Mod6CTOpt2
pdf
keyboard_arrow_up
School
University of the Cumberlands *
*We aren’t endorsed by this school
Course
539
Subject
Philosophy
Date
Apr 3, 2024
Type
Pages
5
Uploaded by briwoodson
Module 6: Critical Thinking Option 2
Colorado State University - Global
Professor Weatherington
Brianna Woodson
01/08/2023
Module 6: Critical Thinking Option 2
1
As time goes on, individuals tend to actualize that holding all assets in their estate may
not be the best course of action for them. There are many reasons why individuals choose to
transfer their assets; these reasons could be due to life events or an overall desire to take control
of their dealings. Therefore, it is essential to evaluate the importance of each option in terms of
transferring assets accordingly. Yvonee is a police detective earning a salary of $58,000 per year
while her husband is a public school teacher earning $44,000 per year. The couple owns a home
and two late model cars as well as a bass fishing boat. Both of the couple have a 401K retirement
account through their employer as well as group term life insurance policies to match their
salaries. Additionally, the couple has about $5000 in their joint checking account. For the
purposes of this assignment I will be reviewing the best course of action in transferring assets for
married couple Yvonne and Joshua.
Trusts
A trust is a legally binding agreement where a trustor gives another party known as the
trustee the rights to hold title to and manage property or assets for the beneficiary (Kagan, 2022).
The main purpose of a trust is to establish legal protection for the assets in question. A trust is a
valuable tool in ensuring that assets are distributed accordingly. Trusts also serve to save family
time and stress by avoiding probate and taxes. The details of a trust are determined by the terms
in which it was set.
It is important to choose the appropriate trust for Yvonne and Joshua to best allocate their
assets in the event one of them passes away. There are three types of trusts: revocable or
irrevocable, funded or unfunded and living or testamentary. A revocable trust can be edited or
termed by the trustor during their lifetime whereas an irrevocable trust cannot be. Testamentary
Module 6: Critical Thinking Option 2
2
trusts are typically non-changeable once established but are revocable with a will if the grantor is
still living (Kagan, 2022). A funded trust has assets allocated to it by the trustor during their
lifetime and an unfunded trust only holds the agreement with no additional funding.
For Yvonne, Joshua and their two children a revocable living trust is the best plan of
action. This is quite common a trust and allows for flexibility in planning. These trusts can have
assets added to and from them or be canceled altogether without much trouble. As
aforementioned, the greatest advantage a trust can provide is the avoidance of probate after the
grantor's death. Also, the control and flexibility over the trust is ideal. Yvonne and Joshua can
choose when and how assets are distributed so property is determined exactly as it should be.
Assets in Trust
It has been decided the type of trust Yvonne and Joshua need so the next step is focusing
on how these assets will be joined for optimization. A joint trust will benefit the family in several
ways: asset protection, taxes, and during and post-death benefits. If Yvone and Joshua were to
establish a joint trust, all of their marital assets would be together in a single trust. This means
their home, vehicles, boat and life insurance policies would be combined into a single trust.
There are also tax benefits for the couple to consider. By establishing a joint trust, assets and
property can earn the same estate tax marital deductions as a separate trust (Hicks). Another
benefit of a joint trust is that while both spouses are living each has equal rights managing the
assets held in the trust. For after death planning, both Yvonne and Joshua will need to establish a
plan of how assets will be distributed. For example, Joshua’s boat could be planned to go to one
of their children and the other child could receive the vehicles. The couples life insurance
policies can also be added to the trust and terms dictated on how the funds are distributed.
Your preview ends here
Eager to read complete document? Join bartleby learn and gain access to the full version
- Access to all documents
- Unlimited textbook solutions
- 24/7 expert homework help
Module 6: Critical Thinking Option 2
3
Yvonne and Joshua should also keep in mind the flexibility of the joint trust. This trust
can have assets allocated to it or removed from it during the lifetime of the grantors.
Additionally, these assets can have separate beneficiaries named in the event the couple wants to
split their assets between their children. In death, this trust makes ownership simple because
there is less work on the living spouse because shared property does not have to be retitled after
death (Hicks). The couple could join their physical property such as their home, cars, and boat
into the trust while also including their group life term policies, including the one Yvonne holds
on her own totaling to $100,000.
Conclusion
Ultimately, establishing a trust is one of the best ways to protect both family and assets at
the result of an individual's passing. Trusts not only protect them in death, but also during life’s
unexpected mishaps such as illness or injury. A joint living revocable trust is the best plan of
action for this family and their modest estate. This trust will allow the couple to responsibly
handle their assets while still offering them flexibility in changing or adding to their trust. With
this trust also allowing the couple to establish separate beneficiaries the couple’s children are
also protected and involved in the estate planning process.
Module 6: Critical Thinking Option 2
4
Works Cited
Hicks, Patrick. “Joint Trusts vs Separate Trusts for Married Couples.”
Trust & Will
,
trustandwill.com/learn/joint-trust-vs-separate-trust. Accessed 8 Jan. 2023.
Kagan, Julia. “Trust Definition.”
Investopedia
, 2019, www.investopedia.com/terms/t/trust.asp.
Lamb, Zachary. “Joint Trusts: A Useful Tool for Some Married Couples.”
Ward and Smith, P.A.
,
5 July 2022,
www.wardandsmith.com/articles/joint-trusts-a-useful-tool-for-some-married-couples.
Accessed 8 Jan. 2023.
“Write Your Legal Will Online, Free & Simple.”
FreeWill
, 9 Aug. 2022,
www.freewill.com/learn/benefits-of-a-living-trust. Accessed 8 Jan. 2023.