Will or Living Trust?

[Tailgate]

Discussed this with Elder Law Attorney. He said a LT with all your assets in the trust allows a seamless transfer upon death to the trustee (DW), and avoids probate. Sounds reasonable... I haven't looked into it beyond the discussion, but is it worth pursuing the idea of a LT of some kind?

 

[ChiliPepr]

I have a revocable trust that holds all my assets (Investments, bank accounts, IRA, 401k, property) except my house (mortgage requirement). My bank account checks are from "ChiliPepr Revocable Trust, ChilliPepr Trustee". The trust states how all my assets should be divide upon death and my will is a one pager basically stating that upon my death any items I own go to my trust.

 

[ERD50]

Could be worth it. If done correctly, and funded correctly, it should avoid probate. What isn't clear to me is just how bad probate is.

As I understand it, the purpose of probate is to inventory everything owned to assure it gets distributed as the will (or law) specifies. A trust effectively does this before death, so probate is avoided.

There are other ways to avoid probate that may or may not be appropriate. Bank accounts with a named "Transfer On Death", or maybe just jointly held? IRA and 401K type plans have named beneficiaries, avoiding both probate and trusts.

Check the NOLO books, so you know what you are getting into.

-ERD50

 

[OldShooter]

Discussed this with Elder Law Attorney. ...

Disclaimer: The internet is probably not a good place to ask this type of question.

That said, your post reminded me of something I learned many years ago and have never had reason do doubt: "To every complex problem there is a simple solution, usually wrong."

We receive mailings, at least weekly, offering free estate planning seminars. Usually there is a free meal at an expensive restaurant involved, and an offer of a free consultation with an "Elder Law Attorney." The goal is to sell an expensive living trust package. There is a reason these guys do this: They are not established and respected enough to live on referral business like the really good guys can.

If this is the type of "discussion" you had, I'd encourage you to work your network (CPA, regular attorney, friends) to find and talk to an established and respected trusts & estates expert. At worst you will pay a few bucks for a second, concurring, opinion. At best you will avoid an expensive mistake. A second opinion is cheap insurance. (The internet is not a second opinion.)

IANL, but my wife was a Senior VP in Investments & Trust for one of the largest banks in the country and I couldn't count the number of times she came home with a story of a badly planned estate and/or poorly drafted documents.

 

[gerntz]

Both of our parent sets had revocable trusts that let assets be transferred hassle and cost free to recipients, no legal nor state involvement. Good deal. There were costs for setting up the trusts (Though I suspect some could do so on own.). These costs were were under $1K each parent set - really don't recall amounts exactly - at the time in the early 1990's. But cost was easily less than 1% of assets. A side note: One bank didn't want to recognize her surviving parent's trust & allow her to transfer the assets to recipients. She told this to the trust preparing attorney who contacted the bank. End of problem.

One $20K bond belonging to my Mom didn't get titled to a trust and so fell under her will. That had to be probated at a $1K cost and the minor hassle of going thru it. So you decide.

We have rev trusts set up for our assets also. $3K some 10 years ago.

 

[misanman]

I have been involved in both trust and wills as a personal representative. In my case, the probate went very smoothly so I've never understood completely why people are so scared of it. I suppose there are horror stories but that was not my experience. In our case, the court was just overseeing the settling of the estate.

The trust case went smoothly as well although I was amazed that there really isn't any oversight. Be sure to pick someone honest as the administrator as it seemed to me they could easily skim $$$ from the trust and no one would be the wiser.

FWIW

 

[Brat]

The purpose of a revocable living trust is to transfer assets at the death of the last grantor trustee without going through probate. Only those assets titled in the name of the trust benefit. Our parents had them and we have one. After my experience with my Mother's estate I can't sing the praises of a rlt loud enough. The purpose of a will is to catch anything not in the trust. It is important to look for stray items like the bond mentioned above.

IRAs don't belong in trusts IMHO. You designate the recipients of the balance in the IRA. One benefit of a rlt is that you can describe the distribution of its assets taking into consideration the value of any inherited IRAs. By the time you pass your IRAs may be depleted or not so the rlt provisions can balance things out.

One thought: my Mother created a new trust after my Father's passing. My brother and I were residual trustees. She required that we destroy all copies of the previous trust.

