SELF-HELP LEGAL KITS

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A-B LIVING TRUST KIT

INTRODUCTION

The Divorce Store® A-B Living Trust Kit provides a low cost and efficient way for a married couple to substantially protect the value of their estate from both the high cost and potential abuses of the probate system, as well as the astronomically high Federal Estate Taxes. The Declaration of Trust included in this kit includes riot only the A-B Trust provisions, but also; a provisional 'Qualified Terminal Interest Trust' ("C" Trust), that is also known as a 'Q-Tip Trust.' The "C" Trust is optional at the discretion of the surviving spouse, if a tax deferral will be beneficial to the estate. You may or may not be aware that we also publish the national best selling Living Trust Kit entitled "The Divorce Store® Living Trust Kit," that also protects against the abuses of the probate system, but does not, however, provide for the elimination or substantial reduction of the federal estate taxes, as provided in The Divorce Store® A-B Living Trust Kit. All of the A-B Living Trust documents, forms and instruments included in both kits are designed especially for the non lawyer, thus they are easy to understand and simple to prepare. The most important and compelling reason for using this kit is the advantages gained from passing a sizeable amount of your estate to your beneficiaries rather than to the Federal Treasury or the legal system. It is important that all of the text material included in this publication be read with a good understanding, as it clearly explains in very brief and non-legal language, all of the important elements of an A-B Trust, including the establishment, management, division and termination of the trust. In other words, you do not need the services of a lawyer to establish, manage, or divide the trust. In fact, the declaration of trust and property transfer forms are pre-drafted in such a professional manner that only a minimal amount of preparation is required. For example, in the most common and typical situation, the Declaration of Trust, Page 1, requires only that you name yourself and spouse as trustors and trustees, your child or children as beneficiary (ies) and one or more of your children or even a trusted friend or relative as the successor trustee, whose designated official duty is to carry out the distribution of the trust assets upon the death of the second trustor. There are however, three Page 1's, included in this kit that provides three different methods of distributing the trust property distribution to the beneficiaries. The three Page 1's are: (1) Form ABT-101-1, which provides for an equal division of the trust property between or among the beneficiaries, (2) Form ABT-101-2, that provides for a percentage division of the trust property to each beneficiary, and (3) Form ABT-101-3, that provides for the designation of specific trust property to each beneficiary when there are two or more beneficiaries. Page 2 of the Declaration of Trust requires only that the property which will be transferred into the trust be descriptively listed; while Pages 3 and 4, the Trust Powers, are fully drafted and do not require any preparation. Page 5 of the Declaration of Trust requires that a check mark be placed in the appropriate box in Clause 8(c) which indicates your decision as to the order in which the Successor Trustees shall act, if more than one successor trustee is named; while Page 6 requires that you check one of the two boxes in Clause 17(b) to indicate whether or not it is your desire that the successor trustee be bonded before carrying out his or her duties as successor trustee, and also, the state where the trust will be officially recognized. All that remains for completion of the Declaration of Trust is for you and your spouse to sign the Declaration of Trust (Page 7) before a notary public, if established in a State other than Florida, or if established in the State of Florida, then you must have two witnesses sign the Witness Clause on Form ABT-108b. At this point, the Declaration of Trust is complete except that you must select the applicable property transfer documents which are the Forms AT-200a through AT-209a. The uniquely efficient design of the Declaration of Trust provides a simple and effective way to distribute the trust assets to the beneficiaries either in equal shares, a fixed Percentage to each beneficiary or specific property to each beneficiary. Keep in mind that the Declaration of Trust is a revocable trust, which effectively means that you are free to deal with the trust property the same as you did previous to transferring it into the trust. In other words, the trust may be revoked at will, except after the death of the first spouse (co-trustor). It is this distinguishing factor that provides the trust with its tax saving advantages. In the chapters that follow, you will learn not only how this A-B Trust provides a substantial savings in Federal Estate Taxes, but also, why this is possible under the Internal Revenue Code. In 1997, congress enacted what is called the 'Tax Payer Relief Act of 1997" that changed the $600,000 per spouse exemption for estate property to $625,000 for the year 1998, then it would increase annually until it reached $1,000,000 in the year 2006, however, in 2001 Congress enacted new laws that annually raised the Federal Estate Tax Exemption to $3,500,000 in the year 2009. The Federal Estate Taxes are then destined to expire in year 2010, provided of course Congress does not rewrite the laws. It must also be remembered that in 1993, Congress enacted what was called "The 1993 Budget Reconciliation Act" that provided for a 36% tax rate on trust income that exceeds $7,500 per year, which is still effective year 2002. Keeping in mind that this text material also provides some important information that may be utilized not only in dealing with the A-B Living Trust, but also, with other events occurring in the daily lives of many families. In the chapters, that follow, you will receive a considerable amount of knowledge that would otherwise cost thousands of dollars in legal fees or many hours of personal research; however, a substantial portion of the material is the work product of the author and his staff, and therefore, not readily available to the general public except upon a very exhaustive inquiry. To insure the correct preparation of each of the trust forms, there are fully illustrated Specimens of each form in the Appendix Section that provide several examples of how each of the forms, documents and instruments should be completed. Remember, we do provide a Free Help Line that you may call if you have questions regarding any aspect of this Kit, except legal counsel or advice.

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