I was looking at property tax and valuations on my County website and noticed that numerous neighbors have their homes owned by "John Smith Trust" for example instead of simply John Smith. Is there a tax advantage to this or is this used for inheritance purposes?
Why do my neighbors have their home in Trusts?
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packrat44
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It is placed in the trust for estate planning (inheritance purpose). No property tax advantage.
Brat
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Agree. It avoids probate.
bssc
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We have our house in a trust because we have properties in two states and don't want to go through probate in both.
OK dumb question...why would one want to "avoid probate"? I've never inherited anything(and likely never will) so I don't know anything about the process, is it a costly process or is there some other reason to avoid it? If you either go thru probate, or avoid it, and you end up at the same place...does it really matter?
Related question: If someone dies, is the division of assets/will public? If not how would anyone know if they got what they were supposed to? How would someone who didn't even know they were named in a will if a crooked executor didn't tell them and simply kept the assets for themselves or gave them to the wrong person?
packrat44
Thinks s/he gets paid by the post
Avoiding probate saves money and saves hassles. I dislike hassles, I hate wasting money.
You choose the executor - why pick one you can not trust?
1. Probate costs money, in some cases 4-6% of the size of the estate. Trusts are handled by the trustees, which in most cases are the spouses, and there's no executor (or trustee) fees.
2. Probate's public-- the will is recorded for anyone to examine.*
3. A trust allows the trustee to handle the assets if another trustee is indisposed. So if your spouse is in a coma (or suffering from Alzheimer's) then as a trustee you can still sell the house or otherwise deal with the trust property. This can also be handled by powers of attorney but many agencies refuse to deal with POAs that aren't on their form with their verbiage. A trust provides fewer loopholes for them to wiggle through.
* It really pisses me off that the state of Hawaii records our home mortgage and thus makes that document a matter of public record. "Mortgage companies" from all over the state and the Mainland pelt us with offers to refinance our mortgage, and they're getting our name/address from the public records. Now imagine if a recorded will listed FarmerEd as the beneficiary of a multi-million estate.
chinaco
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
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I am not a lawyer, but my research has shown a number of possibilities where trusts can be used effectively. They can also be a bad decision if employed for the wrong purposes or not thought through and crafted properly.
They can bypass a generation.
Irrevocable trusts. Could be used to shield the assets from the state (think Medicaid) or other entities.
A trust can control (describe rules and terms after death) the assets.
A summary.
Trust law - Wikipedia, the free encyclopedia
They can bypass a generation.
Irrevocable trusts. Could be used to shield the assets from the state (think Medicaid) or other entities.
A trust can control (describe rules and terms after death) the assets.
A summary.
Trust law - Wikipedia, the free encyclopedia
Money does funny things to people, but Nords answered it - the wills are public if they go thru probate, so that solves the problem. If they weren't it would seem rife with problems and a big potential for abuse.
Nords said:
Mortgage docs are public here in Mass to - probably in all states. You can even sit at the comfort of your computer and lookup/download to your heart is content - for free via the internet. http://www.MassLandRecords.com
In some states it makes a lot of sense to avoid probate. In those states fees may be very high and the process very slow. Florida and California are examples I have seen mentioned frequently.
In other states probate really isn't that big of a deal. It is cheap, fees are not based on assets, and the process is relatively fast. In my home state of Minnesota there is no particular reason to avoid probate. The cost of probate is cheaper than moving all your assets into a trust or joint tenancy. True, court files are public record but who is going to be poking around to see what your probate file looks like?
In other states probate really isn't that big of a deal. It is cheap, fees are not based on assets, and the process is relatively fast. In my home state of Minnesota there is no particular reason to avoid probate. The cost of probate is cheaper than moving all your assets into a trust or joint tenancy. True, court files are public record but who is going to be poking around to see what your probate file looks like?
lazygood4nothinbum
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i only got hit on by one person utilizing death records to try and sell the inherited house for me. i called the s-o-b in person and screamed bloody murder at him.
All the legal help in the world won't really help you structure your assets to qualify for medicaid. The most recent changes to the medicaid program in 2006 make it extremely difficult to take advantage of "timely" transfers or annuities that were used in prior years to "qualify" people for medicaid. And dropping your assets in a trust does not really help you qualify for medicaid and perhaps other government assistance programs.
Brat
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
There are two major advantages to a trust IMHO:
1) Contingent trustees can act in the trust's behalf should the grantor/s become unable to do so. This is particularly useful for assets such as bank and investment accounts. Even when a home is in a trust the title insurance folks may make the trustees jump through a couple hoops if the grantor/s are unable to sign. Haven't had to deal with that as Mom sold her home after Dad passed, they were both grantors of their trust.
2) Nosy people, presumptive (on their part) heirs, have no status when it comes to demanding an accounting of assets in the trust.
1) Contingent trustees can act in the trust's behalf should the grantor/s become unable to do so. This is particularly useful for assets such as bank and investment accounts. Even when a home is in a trust the title insurance folks may make the trustees jump through a couple hoops if the grantor/s are unable to sign. Haven't had to deal with that as Mom sold her home after Dad passed, they were both grantors of their trust.
2) Nosy people, presumptive (on their part) heirs, have no status when it comes to demanding an accounting of assets in the trust.
