• What is Estate Planning?  Estate planning is the process of planning for the efficient and orderly transfer of one's assets at death with the goal of conserving the assets and minimizing their loss to estate taxes or administrative expenses.

• What is a trust?  Generally speaking, a trust is a relationship where a person, called a trustor, transfers an asset, to another person, called a trustee. The trustee manages and controls the asset for the benefit of a third person, called a beneficiary.

• What is a trust used for?  Trusts have many uses.  One common reason to establish a trust is to provide control of assets for the benefit of minor children.  Trusts are also frequently used as a  substitute for a will.

• What is a revocable living trust?   A revocable trust can be terminated or changed by the trustor anytime during his or her life. It cannot, however, be changed after the trustor's death.  Similar to a will, a revocable living trust gives instructions as to how the trustor's assets are to be distributed at the trustor's death.  Unlike a will, the assets in a trust do not have to go through probate.

• Does a trust eliminate federal and state taxes?  No.  The assets of a revocable living trust are subject to the same federal and state death taxes that would be applicable if the assets were to pass under a will.  Nevertheless, there is an opportunity to save on costs associated with probate proceedings and to minimize certain types of taxes.

• What is probate?  Probate is a court proceeding whereby a court decides who is to receive assets that were owned by a person who has died.  This is an expensive and long process that can signficantly reduce the value of an estate.

• How much is exempt from federal estate tax?  Congress has approved a schedule that increases the amount an individual can leave to heirs tax-free to $2 million in 2006-2008 and to $3.5 million in 2009.  

• Is my life insurance proceeds taxable upon death?  Yes.  Taxes can be reduced or eliminated if an ILIT is used. 

• What is an ILIT?  An Irrevocable Life Insurance Trust allows life insurance death proceeds paid to it to escape estate taxation in the estate if certain precautions are taken.