View Full Version : Do you have a trust?
awakenedsoul
4-16-13, 6:39pm
I just made an appt. with an estate planning attorney to do a trust package. I filled out a will and power of attorney forms from USLegal Forms in the meantime, but I'd feel better if my home was in a trust. Do you have one? How is it set up? Who is your trustee?
Why would you put it into a trust? Help me understand this please?
ApatheticNoMore
4-16-13, 7:06pm
This is the impression I have (but hey if anyone is actually an estate lawyer, I more than defer): it seems you don't actually need it for a lot of things (it seems you don't even need it for prop 13, which might be the concern for CA housing - I asked this question of my mom who talked to her lawyer about it). It mostly just prevents an estate from going through probate which can delay immediately receiving the inheritance. Avoiding the headache and delay may be a good thing (but not critical unless the inheritee immediately needs the money).
Of course I'm not talking about the kind of money that might hit estate taxes, that is most likely another matter entirely.
Trusts can also be used to restrict what the inheritee does with the money, like how much they can get at at a time etc.. Obviously useful for minors, and young adults. But also a trust was setup for this purpose that I know of: woman with a much older husband, left a trust by her parents, could not access principle itself, only got payments of principle plus interest. Why? The concern was it would all be spent on long term care/healthcare for the husband because he was much older. Sneaky? Haha, I don't know. It protects some money from potential medical bankruptcy I suppose.
frugal-one
4-16-13, 8:48pm
In the state I live in... we can put a beneficiary on the house deed and avoid probate. The cost was $30. We have no need for a trust. I do POD (paid on death) and TOD (transfer on death) for savings and brokerage accounts. These enable me to designate beneficiaries and avoid probate as well. In some instances, a trust is not needed. You may want to read and check further.
My father in law's farms and assets are in a trust.
DH and I are in the process of making a legal asset distribution, and we will likely have a trust which means that upon our death, real estate and other financial assets will be transferred by beneficiary deed into a trust. From there, a trustee will sell the real estate, liquidate the financial instruments, and divide our assets evenly 6 ways.
We are doing this because I see this as the easiest way to split our assets evenly 6 ways. If I leave the house to person A, a bank account to person B, another bank account to person C that is too complicated for me and it's not evenly divided.
Oh and it all avoids probate. Because we don't have minor children or even children at all, I don't care how carefully the trustee works to get maximum price of any assets we have, in fact, if they take the easy way out and sell at rock bottom price, it's fine with me. I want our beneficiaries to be little burdened with our estate. To me that means: get it done quickly, make it easy on the trustee.
try2bfrugal
4-16-13, 9:27pm
We have a will and a trust. We paid an estate attorney to create all the documents. Our house is in a trust. We are each other's trustees and if we both died we, we have parents listed next. Eventually the trustees will be our kids.
awakenedsoul
4-16-13, 11:09pm
I talked to a friend of mine who is a tax attorney and does estate planning. In my case, he advised me to specify that my home sale will go to nursing home expenses for my parents, (if they need it.) If not, I left it to my closest friend. She has struggled as a single mom, and as adults her kids are struggling, too. I totally trust her to handle my affairs and as power of attorney. My parents are getting older and I don't want my house and possessions going to my brothers and sister in law. I explained all this to my parents. My dad was kind of upset. He said that if I'm going to do that he's not going to include me in the inheritance. He wants to keep it in the family. So, I am going to put in the trust that if I die, what I inherit goes to his grandchildren. If I marry or have children later in life, I can change it.
We have wills and trusts. Eventually, it will all be in trust -- largely to avoid probate, etc.
HumboldtGurl
4-17-13, 1:29am
We have a trust and our mountain cabin is in it. We did it to avoid probate. Use NOLO Press' DIY guide and it was pretty simple.
Wildflower
4-17-13, 1:48am
In the state I live in... we can put a beneficiary on the house deed and avoid probate. The cost was $30. We have no need for a trust. I do POD (paid on death) and TOD (transfer on death) for savings and brokerage accounts. These enable me to designate beneficiaries and avoid probate as well. In some instances, a trust is not needed. You may want to read and check further.
