WHAT ARE THE BASIC INGREDIENTS IN A TRUST? - 
 * Trusts, entities created to own property, can be used by people
 of minor or moderate means, as well as by the rich.
 
 * When creating a trust, you need to carefully spell out the
 identities of the parties, their roles and the assets you mean to
 transfer to the trust.
 
 * Control can be retained, especially when first getting
 comfortable with the concept and use of trusts.
 
 * Although you could give up control of assets, to gain tax
 advantages and asset protection, you still can continue to exert
 considerable influence over trust property.
 
 * Trusts generally have one or more beneficiaries and one or more
 trustees.  Someone can function as both trustee and beneficiary.
 
 * The trustee, as asset manager, is the controller, so considerable
 care should be taken in selecting trustees, co-trustees, and
 successor trustees.
 
 * Trustees have a fiduciary responsibility to invest the trust
 assets prudently and CANNOT legally convert assets to others not
 named as beneficiaries.
 
 * When drawing up a trust, get professional advice from many
 sources, even if that means you end up spending substantial
 amounts.
 
 * Trusts set up while you are alive are living trusts, which may be
 revocable or irrevocable.
 
 * Testamentary trusts, which take effect at your death, are
 irrevocable.
 
 * Irrevocable trusts are more powerful tax-avoidance and
 asset-protection tools than revocable trusts.
 
 * When a trust is established, specific language should be should
 be included on how and when the trust can be terminated.

 WHAT DO WE DO FIRST? - 

 The most important document now.
 The Will is the most important document now.  FIRST; make a few
 copies of all of the forms to practice on!  You can fill it out,
 right or wrong, in only a few minutes.  Then, after you have had
 that experience and practice, do it again until you feel you
 accomplished all thing you feel are necessary.  Wills can be
 changed as often as wanted.  The Will should be filled out prior to
 filling out the Trust.
 
 The SECOND Document to fill out.
 The Trust is the second most important document to complete. 
 AGAIN!; make a few copies of all of the forms to practice on!  Most
 items you were concerned with you selected and determined in the
 Will.  If you have not yet created a Will by this point; stop now
 and do the Will!  If you have completed a Will, the Trust is your
 next step.  Although you now have a Will in place, the Trust is
 designed to supercede and be activated now.  The Will is only to
 cover items that you may not have properly protected or had titled
 to the Trust.  Another words, the Trust will be your Supreme
 Commander and Assistant; while the Will is standing by to be your
 cleanup crew.  In fact, the word "Custodian" is associated with
 documents often.
 
 Keep in mind that any of the documents can be changed whenever you
 make the effort to do so.  

 
 WHY SHOULD WE MAKE IT IRREVOCABLE? - 

 A trust that is created while you're alive is called a Living
 Revocable Family Trust (or a combination using some of these
 words).  Lawyers sometimes call it an Inter vivos Trust ("during
 life trust").  Trusts created in your will are called Testamentary
 Trusts; that "testify" to creation of a trust to take effect upon
 death.
 
 Trusts primarily are classified as revocable or irrevocable.  A
 revocable trust can be changed or terminated by the creator.  An
 irrevocable trust, on the other hand, can't be cancelled by the
 creator.  Usually, the irrevocable type do not allow changes
 either.
 
 Testamentary trusts are always irrevocable:  They can never be
 annulled or substantially altered.  Living trusts may be
 irrevocable or revocable.  In most states, a trust that is not
 specifically revocable is considered an irrevocable trust.
 
 Because of their permanence, irrevocable trusts are powerful
 tools.  Assets transferred into such trusts may be outside your
 taxable estate.  Since a revocable trust is "temporary", it is
 ignored in most legal situations until it becomes "permanent"
 (usually at the death of the creator).  Perhaps just as important
 because of the popularity of lawsuits, assets transferred into an
 irrevocable trust may be protected from creditors and other
 claimants.  The primary requirement here is that the assets must be
 transferred to the irrevocable trust prior to the existence of a
 problem.
 