The main reason I liked the trust was to preserve the estate tax exemptions of the first spouse to die. After 2010 or so that will be important for us. You can effectively double the estate tax exemption you would get by doing nothing. Plus it looks much easier for the survivors, both spouse and kids. My Mom had very little trouble when Dad died.
Dan
Dan
My former advisor sold me a trust when I had a couple of hundred thousand in assets and no dependents. He sold me another one after I was married. Shortly after that he retired at age 50. The trusts were all boiler plate so I doubt they were worth the $800-$1000 fee. Due to my experience, I rank trusts with whole life insurance and variable annuities. Wills and Joint Tenants With Right of Survivorship (JTWROS) on our assets seems to cover our financial territory since we have no kids.
Brat
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
A trust should be created by an attorney, not a financial advisor. They need to reflect your PERSONAL goals and needs and be a part of your estate planning. The problem isn't the trust(s) but the person you entrusted.
I am enjoying this thread.
I have a couple of questions along similar lines that possibly others here (as many of us have accumulated, or are in the midst of accumulating, a decent nest egg) have thought about.
Does anyone know of ways to legally arrange your financial affairs (including pension, investments, home, etc.) to:
omni
I have a couple of questions along similar lines that possibly others here (as many of us have accumulated, or are in the midst of accumulating, a decent nest egg) have thought about.
Does anyone know of ways to legally arrange your financial affairs (including pension, investments, home, etc.) to:
- still maintain control
- maximize your Safe Withdrawal Rate
- reduce or avoid federal/state taxes
- strategize/plan for the eventual 'means testing' that many of us think will become the 'hurdle' to qualify for SS and, if ever implemented, whatever national health care or insurance we end up with
omni
I am also enjoying this thread. I had just been looking through old messages trying to find a comprehensive thread on when a trust is a good thing/worth doing, but it looks like this thread might come close to addressing it.
My parents and in-laws are both alive and in good health. My in-laws are very tax savvy, and have set up a trust to protect their assets from probate. My own parents have not. While the will of my parents is very simple - split assets evenly between the children, we all live in different states from my parents. I don't know how the probate laws in those states (or my parents' state, Arizona) will affect the assets. How much might be lost to the probate Courts, if anything. My parents say that they don't have enough money to make it worth having a trust, but I have doubts that is true.
Is there a place where I can look up this info? Or do one of you fine folks know more of the details on such a thing?
My parents and in-laws are both alive and in good health. My in-laws are very tax savvy, and have set up a trust to protect their assets from probate. My own parents have not. While the will of my parents is very simple - split assets evenly between the children, we all live in different states from my parents. I don't know how the probate laws in those states (or my parents' state, Arizona) will affect the assets. How much might be lost to the probate Courts, if anything. My parents say that they don't have enough money to make it worth having a trust, but I have doubts that is true.
Is there a place where I can look up this info? Or do one of you fine folks know more of the details on such a thing?
Brat
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
All I can do is provide real life examples, including two for very modest assets where the grantor became senile.
Goonie
Thinks s/he gets paid by the post
You can find some info on setting up and using trusts at NOLO. Just type in 'trusts' in the website's search box, and there will be a 'FAQ' section. When we were starting to get our estates in order, I perused through their website and gathered some useful info. I also bought the book "Plan Your Estate" by Denis Clifford & Cora Jordan, published by NOLO. (I got it from Amazon for about 50% of list) "Plan Your Estate" pretty thoroughly covers most, if not all, aspects of estate planning and gives fairly in-depth coverage of trusts, wills, POA's, and all that stuff. Some things may vary slightly from state to state, but this is a good starting point (IMHO).
They have hundreds of publications covering all sorts of legal matters. To see them all, type 'books' in the search box on their site. There's some interesting stuff there.
- Edited to add - If you do decide to get the book, be sure you get the latest edition....Amazon list a couple of older ones too. The current is the 8th edition.
Goonie
Thinks s/he gets paid by the post
I just went in a looked through my bookshelves, and found another book that may be of interest also. "8 Ways to Avoid Probate" by Mary Randolph (also NOLO Press....also bought at Amazon). NOLO's blurb of it: "8 Ways to Avoid Probate offers simple but effective methods to skip the entire process -- plus real-world examples of how others have used them."
Between "Plan Your Estate" and "8 Ways...", I had enough info to make everything pretty easy. We drew up most everything, then had an attorney friend look it all over.
It worked for us....Your mileage may vary.
Between "Plan Your Estate" and "8 Ways...", I had enough info to make everything pretty easy. We drew up most everything, then had an attorney friend look it all over.
It worked for us....Your mileage may vary.
Moemg
Gone but not forgotten
Is it a smart move to put your house in a trust if you plan on moving in the near future .I live in Florida so probate is lengthy and expensive here and my main heir is my daughter who lives in New York .So I want the house to pass as easily as possible to her .
My parents put a TOD (Time of Death) rollover onto all of their accounts and put one on the deed of their house. When they died everything rolled over to my brother and I 50/50, no problems. We were able to sell the house and took over the accounts all with a few certified copies of their death certificates. It was extremely easy, an estate attorney set it all up. I don't know how trusts work but they made it very easy for us.
