Question

Which of the following constitute advantage(s) of a revocable living trust? Please give detailed answer why each are wrong/right.

I. Reduction in federal estate taxes

II. Privacy surrounding one's financial affairs

III. Removal of asset appreciation from the grantor's gross estate

IV. Professional management of trust assets

A. II only

B. IV only

C. II, and III only

D. II and IV only

E. I, II, and III

Answer 1

Answer is option D

D. II and IV only

It neither saves federal income tax nor estate taxes

A revocable living trust allows maintaining privacy regarding the distribution of assets. When the will is used to distribute assets, there is no privacy as it becomes a public document.

There is no removal of asset appreciation from the grantor's gross estate

In a revocable living trust, there is professional investment management for managing of trust assets