 Revocable living trusts, as the name implies, are not as
 cast-in-stone as irrevocable trusts, nor do they offer the same
 degree of tax use and creditor protection.  Instead, they're
 commonly used to avoid probate and to protect assets in case of the
 owner's incapacity.  Again, usually, at the asset owner's death, a
 revocable living trust becomes irrevocable.

 BUT, if you put in the proper provisions, you can make the trust(s) 
 irrevocable, yet still able to modify the important parts, like the 
 choices of Trustees and Beneficiaries, or the conditions of benefits.


 HOW DO WE ACTIVATE THE TRUST AFTER IT IS CREATED? - 

 TRANSFERING TITLE AND OWNERSHIP TO THE TRUST
 
 After your trust is in place, the hard part begins.  It's easy
 enough to say, "Transfer your assets into trust."  In practice, it 
 means going through a formal process of changing the written legal
 title to all the relevant assets so that they are officially owned
 by the trust.  If your brokerage account is held by "John and Joan
 Smith," for example, you need to formally change ownership to, say,
 the "John and Joan Smith Trust Agreement dated April 2, 1994," with
 John and Joan Smith acting as co-trustees.  This is tedious, but
 you must do it if you want your assets to avoid probate.  A good
 lawyer can help you deal with the paperwork at additional costs.  
 
 Observation:  Mortgaged property calls for special treatment.  Most
 mortgage holders require you to get their consent before retitling
 the property.  You may have to sign a statement acknowledging that
 the mortgagor still has a lien on it.  Depending on state law, you
 may also have to have a new deed drawn up--what's called a
 conforming deed.  You may pay a $20 or $30 fee for filing the deed,
 but there is no title search or transfer tax to worry about. 
 Handle a second mortgage or home equity loan in the same way.
 
 Asset sales must be made by the trust, not by you.  Similarly, new
 acquisitions must be titled to the trust.  If you don't push the
 right papers, assets will be excluded from your trust and subject
 to probate, exactly the result you wanted to avoid.  
 
 As hard as you try, you won't be able to retitle everything you
 own.  Thus, a revocable trust should be supplemented by a (backup)
 "pour-over will."  This document should state that assets not
 already in your revocable trust shall be included in the trust at
 your death.  Keep in mind, though, that assets transferred into a
 trust via a pour-over will are subject to probate.


 WHAT DO WE DO IF THE TRUSTEE DIES OR IS SICK? - 

 SUCCESSION PLAN - 
 Once your revocable trust is set up, ongoing costs are minimal.  No
 tax preparation is necessary because all income flows through to
 the beneficiaries--usually you or you and your spouse.  If you need
 to modify your trust for any reason, you can do so with a trust
 amendment, signed only by you or you and your spouse, without
 witnesses.  If you move from one state to another, you may need a
 modification but you won't have to pay for a complete rewrite.
 
 When setting up a revocable trust, the most important thing you
 need to do is to name a successor trustee or trustees.  Assuming
 you're the original trustee, your successor will take over at your
 death, when your revocable trust becomes an irrevocable trust. 
 Then the successor trustee will distribute trust assets to your
 heirs, as per your wishes.  There's no delayed income and no
 disputes over managing your real estate or your company.  If you
 should become incapacitated as you grow older, thus unable to
 control your own affairs, your successor trustee can take over.
 
 Who should you name as successor trustee?  In most cases, your
 spouse or grown child is an appropriate choice.  You want to be
 confident your successor is a diligent, detail-oriented person who
 is likely to outlive you.  You also want to be confident that your
 successor is trustworthy--someone who will carry out your wishes
 and also be a prudent fiduciary should you become incapacitated or
 have minor heirs when you die.  If that person is familiar with
 your affairs, so much the better.
 

