminars in 
local newspapers
and sign up clients just for such a service.

While doing it, they can portray themselves as heroes. A law firm in 
Southern California,
in its free - seminar advertisement for a living trust, touts itself as 
"defying the system by
placing principle above profit." It is "willing to forego millions of 
dollars in probate fees
in favor of preparing a one-time, foolproof, affordable plan." This just 
proves the point
I've been trying to make here. Probate is a multi-million dollar business 
and, like the ad
says, "you should avoid it like the plague."

For further information, contact:
Bethel Enterprises
40 Richman Plaza Suite 8E
Bronx NY. 10453
Phone:      718 299 8206
Fax:          718 716 8404
E-mail:       Bethel@interramp.com
Web Site: Http://Bethelenterprises.inter.net/bethelent.