Revocable Trust Questions

[BooBoo]

I just found out I am named as the administer of my Mom’s revocable trust. I am trying to understand what that entails. I have been doing some initial research as to what is required and will consult with an attorney upon her demise but would still like to be a little informed. The majority of her assets (under 1 million) are titled in the trust. The trust will be divided between her three children upon her passing. She lives in Florida as well as my brother and sister. I live in Pennsylvania. My understanding is the trust was set up to avoid probate in Florida. What kind of taxes can the heirs expect to pay? What are my responsibilities as administrator? Any input is greatly appreciated

 

[ERD50]

I suggest you try to find out all you can *before* her demise.

If you were named 'administrator' (successor trustee is probably the correct term?), then you should ask for a copy of the trust. Discuss what she wants while she is still here.

My MIL swore up and down that her departed husband's trust left X% to the g-kids, but I showed her that it didn't (it left 10% rather than her claimed 25%). I suggested she could have hers amended to make up the difference (needed updating anyway), so she did that.

Also, revocable trusts can come into play before the trustee's demise. There may be sections for dealing with incompetency, etc.

Good luck, but please, find out what you can while you can. When it's too late, it's too late (unless you find a legitimate seance medium.

-ERD50

 

[SJhawkins]

I realize that this maybe digging into somebody else's business but is a trust really nessasary to avoid probate for less than a million, not that a million is not a lot of dollars but.....maybe it's a Florida thing, I'm not a lawyer.

All I know, a trust can be a PIA at times. I would first question if its really is needed, that is if you want to go poking around!

With today's POD, TOD, etc and if you have responsible kids using those tools should cover many "smaller" estates.

Back to your question, if your are to be responsible to admin the trust, first get a copy of it if you have not already and see what you have to deal with. I would not want to be involved with the admin of a trust without knowing the details. Maybe you want to do one of your siblings a "favor" and suggest to your mother another admin would be a better fit

 

[The Cosmic Avenger]

I realize that this maybe digging into somebody else's business but is a trust really nessasary to avoid probate for less than a million, not that a million is not a lot of dollars but.....maybe it's a Florida thing, I'm not a lawyer.

Florida is part of the half of the states that do NOT allow for TOD/POD deeds, that might be why. https://www.nolo.com/legal-encyclopedia/free-books/avoid-probate-book/chapter5-1.html

 

[SJhawkins]

Florida is part of the half of the states that do NOT allow for TOD/POD deeds, that might be why. https://www.nolo.com/legal-encyclopedia/free-books/avoid-probate-book/chapter5-1.html

Thanks for the info, that kind of stinks.

 

[CRLLS]

DW purchased and read thru a couple of books from NOLO: "The Executors Guide" and "The Trustee's Legal Companion". She said they both helped her understand the process and responsibilities. She was Co-Executor and Co-Trustee with one of her sisters. Having read them, she had a basic knowledge and could understand the process. Her sister, not so much.

I can recommend both books.

P.S. You don't mention if a will is in place. It is also an important document to have.

 

[mathjak107]

The more documents you add beyond a will the greater the chances of a snafu .

There are no do overs when your heirs hit snags .

For those who remember our sage years ago we encountered both a will with issues and a trust with a defect .

The courts are very sharp on wording and as the judge told u

“ it is quite clear what the intentions are , but I can’t rewrite history or add missing verbiage “

 

[Samething]

Thanks for the info, that kind of stinks.

Florida does allow an Enhanced Life Estate Deed aka a Ladybird deed that passes property to named heirs outside of probate.

 

[Happyras]

My 2 cents worth;
My FIL had a lawyer in FL that set up a RLT trust. FIL passed. DW brother became sole trustee, but lived in MA. He went back to the lawyer in FL. Lawyer filed for probate anyway. It was a very small estate <200k. The lawyer took his time and took a substantial fee for probating the estate. Florida law has a nice fee allowance for the lawyers who probate. The >$2K spent on the trust was all pocket change to that lawyer, who got even more unwinding his trust and filing probate. It is likely that the lawyer had not re-titled all assets into the trust, so instead of using the pour over will, he simply probated everything.

This is why I really hate the smoke and mirror game these lawyers play, and take advantage of folks.

I would suggest finding a lawyer other than the one who created this trust scam and get a Ladybird deed etc in lieu of the trust. Or make certain you can handle the trustee duties with a lawyer you can trust. Or, in my opinion, use an IDGT trust structure and get all the assets into a trust outside of the estate. FL does allow POD, but an IDGT provides a similar effect. Control and tax on assets by grantor prior to death, but all assets owned and disbursed by the trust and successor trustees. Pretty simple to liquidate, but it would be irrevocable. Typically, minor assets in an estate below a certain value would not be subject to probate or at least costs.

