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Yet another revocable living trust question.
Old 11-27-2004, 03:12 PM   #1
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Yet another revocable living trust question.

I just finished our IRA conversion paperwork and I'm ready to start the next big, ugly, long-term project. Anyone have any lessons learned to share on living trusts?

Spouse and I recently updated our wills to include A/B trusts after the first one of us dies (apparently I've volunteered for that duty). So we think we've resolved the estate tax issue and I can stop watching my back during 2010.

Next up is a revocable living trust to avoid probate expenses. I think I've read enough books & websites-- I understand how they work, how they're taxed, and how they should be structured. It looks like we could glue on a living trust fairly easily where our current wills leave off. Ideally the trust would cover so much of our estate that there'd be little or nothing to probate under the will (and the A/B trusts would probably be moot). Depending on fees I'm willing to do the trust's retitling & recording myself.

I'm personally motivated to establish a RLT because my father was dragged through legal hell (sorry, Martha_M) during the probate of my grandfather's "simple" $60K estate-- not much more than a brokerage account. In addition to the experience my Dad paid more than $4000 and spent over 13 months pursuing K-1s. Well, maybe it was more like legal heck... but I think it's still worth $4000 to avoid having our executor repeat the experience on our estate.

We're at the point where I'd have to make appointments, drive downtown, and interview several firms. Local Hawaii lawyers quote $2500-$3000 for the whole package with some form of annual maintenance.

Has anyone put together a living trust recently? How much did you pay, and was it worth it? What issues did you bring up with the lawyers? What do you wish you'd done differently-- or not at all?



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Re: Yet another revocable living trust question.
Old 11-27-2004, 04:11 PM   #2
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Re: Yet another revocable living trust question.

Nords, this is also on my "to-do" list. I haven't even started on it, but my father did one about a year ago and paid a lawyer $600. I plan to go the DIY route. My rationale may be a little thin, but here it is: A few years ago I set up an LLC as advised by my lawyer. I wanted to get moving on it, but the lawyer dinked around and dinked around. Finally, after a few months, she produced the documents. In the meantime I had done one myself, just to improve my understanding of the process. I didn't intend to actually use it - I was paying her to do the "official version". After getting hers I examined it and spotted a couple flaws. I also found hers to be very poorly written; it wasn't clear at all. So I tossed hers and used mine. I used a book by Nolo Press. It was terrific. A couple of years later I had an attorney relative examine it and she said it was solid. After that experience I decided to do my own will, and next I plan to do my own living trust. You've probably already seen Nolo's stuff in your research, but here's a link (book link in the right column - $29):

http://www.nolo.com/lawcenter/ency/a...3BF19B4D9ACDAA
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Re: Yet another revocable living trust question.
Old 11-28-2004, 02:57 AM   #3
 
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Re: Yet another revocable living trust question.

As one who does most of his own legal work,
I can give Nolo Press high marks.

John Galt
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Thanks, Bob!
Old 11-28-2004, 07:15 AM   #4
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Thanks, Bob!

Wow, great link. I kinda drifted away from Nolo over the years and it looks like they're better than ever. I've been reading too much "theory of" and not enough "build your own". Back to the library!

I don't replace my own brakes or slaughter my own chickens, but this will certainly clarify our thought process and apply a little pressure on the fees. Especially if Intuit bundles the software with my next Quicken upgrade or with Turbotax...
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Re: Yet another revocable living trust question.
Old 11-28-2004, 08:49 AM   #5
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Re: Yet another revocable living trust question.

Nortds, we recently did the whole will, AB trust and all that jazz. I specifically asked about a revocable living trust, and the lawyer (who I have a lot of trust in) indicated that my state's probate fees were pretty low and processes are pretty streamlined. Since most of our assets are in IRAs or set up JTWROS or payable on death, there was little point in bothering with the hassle and expense.

Obviously I have no idea if your state is similar or what your asset distribution is, but it might be worth finding out if a living trust is even worth the trouble.
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Not to worry...
Old 11-29-2004, 10:11 AM   #6
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Not to worry...

... I'll research the heck out of this one and torment most of the lawyers on Oahu.

And I'll post everything we learn.

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Re: Yet another revocable living trust question.
Old 11-29-2004, 02:01 PM   #7
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Re: Yet another revocable living trust question.

Quote:
As one who does most of his own legal work,
I can give Nolo Press high marks.

