REVOCABLE LIVING TRUSTS 
 Revocable trusts, as described in the introduction won't provide
 you with tax shelter.  However, revocable living trusts can shelter
 you from the probate threat to your wealth and control over it.
 
 Literally, probate is the process of "proving" your will and
 transferring assets to your heirs.  A lot of people spend a lot of
 time and effort trying to bypass probate, for these reasons:
 
 * Expense.  Depending on your state and the size of your estate,
 the total cost of probate might be 3%-7% of your assets.  Say you
 die with a total estate of $300,000, certainly not a huge amount in
 today's world.  From $12,000 to $28,000 might go to lawyers,
 executors and court fees--just for shuffling papers.  For a married
 couple, two probates may be needed, costing as much as $24,000 to
 $48,000, before all of their assets can go to their kids.  What's
 more, the probate fees get paid first, before your family gets
 whatever's left.  
 
 * Delays.  Not only will probate cost your heirs, it can cause
 critical holdups.  Although some states probate an uncomplicated
 estate in a matter of a few weeks, an "expedited" probate might
 take six months in others and a few states tie up assets for up to
 two years.
 
 While assets are in probate, the court is in control.  That means
 your executor or an administrator appointed by the court will
 manage them until the estate is settled.  Will he or she buy and
 sell to take advantage of market or tax-planning opportunities? 
 Perhaps--and perhaps not.
 
 * Publicity.  Adding insult to injury, probate proceedings are on
 the public record.  Anyone can see a list of your assets and the
 debts you've incurred.  Illegitimate claims may be brought against
 your estate and various scam artists may try to prey upon your
 heirs.  If you own a closely held company and it goes through
 probate, its records will be exposed to competitors and creditors
 and management during probate will be awkward.
 
 * Multiple probate.  Suppose you own a vacation home or investment
 property outside your state of primary residence.  Your estate will
 have to go through probate in that state, too, adding still more
 expense and aggravation.
 
 It's clear, then, that probate is best avoided, if possible. 
 That's where revocable living trusts come in.  In essence, once you
 transfer assets into the trust, they're owned by the trust instead
 of you.  At your death, the assets stay in the trust, to be
 distributed by the trustee rather than by a probate court. 
 Interest payments, for example, go to your heirs right away,
 without the delays of probate.
 
 This arrangement makes it very difficult for a disgruntled heir (or
 would-be heir) to challenge your disposition of assets--a big
 benefit.  Another benefit is privacy:  Your assets and their
 disposition are not exposed to the general public, as they are when
 assets go through probate.
 
 Won't an irrevocable trust avoid probate, too?  Yes, it will, and
 some people use them for this purpose.  Revocable trusts are used
 more frequently, though, precisely because they're revocable.  You
 can change the terms whenever you want even cancel the trust
 altogether.  You can set up a revocable living trust naming
 yourself as trustee as well as beneficiary.  If anything comes up
 that makes you unhappy, you can back out change the beneficiaries
 reallocate the trust assets.
 
 You will, of course, name a successor trustee and successor
 beneficiaries to manage and receive the trust assets after your
 death.  In the meantime, you have full control of the assets, just
 as you did before creating the trust.  If you transfer stocks into
 the trust, for example, you can buy or sell them at will.  You will
 receive the income from any trust assets; however, you'll owe the
 resulting income taxes.  A revocable trust is not a tax shelter.
 
 A revocable living trust can be used as an estate planning vehicle,
 too.  In addition to naming individual beneficiaries for assets,
 you can, for example, set out instructions for other trusts to be
 established at your death.
 
 The bottom line:  With a revocable living trust, you have control
 over your assets while living.  You can name who gets what at your
 death, and you can change your mind if you want to.
 
 RIGHT FOR YOU?
 Should you use a revocable living trust?  That depends on your
 assets and your state's laws and probate practices.  Living trusts
 are used more in some states (for example, California) than others
 (for example, New York), because some states have long, expensive
 probate proceedings, which encourage the use of living trusts. 
 Other states may discourage living trusts, for example, by
 prohibiting trust creators from acting as trustees as well as
 beneficiaries.  Therefore, you should investigate your state's
 trust laws and probate procedures before acting, to determine
 whether living trusts make sense in your state.  If they do, you
 still have to decide if such a trust makes sense for you.  That is,
 you need to see if you have the types of assets that should be
 included in a revocable trust.
 
 Assets that bypass probate.  Some assets bypass probate even if
 they aren't held in a trust.  These "non-testamentary assets"
 include:
 
 * Life insurance proceeds with a named beneficiary (as long as you
 don't name your estate as beneficiary).
 
 * Retirement plan assets with a named beneficiary (again, so long
 as the beneficiary isn't your estate).
 
 * Jointly owned property, including real estate and brokerage
 accounts, that you hold in "joint tenancy with right of
 survivorship" or in "tenancy by the entirety."  At death, the
 property automatically goes to the co-owner.  (In contrast,
 property owned as "tenants in common" is subject to probate.)
 
 * POD bank accounts.  In some states (including New York, Texas and
 Florida), bank accounts can be designated "payable on death," or
 POD.  Just like an insurance policy or retirement plan holdings,
 the proceeds go directly to a named beneficiary at death, avoiding
 probate.
 
 Exception:  If your heirs are minors, you'll need a trust or
 custodianship to hold even these assets, because minors cannot
 inherit property directly.  Name a minor as beneficiary for an
 insurance policy, a retirement plan a POD bank account, and you'll
 get the probate court involved.
 
 As you can see, the shape of your portfolio determines whether or
 not you're a good candidate for a living trust.  If most of your
 assets consist of a jointly owned home, a joint bank account and a
 retirement plan with a named beneficiary, probate won't be much of
 a factor, and you probably don't need a revocable trust.  On the
 other hand, if you have diverse holdings--shares in a family
 business, stocks and bonds, investment real estate properties and a
 valuable art collection, say--that aren't jointly held, setting up
 a revocable trust may be worth your while.
 
 Start slow.  Make a "self-declaration of trust," naming yourself
 the initial trustee and initial trust beneficiary.  Thus, you'll
 run the trust and collect whatever assets the trust generates.  
 
 You'll probably want to transfer only a few assets into the trust
 at first, to hold down the cost and the paperwork.  When you get
 older and comfortable with the trust concept, you can create more
 trusts, or change them.  The assets MUST be transferred to be
 included in the trust.  Assets that are NOT transferred are then
 covered in your Will.  If there is no Will; then the state will
 determine the heirs and pay someone of the court selection to be in
 control, and act at the court approval over periods of time.
 
 Tax note:  Because revocable living trusts aren't permanent,
 they're tax-neutral.  No gift tax is incurred on transfers, but the
 property remains in your taxable estate and you are taxed on the
 trust's income.