Absolutely trustees must be honest and should provide a copy of all transactions to those affected.

As someone mentioned banks often create barriers, unless of course they are the trustee. : (

 

[CaliKid]

I have some familiarity with the California probate process. It's great for the probate attorney but not great for your loved ones. It's very expensive and takes 7 months minimum to go through. It's quite simple to avoid though with a properly established living trust so find an experienced estate planning attorney and get it done. Also, I have seen a few situations where people tried to do a trust themselves, use a paralegal, etc... that's great if it works but it doesn't always and can great large disasters after death (or disability). At least in high probate cost states like California living trusts are mandatory if you have loved ones (or loved charities) to leave your money to!

 

[Tailgate]

We receive mailings, at least weekly, offering free estate planning seminars. Usually there is a free meal at an expensive restaurant involved, and an offer of a free consultation with an "Elder Law Attorney." The goal is to sell an expensive living trust package. There is a reason these guys do this: They are not established and respected enough to live on referral business like the really good guys can.

This attorney is one of the good guys.. retired District Judge, retired Army Colonel. I sought his counsel and our discussion revolved entirely around my questions. He said that probate is fairly straightforward, but time consuming and might be a hassle for my DW (who has zero appetite for financial issues). The LT is seamless. Based on his flat fees of $2,500 for probate and $3,000 to establish an LT, seems like the $500 difference is a good value for her peace of mind (and mine). I'm sure I could find it cheaper but I interested in someone who is connected and knows the law front and back. He's seen it all.

The suggestion of a one page will to supplement the LT makes perfect sense.

I think an Elder Law Attorney can be indispensable for issues like this along with Medicare and Medicaid guidance.

I also agree that the internet does not take the place of real due diligence.

 

[Cobra9777]

In our case, all assets are either jointly owned with TOD to our 2 kids, or individually owned with spouse as primary beneficiary and kids as 50/50 contingent beneficiaries (and per stirpes). Texas allows TOD on real estate but not automobiles, so the one exception is our vehicles, which are jointly owned but no TOD... and I suppose household goods. But I'd estimate that 98% of our net worth would transfer directly to the joint owner or beneficiary. We also have a will, including living will and durable POA.

Is it still necessary or preferable to have a trust under these circumstances?

 

[marko]

We receive mailings, at least weekly, offering free estate planning seminars. Usually there is a free meal at an expensive restaurant involved, and an offer of a free consultation with an "Elder Law Attorney." The goal is to sell an expensive living trust package. There is a reason these guys do this: They are not established and respected enough to live on referral business like the really good guys can.

.

Might depend on the state. Elder Law is a fairly big business here in Mass, represented by some fairly heavy duty law firms. Our attorney has a small division that specializes in Elder Law alone.

As far as trusts, a Revocable Trust is a great idea, avoids probate (which can tie up funds for a year or so). Probate can also be expensive: as an executor, I paid over $30K in legal fees for a large estate (fee set by state law). It also provides a level of privacy.

However most folks also have a will to cover other stuff as well.

 

[EastWest Gal]

In California, the probate fee is set at a percentage of the value of the estate. Anything in a trust is not subject to probate. Had my father stayed in California, the trust would have saved us probably six figures. Here, in PA, I was charged a flat hourly fee for legal help settling the estate, and the attorney was very fair, inexpensive, and basically advised me what to do each step. I probably spent less than $2000 in legal fees. So, the answer varies state by state. Also, even if you have a trust you should have a will.

 

[kgtest]

both an executor and owner of RLT. I agree that IRA's do not need to be included in the trust since the purpose of trust is to avoid probate and effectively designating beneficiaries can accomplish that. Figure you have 1million to protect, what's $1,000 spent now knowing your heirs won't lose 1/4-1/2 the estate value to probate lawyers like for example Prince's heirs are fighting.

Robin Williams did the trust right.

 

[RunningBum]

I have a TOD for my investment account, and beneficiaries for retirement accounts. My state allows for TOD of real estate, so I suppose I should get around to that. That would cover most of my assets, and with 1 heir and the will saying everything not covered by the TOD going to him, I don't see a big issue with probate for me. If my situation ever gets more complicated, I can revisit this.

