Michelle is a teacher who lives in Monterey Park, California. She lives with her two children, Chris, age 5 and Andrea, age 10, who she shares and co-parents with her husband Anthony. Michelle is separated from her husband Anthony, and they live apart, but they remain legally married (not divorced) since their marriage in 2005. Michelle also lives with her two beloved cats. Michelle's only other living relative is a sister named Carla.

Michelle, like most people, is a busy person and she has never taken the time to put together an estate plan. But as her children are growing older, she is thinking more about what will happen with her assets after she passes.

In terms of her estate planning objective, Michelle wants to make sure that those dependent upon herher children and her petsare taken care of. She also feels a sense of duty and loyalty to leave something for her sister Carla, who is her best friend. Michelle has no interest in leaving anything to her husband. Finally, Michelle is a breast cancer survivor and she wants to leave a financial gift to support cancer research.

Michelle owns a significant estate. She and Anthony own, as joint tenants, a house worth $600,000, although Anthony does not currently live in the home. In addition, Michelle owns a vacation home in Palm Springs she inherited prior to her marriage to Anthony. The vacation home is worth $400,000. Michelle also owns stocks worth $200,000 that she began purchasing over time with income she earned after her marriage to Anthony. Finally, Michelle has a retirement plan with her job and she has designated Carla as the beneficiary of that plan.

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1. Let's assume Michelle decides to transfer her estate via a living trust. Describe how a living trust can help meet Michelle's goals, and give examples of how she could structure a trust to meet her goals. For example, think of income and/or remainder beneficiaries, and how the trust might be structured to benefit the beneficiaries.