 WORST-CASE PROTECTION - 

 As we have seen, a successor trustee can help smooth the transition
 in case you're still alive but unable to handle your own affairs. 
 Unfortunately, we're living longer these days but not always living
 better.  It's not a pleasant subject, but you never know whether
 you'll become seriously ill or otherwise disabled at some time in
 your life.  With a living trust in place, your successor trustee
 can step in and take over management of trust assets, without a
 court appointing a conservator.
 
 Most importantly, your successor trustee will take over in
 private.  You and your family won't have to go through the public
 humiliation of a court hearing in which all the intimate details of
 your life are revealed.  That happened to Groucho Marx, who was
 declared incompetent by a Los Angeles court while he was in his
 eighties.  He was living with a woman named Erin Fleming, who
 wanted to be named guardian; that touched off a public battle with
 Marx's family, winding up with a relative being named as guardian. 
 If Marx had set up a revocable trust, the public circus could have
 been avoided.  
 
 Recommendation:  To fully protect yourself, have either a
 "springing" or a durable power of attorney in place.  This
 authorizes someone you trust to manage your business and financial
 affairs in case of your disability or incompetence.  A springing or
 durable power of attorney also can enable additional assets to be
 transferred into your trust even should you become incompetent.
 

 HOW OR WHEN DO WE END THE TRUST? - 
 
 The best question is "Why would you want to end the protection?"

 Of course, when the assets are gone or spent, the trust is ended.

 You can make specific situations or time when the trust will end in 
 the trust document itself.

 When you create a trust, you need to give some thought to how it
 will end.  Generally, that's not a problem with a revocable trust. 
 Just make sure there's a specific revocability clause in the
 trust.  Depending on the clause, you'll be able to revoke the trust
 in five business days by giving written notice to the trustee.
 
 With an irrevocable trust, you should establish definite criteria
 for the trust to terminate:
 
 * You can set a definite term (e.g., 10 years) for the trust.
 
 * You can peg the trust to the age of a beneficiary--most state
 laws require that trusts be terminated within 21 years after the
 death of the last named beneficiary to die.
 
 * You might give the trustee the power to distribute all the
 assets, thereby terminating the trust.
 
 * You can give the trustee flexibility.  For example, a trust for
 the benefit of a child might be set to terminate at age 35 but the
 trustee can have the discretion to terminate the trust if the
 assets shrink and it becomes impractical to continue.
 
 There are circumstances in which an irrevocable trust can be
 terminated prematurely.  If everyone who has an interest in the
 trust signs a release, the trust may terminate.  Then again, it may
 not, depending on state law and the circumstances involved.  Rather
 than rely on a premature termination, take care to spell out
 termination procedures when you establish the trust.
 

 COMMON QUESTIONS ONLY YOU CAN ANSWER:
 
 That poses some difficult questions for both would-be trustees and
 trust creators.
 
 * Should you keep the income in the trust?  If so, a substantial
 amount of the earnings will be lost to taxes.
 
 * Should you distribute trust earnings to beneficiaries?  If the
 beneficiaries are in a lower tax bracket, that will save income
 tax.  However, that might defeat the purpose of the trust, because
 those distributions might be squandered, lost to a creditor and
 fall victim to similar calamities.
 
 Caution:  If trust income is distributed and spent, the benefit of
 compounding will be lost.
 
 Trust distributions are considered unearned income.  Therefore, if
 trust income is distributed to a beneficiary under age 14, you run
 into the "kiddie tax"--unearned income over $1,200 per year is
 taxed on the parent's marginal rate.
 
 * Should you set up several trusts instead of one?  That could
 decrease taxes, but could increase administrative expenses and tax
 preparation fees.  Also, trusts with the same control and
 beneficiaries could be merged for tax purposes.
 
 Recommendation:  Set up separate trusts for each of your children. 
 
 Recommendation:  Include each beneficiary's children.
 
 Recommendation:  Put a different Trustee control for each trust.
 
 Recommendation:  Put each significant asset in a separate trust.