 

[nwsteve]

We have a RLT for our assets (but exclude the IRAs). One of the most persuasive arguments for a RLT not mentioned is the ability of the trustees to immediately assume management of RLT assets should there be an impairment (but not death) without any further review by some other authority.
In our case we have some rental property, the Trustee can be sure all bills and tenants issues are properly managed should we become incapacitated for any duration longer than 30 days. Only a finding of impairment by a physician is required. Impairment could be everything from an incapacitating accident to loss of cognition capabilities (e.g. stroke),

 

[imoldernu]

Since we created our own will with the use of a legal program, we took the next step of developing a Living Trust. After reviewing the reasons for doing this, decided not to complicate matters. The information required was the deciding factor. While the exercise was enlightening (amount of detail, and listing of possessions) we could see no need for complicating what was essentially a cut and dried document.

Our finances and material assets are simple. While we haven't consulted a Wills/Trust lawyer, our son has reviewed the document, and feels it is adaquate.
When one of us passes, It may be time to review the situation.

 

[gerntz]

The trust case went smoothly as well although I was amazed that there really isn't any oversight. Be sure to pick someone honest as the administrator as it seemed to me they could easily skim $$$ from the trust and no one would be the wiser.

I prefer the latter risk over an outsider having oversight.

 

[CardsFan]

I have a TOD for my investment account, and beneficiaries for retirement accounts. My state allows for TOD of real estate, so I suppose I should get around to that. That would cover most of my assets, and with 1 heir and the will saying everything not covered by the TOD going to him, I don't see a big issue with probate for me. If my situation ever gets more complicated, I can revisit this.

This is our situation, as well. Joint accounts, beneficiaries and TOD's cover 90+% of our worth. Of course, there is also a will. Transfer to one another is simple. However, when one of us passes, the other must remember to change all the TOD's and beneficiaries to our DS. Have not seriously looked at a trust, but it might be beneficial so that no action is required by the survivor to transfer to DS.

 

[Brat]

Exactly.

 

[pacergal]

We have a revocable living trust, pour over will, healthcare POA, and advanced directive.
My father had a will and trust. Everything did not get placed in the trust and probate took almost 2 years!! We did not want our kids to go through that, so met with eldercare attorney and followed her advice to the tee. Met with her a second time to bring back all documents so she knew, and could reassure me, everything was in place. Two year probate really sucks the life out of you. We had to do estate taxes twice due to income received by the estate from investments. The $ paid to lawyer for Dads trust was essentially null and void. He would have been spinning in his grave if he knew what we went through!

 

[meierlde]

It depends on the state and how much time the executor has to spend. In Tx there is independent administration where once appointed the only thing the court sees is the final inventory. Of course you also need to make an inventory containing also assets passed by TOD etc in order to determine if you fall under the federal estate tax (more so back when I did it as the limits were lower for filing a return) After in either case you need to file a final 1040 for the last year or part of year of the persons life. Then you either file a 1041 for the estate or for the trust (If you find an attorney who is also a cpa they can help with this all be it turbotax business does 1041s also)
The fee charged does depend on the state as some states have fee schedules for estates. The major issue is that the inventory is a document anyone can look at at the court house however so that is the privacy issue. Of course even with a trust you probably need a will to handle things that got omitted such as personal property where you really can't change title to it. Each of the probates for my parents took 6 to 9 months.

 

[mathjak107]

take a hard look at why you want a trust . they can be double edge swords .

as an example a revocable trust avoids probate . medicaid rarely goes after assets not probated . however a house becomes an unprotected asset in a revocable trust .

where as when held in personal name the value of the house under a limit is not counted for qualifying that is no longer the case once in the trust .

now to qualify the dollars in the house count . you may have to sell the house to qualify and then have to spend it down .

so yeah ,medicaid can't take the house if it isn't probated but now you can't qualify with it in the trust .

look back's apply when reshifting .

 

[Brat]

If that is true (may be state specific which is why you want a lawyer involved) title the house so that title transfers on death.

 

[mathjak107]

it would be state specific . in ny we have no quick claim deeds . in florida they do so you can pretty much tod it .

 

[Fedup]

It depends on the value too, plus whether you think you might get Medicaid.