John Galt

John, this amuses me. You came from an accounting backround, you use an "outside" accountant, but do most of your own legal work. Me, I came from a legal backround, but use lawyers for my legal work and defer to their advice. However, I minimize using accountants and when I do I second guess them all the time. At least my accountant doesn't mind and we have some fun with the give and take.

Nords, it is hard to come up with specific questions for the lawyer when working through your revocable trust issues. Basically, you want to tell the lawyer what you want to accomplish, ask if he can do it, how it is done, what adverse consequences might there be, and whether this is something that should be done. The next area of inquiry would be whether there is anything else the lawyer thinks you should consider doing, why and what are the consequences. Too broad to be much help. The reading you are doing should help narrow down what you want to discuss.

I think more lawyers today are receptive to working in a joint effort with their clients in producing a product at a reasonable price. Therefore, if you do a lot of the work yourself and do a good job, it may save you money. However, sometimes it simply is easier for the lawyer to ask you what you want to accomplish and then the lawyer can draw up his own type of documents. It can be more effecient than fly-specking something someone else has drafted for missing elements and other problems.


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Re: Yet another revocable living trust question.
Old 11-29-2004, 02:04 PM   #8
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Re: Yet another revocable living trust question.

It isn't the State's probate fees that are the killer; it is the lawyer's fees to guide you through the process!!!

The real value of a RLT is the ability to have a trustee you designate manage your assets when you can't. THEY DON'T NEED TO GET A CONSERVITORSHIP. My husband's parents designated each of their kids as trustees-it worked out fine. My parents did that too at first but found that the "authority" went the head of one and changed the list of trustees. You can get creative about when it is that the reserve team steps in and establish whatever safeguards you think appropriate. Don't think that requiring two signers on the checks will do any good, almost all banks ignore that.

IMHO if a trustee starts managing your RLT s/he should be required to report to the other trustees periodically. If there is a concern or dispute about the trust's management there should be a resolution process. Don't think that disagreements won't arise. Your lawyer will tell you not to name anyone as a trustee who you don't trust. This trust may live a long time, people and their circumstances change. Provide for belt and suspenders.
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Re: Yet another revocable living trust question.
Old 11-29-2004, 02:23 PM   #9
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Re: Yet another revocable living trust question.

Quote:
It isn't the State's probate fees that are the killer; it is the lawyer's fees to guide you through the process!!!

The real value of a RLT is the ability to have a trustee you designate manage your assets when you can't. THEY DON'T NEED TO GET A CONSERVITORSHIP. My husband's parents designated each of their kids as trustees-it worked out fine. My parents did that too at first but found that the "authority" went the head of one and changed the list of trustees. You can get creative about when it is that the reserve team steps in and establish whatever safeguards you think appropriate. Don't think that requiring two signers on the checks will do any good, almost all banks ignore that.

IMHO if a trustee starts managing your RLT s/he should be required to report to the other trustees periodically. If there is a concern or dispute about the trust's management there should be a resolution process. Don't think that disagreements won't arise. Your lawyer will tell you not to name anyone as a trustee who you don't trust. This trust may live a long time, people and their circumstances change. Provide for belt and suspenders.
You also could simply provide a durable power of attorney for your children (or whoever), along with a health care directive, to address the ability to make decisions if you are not able to. When we go on a long trip, we give a power of attorney to a very, very trusted friend so that if we are not able to act on our own behalf, he can.

Many people are disinclined to have anyone other then themselves as trustee of their revocable trust until they die.

Probate fees are all over the board and differ dramatically from state to state, both for fees payable to the state and fees payable to the lawyer. Some states are using probate fees or "taxes" to generate income. Some states allow lawyers a percentage of the probate assets as a fee. Personally, I think that is unfair as the value of the assets have nothing to do with how much work there is to do. Minnesota allows lawyers to be paid only for work actually done.
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Re: Yet another revocable living trust question.
Old 11-29-2004, 02:51 PM   #10
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Re: Yet another revocable living trust question.

Quote:
I wanted to get moving on it, but the lawyer dinked around and dinked around. Finally, after a few months, she produced the documents.
I always tell new lawyers that clients expect all lawyer to know the law and do things right. One of the best ways to differentiate yourself is to do not only good quality work, but timely work, and always but always keep your client apprised of what is going on. The biggest client I have comes to me because I do things on their schedule.

