Pros and Cons of having a Trust

pb4uski said:
$3k isn't bad, my uncle paid a little more for estate planning a few months ago.

Ypu don't necessarily need the trust. Florida allows enhanced life estate deeds on properties and Kansas allows TOD deeds and both of these function similiar to benefaries.

Your daughters definitely should NOT be on the deed. If they get sued and lose then your properties are at risk.

Nothing happens to your assets if you go into assisted living. Many competent seniors go into assisted living for convenience... they can still handle their finances but prefer to have their meals made for them. I think your question is more what happens to your assets if you become incapacitated and unable to manage your financial affairs. The trust is a bit better if you are incapacitated because you can have provisions for your co-trustee to take over if you can no longer handle your financial affairs. That is why for my uncle we put not only his property but also his taxable brokerage account into trust. He and I are co-trustees. He has the wheel on managing his finances until he can't... at which point I step in and manage the assets for him.
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Thanks for the quick reply .... You are correct about incapacitation is what I am talking about ...... Should this happen, I do not want the facility or government to have control over our Assets (property or $$$)...... Does having the revocable trust cover this, after 5 years or something like that ??
 
No, you are confusing some things. Think of a revocable trust as a separate entity from you personally... you contribute assets to the revocable trust and the revocable trust then owns the assets. You are the grantor, beneficiary and trustee for the trust. Usually, there is also a co-trustee or backup that manages the trust if you become incapacitated and can no longer manage the trust or if you die. The trustees, you and the co-trustee, have a fiduciary duty to the trust beneficiaries to manage the trust consistent with the provisions of the trust.

When you die, the trust becomes irrevocable. The co-trustee takes over and manages the trust consistent with the provisions of the trust. Typically, the trust provides financial support for any surviving spouse and then specifies how the trust's assets are to be distributed (similar to a will, but without going through probate).

The 5-year thing relates to Medicaid LTC planning that has a 5-year lookback. From what you have wrote that is not what you are doing so it doesn't apply.
 
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You may not need a trust to avoid probate. We just use beneficiaries on our financial accounts and son as contingent beneficiary on real estate.

One thing we did do on wills is establish a wipeout provision: our nieces and nephews are contingent beneficiaries of our post-charity estate.

Also in some states probably is not a big deal (example Texas). But it is public.
 
Always remember that PODs/beneficiaries do not pay out if you are disabled and unable to pay your bills. That's where a trust is excellent as most banks don't honor generic POAs either. Of course, if you know you will never become unable to handle your affairs then don't worry about it! ;)
 
CaliKid said:
Always remember that PODs/beneficiaries do not pay out if you are disabled and unable to pay your bills. That's where a trust is excellent as most banks don't honor generic POAs either. Of course, if you know you will never become unable to handle your affairs then don't worry about it! ;)
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? Not following. Sounds like you are making a case for a living will?

TOD is contingent on death, not on good health or anything else.
 
RetMD21 said:
If the institution chooses to accept the POA
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Sure. And easy to use a different form if required. That is something you want to investigate in advance. A little tougher if your bank does not allow co-trustees or has other issues with your trust.

Stated simply, the details in both cases can be a wild card. But All you can do is what appears best all things considered. A trust is a tool. it is not a panacea.
 
I did't realize that someone was proposing a trust as a panacea
 
RetMD21 said:
I did't realize that someone was proposing a trust as a panacea
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You suggested problems with a POA. Please flesh out your solution. Sounds like it won't be a trust in which case I misunderstood your point.
 
LakeRat1 said:
Thanks for the quick reply .... You are correct about incapacitation is what I am talking about ...... Should this happen, I do not want the facility or government to have control over our Assets (property or $$$)...... Does having the revocable trust cover this, after 5 years or something like that ??
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$3k sounds more like the fee for a revocable living trust (RLT)...your earlier post said irrevocable.

As already noted, a RLT normally becomes irrevocable on death.

Then the successor trustee takes over to carry out the terms of the trust WRT asset distribution.

I was co-trustee on a couple of RLTs for relatives after they were diagnosed with their respective, terminal illnesses.

Which allowed me to handle their affairs immediately w/o having to qualify as successor trustee.

In the event of incapacity, a successor trustee (or co-trustee) does control the assets.

With a RLT you still need to worry about Medicaid's general 5-year "look-back" provision.