 

[Happyras]

Oh, and you asked about taxes, there are no FL state death taxes, but the lawyers make up for that by law;
Florida is one of the few states that sets out, in its statutes, lawyers' fees that are presumed to be reasonable for estates of a certain value. (Fla. Stat. Ann. § 733.6171.) The fee is based on the value of the assets that go through probate, plus any income they earn during the probate proceeding. The value of homestead property is not counted.

Here are the statutory fees:

Value of estate up to $40,000: $1,500
$40,000 to $70,000: $2,250
$70,000 to $100,000: $3,000
$100,000 to $1 million: $3,000, plus 3% of the value over $100,000
$1 million to $3 million: $3,000, plus 2.5% of the value over $1 million
$3 million to $5 million: $3,000, plus 2% of the value above $3 million
$5 million to $10 million: $3,000, plus 1.5% on the value above $5 million
More than $10 million: $3,000, plus 1% of the value above $10 million
These fees are only for "ordinary" services. Anything the lawyer does that isn't ordinary—for example, handling a will contest or giving tax advice—is presumed to justify a larger fee. If a lawyer follows the fee schedule, the fee may be almost unrelated to the amount of legal work done. It's the same amount of work to handle a $1 million brokerage account as it is to probate a $100,000 account—but under the statutory fee schedule, the bill for the million-dollar account would be ten times larger.

Florida attorneys aren't required to follow this fee schedule, and many acknowledge that it often leads to inflated attorney fees. Especially if the estate you're handling is greater than $100,000, be sure to find an attorney who will quote you a flat fee or work at an hourly rate.

 

[Happyras]

POD or TOD might be the better option for non-titled assets, but may be OK for titled assets. Also, your mom could do all JWOS.

Transfer/Payable on Death Designations in St. Petersburg, Clearwater, Tampa, Sarasota and surrounding West Florida areas.

POD Designations:

Florida allows bank accounts to be designated as payable-on-death, or a “POD” designation. This allows a beneficiary to automatically take ownership of the account upon presenting proof of the account holder’s death without going through probate court proceedings. A POD designation can be used for any deposit account, including checking accounts, savings accounts, or certificates of deposit. A designated beneficiary will have no rights in the account until the event of the account holder’s death, which is different from owing an account as joint tenants, as a joint tenant of an account can use and control such account during the life of the other account holder. If a particular account is owned jointly and has a POD designation, upon the death of one of the joint account holders, Florida law allows the account to pass to the surviving account holder, and not to the beneficiary. In other words, any POD designation does not take effect unless all account owners have passed away. In the event there is more than one beneficiary, the beneficiaries hold equal shares of the account.

TOD Designations:

A transfer-on-death designation, or a “TOD” designation, is very similar to a POD designation, except it is used for securities, such as individual stocks and bonds, mutual funds, and brokerage or trading accounts. Like a POD designation, securities can be registered so that a beneficiary is designated to take ownership upon the death of the owner without going through probate.

 

[OldShooter]

Definitely get the trust document and study it. Hire some help if you don't understand something.

One thing to look for is the degree of discretion you have with assets. When to distribute, who gets what, what is the valuation of real estate, good jewelry, etc. The less discretion you have the smaller the chance of family acrimony.

For example when I helped my mother write her will, I had it specify that the lake home was to be valued at the current county estimated market value. This eliminated the possibility of dueling appraisals. I, as executor, had no discretion and my sister and brother had no complaints.

 

[CRLLS]

JWROS has it's own issues. especially if all 3 are not on the same page. Who gets named? If all 3 children are named, each one has the power to withdraw the entire amount. If only one gets named, is it the intention that they evenly split the amount? That amount then is applied to their 15K annual / lifetime gifting limits. What happens if the joint owner should happen to pass before they get to evenly distribute the accounts. As a joint owner, they have the right to empty the account even while the parent is alive. I'm not saying that anyone in particular would to this, but I'm certain it has happened.

This is not something I would recommend to bypass a trust or a will or to reduce an attorney's fees.

Not all attorney's fees are high. I would expect if there were no Will and the court appointed one as Executor it might be pretty high. DW (co-executor and co-trustee had an attorney "help" with finalizing her mother's affairs after her death. The attorney did some required things such as filing both the Will and the Small Estate Affidavit. Also did some advising and hand holding along the way. One item that surprised me is that the attorney sent letters to the beneficiaries listing the amount they would get and required that they all sign and return an acceptance letter before the money was finally distributed. The entire attorney's fee was ~$3,500 for an estate value in the upper 6 figures.

 

[BooBoo]

Thank you all for your input. I have my work cut out for me and I thought medicare and social security were hard. Silly me.