This is the third unresponsive lawyer story I have heard today. No wonder people don't like us.
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Re: Yet another revocable living trust question.
Old 11-29-2004, 03:10 PM   #11
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Re: Yet another revocable living trust question.

For 15 years I've been the trustee of a relatives grantor trust which has just been ended. The grantor has been permanently placed in a qualified nursing home so according to the trust instructions the corpus has been distributed to the beneficieries. I realize that this topic is about living trusts not grantor trusts. My concern is that care and planning be given to the trustee decision. Its usually a thankless job and one that may have significant fiduciary responsibility and last for years. If you are your own trustee, thats one thing..... but what about later if and when competence becomes an issue, Trustees are a key issue.


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Re: Yet another revocable living trust question.
Old 11-29-2004, 03:59 PM   #12
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Re: Yet another revocable living trust question.

Martha_M or any other lawyers/legal types out there familiar with RLT's:

I have a question for a friend of mine with a problem regarding a RLT her parents set up about 13 years ago. At that time, my friend's brother was named as both Trustee and Durable Power of Attorney. My friend's father passed away 10 years ago and her mother was placed in a nursing home last year and is now mentally incompetent. The brother who is Trustee and Durable Power of Attorney has become irresponsible and difficult to deal with and has said he will be making all financial decisions regarding the businesses and accounts in the RLT without consideration or input from any of the siblings. My friend and her other 2 siblings do not agree with what the brother intends to do.

Questions: Can the brother do this? Do the other siblings have any say in matters regarding the business and/or accounts in the RLT, and is there anything that can be done to replace the brother with another Trustee or other Trustees at this point?


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Re: Yet another revocable living trust question.
Old 11-29-2004, 04:36 PM   #13
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Re: Yet another revocable living trust question.

I did a RLT a couple of years ago for around $1K, including putting the house in it (which cost a chunk to register the deed). I did this not only to save probate money, but to simplify the whole mess for my successor trustee. It seems that it takes 18-36 months to handle it otherwise, so I wanted to avoid so much time and effort.

I don't understand why there should be any annual maintenance for it (don't have the lawyers be the trustees). I'm glad I did it to hopefully simplify things if I die unexpectedly.

Now I have to modify it, so it will be fun to see how much rates have gone up!
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Re: Yet another revocable living trust question.
Old 11-30-2004, 04:36 AM   #14
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Re: Yet another revocable living trust question.

Quote:
Martha_M or any other lawyers/legal types out there familiar with RLT's:

I have a question for a friend of mine with a problem regarding a RLT her parents set up about 13 years ago. At that time, my friend's brother was named as both Trustee and Durable Power of Attorney. My friend's father passed away 10 years ago and her mother was placed in a nursing home last year and is now mentally incompetent. The brother who is Trustee and Durable Power of Attorney has become irresponsible and difficult to deal with and has said he will be making all financial decisions regarding the businesses and accounts in the RLT without consideration or input from any of the siblings. My friend and her other 2 siblings do not agree with what the brother intends to do.

Questions: Can the brother do this? Do the other siblings have any say in matters regarding the business and/or accounts in the RLT, and is there anything that can be done to replace the brother with another Trustee or other Trustees at this point?

Estate planning really isn't my area of focus, but it sounds to me like one possibility is to petition the court for the appointment of a guardian/conservator and then have the guardian revoke the power of attorney. Depending on the trust documents, the guardian may be able to terminate the trustee too. The trustee has a fiduciary duty to the beneficiaries of the trust, so the beneficiaries may have grounds for removal of the trustee as well. The trust document may also give the beneficiaries some rights. This truly is a 'see your lawyer" situation.
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Re: Yet another revocable living trust question.
Old 11-30-2004, 02:45 PM   #15
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Re: Yet another revocable living trust question.

POAs can be a pain in the ...., and for safety's sake they should expire.. what then. My husband and I have/had both for our parents. I can assure you that managing a RLT as a trustee is a lot easier than exercising a POA. Consider for a moment paying the bills for years with just a POA.

IMHO a well written RLT is much easier to work with. The grantor trustee(s) need to provide for a process to remove a trustee and/or apoint successor trustees. The last resort could be a bank trust department (if we are talking substantial assetts) or a conservitor.

Managing a privately held business is a tough one. I have seen a several businesses fall apart when their founder can no longer manage them. There always needs to be a process for removing an executive, but the fact that the kids don't agree with the brother's decisions doesn't mean that the brother is miss-managing it.
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