The assets titled in a RLT are still under your control (income, etc. is reported on your personal tax return) so there's no clock running until assets are transferred to an irrevocable trust or to a 3rd party.
 
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Montecfo said:
? Not following. Sounds like you are making a case for a living will?

TOD is contingent on death, not on good health or anything else.
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Making case for a living trust. A living will has to do with health care decisions.

Yes, a TOD is contingent upon death. A lot of people seem to think that's all they need. My point is that a lot of times a person becomes incapacitated BEFORE death and thus a living trust would be needed. A TOD is an incomplete plan.
 
Does anybody use or heard of an online eState Plan? I recently attended a presentation by an estate planner selling this type of estate plan and living trust. Once set up it allows the holder to go online and modify the terms of the plan without having to go to a lawyer. The initial cost is about $3K with an annual $95 fee thereafter. You can get more info by doing a search for "eStatePlan" as a single word.
 
Montecfo said:
You suggested problems with a POA. Please flesh out your solution. Sounds like it won't be a trust in which case I misunderstood your point.
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The trust is more flexible but not free. You knew that generic attorney generated POAs might not be accepted but I only found that out when I tried to use one :) . I am sure a lot of people use informal solutions. My cousin had his father's bank login information and transacted on the account when he needed to take over. It worked for them.
 
RetMD21 said:
The trust is more flexible but not free. You knew that generic attorney generated POAs might not be accepted but I only found that out when I tried to use one :) . I am sure a lot of people use informal solutions. My cousin had his father's bank login information and transacted on the account when he needed to take over. It worked for them.
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What are the legal ramifications of doing that? We have access to all of my MIL's accounts online and could transact as her after her death, but that seems not quite right. My wife is a joint account owner on all of her mom's banking accounts, so that seems ok because she approved that. But my MIL is the sole account owner on her brokerage accounts so not sure it would be ok to move that money after her death with just the login. We could, but not sure we should.
 
My cousin may have been POD or joint owner on the bank account during my uncle's life. My guess is that at worst he was violating a bank policy. His siblings weren't complaining and it was a practical approach without doing something more formal. If asked, his plan was to say that he was following his fathers instructions for each transaction. I think it gets more sketchy and possibly illegal after death. The institution may freeze the accounts when they learn of the death anyway.

As an aside a high school classmate got in trouble with FINRA and maybe the courts when he transacted on an IRA account after the owner's death. The family maintained that he was churning the account for commissions but he claimed that he had the owner''s approval for transactions. He lost his ability to work in the industry and I think his firm reached a financial settlement with the family.
 
Midpack said:
We have a trust to make things easier on our heirs. To me it’s selfish to do otherwise, they have lives to lead. We don’t want them to have to jump through any probate hoops to settle our estate. ...
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A wealthy distant relative died. He had a revocable trust but failed to move assets such as the marital home (was in his name only) and land into the trust. Thus, his estate will be probated in multiple states. While he was alive I tried to drop hints that he should strive to avoid probate but he never "got the message". I didn't feel that it was appropriate for me to mention specific assets that I knew he hadn't dealt with properly. I figured that someone with his wealth would have advisors to handle this - never happened.

The lawyer advising his estate is having to present not-entirely-relevant documents to the probate judge arguing that the deceased intended the marital home to go to his wife. Very messy. I suspect that the judge will agree but this 'drama' could have been avoided with better planning (and execution). :popcorn:
 
It can be difficult or impossible to get people to do anything. I think it is pretty common for bad execution to negate good planning.
 
RetMD21 said:
It can be difficult or impossible to get people to do anything. I think it is pretty common for bad execution to negate good planning.
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+ 1

A good friend who had significant assests - multi millions - died without a will or trust. I had been suggesting for many years that he create an estate plan but he refused because he hated to consider his own mortality.

He said his financial assets had POD/TOD designations, but I suspect he told me that just to shut me up.

He also insisted on keeping important receipts and other papers in his wallet all the time, rather that put them in a file cabinet. His wallet was almost 4 inches thick and made it uncomfortable for him to sit with his wallet in a back pocket, where he kept it.
 
corn18 said:
But my MIL is the sole account owner on her brokerage accounts so not sure it would be ok to move that money after her death with just the login. We could, but not sure we should.
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It's not okay after her death; the account assets will go to the beneficiary(ies)

Regarding the original question, there are two main reasons to use a trust, minimize estate taxes if the estate is large enough, and set up your legacy the way you want it.
 
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