This is what we did too. A trust wasn't necessary. Everything will go to our DDs without probate.
This is what our lawyer advised....
We've been considering this, but I read something someone wrote a few days ago that resonated with me: He mentioned that the cost of something (consulting a lawyer about whatever it was he was talking about) was not worth taking on the risk of not doing so. It struck me that that was what always bothered me about what seemed to me to be a blind deferral of certain considerations (such as legal considerations) to the realm of expert consultation, without regard to the cost and value, balanced against the risks. I recall when my mother passed a way I had that knee-jerk reaction and engaged a lawyer who, in the end, did absolutely nothing for us (because there really was nothing for him to do for us, and more importantly, no reason to think that there ever would have been). So I'm now coming to the conclusion that, for my family, the risks that trusts are supposed to ameliorate aren't worth the $1500 necessary to pay to get a lawyer involved.
To be fair, our situation might be somewhat unique: We have no children, from present marriage or past. We have a surplus in our emergency fund enough to pay-off our mortgage, the last debt we have, and will be resistant to the idea of incurring any new significant debt. Bank and brokerage accounts are WROS or TOD, with secondary beneficiaries. Indeed, our biggest concern in that regard is whether the estate, itself, will have enough money available to it to pay our bills, once we're both gone. We're going to work through that with a financially planner, making sure to leave enough resources available to the executor of our wills to do an orderly shutdown of our estate.
We've been toying with a do-it-yourself trust. A friend of mine used Suze Orman's kit, so we'll look into that. But I'm not really convinced that even that would be worthwhile, given the complexity it would inject.
This is very timely for me. I am scheduling a meeting with our accoountant who is an independent financial planner and obviously knows everything we have! We have no children, my husband would like to leave his half to his nephew but I have 3 siblings and 8 nieces/nephews and it just seems overwhelming to try to divvy it up evenly. My gut says leave it all to charity if I don't spend it all first! Not much chance of that because we live quite simply. So- I like the idea of a trustee, but how do you choose one? I've thought of making the bank do it...don't want to burden any friends or family with that. So I have nothing to contribute here, but am avidly reading the different ideas.
I think there's a big risk that any complicated trust arrangement could end up leaving more money to the trustee, in terms of reasonable and customary compensation for administering the trust, than to beneficiaries, if you really go down the path of having a trustee like a bank. (They don't do such things for free, eh?) A trust seems like it would provide you a means of ensuring that unusual tenets of a will won't be overridden (or even the attempt to override entertained), given that trusts don't brook with such challenges, though, but it would sure be good, I suspect, if you could get someone close to you but not a beneficiary to volunteer to administer the trust after you pass away.
Our situation isn't all that much different from yours, actually. I have two siblings and my spouse has two siblings that had issue before death. Our current will leaves our estate to the four children of my two brothers (two plus two, so split evenly is the same as per stirpes), but my spouse seems inclined to add second cousins into the mix, rather than nieces and nephews. However, I don't see how the nieces and nephews could legitimately challenge the will, as it is today (with my spouse's family excluded entirely) or as we may change it (with my spouse's second cousins included). Regardless, if we were to go the trust route for this, we'd still appoint a trustee from my family, trusting them to treat my spouse's family fairly, because they're good people.
awakenedsoul
4-17-13, 3:54pm
The attorney I spoke with recommended that the trustee not be a family member. I told her mine is a close friend of over 20 years, and she said, "Good." My brother is the trustee for my parents' estate, and it has really changed his personality. He's on such a power trip. I think it gets weird if the trustee is also a beneficiary, (especially if they are in debt!)
Another thing about a trust is that it protects you from lawsuits. Your house is safe. Some of the parents in this area have them. They feel their teen age boys are their biggest liability. My friend's son was snorting liquor with friends and died. Her ex husband sued the boys' parents who bought him the liquor. They lost their house.
The attorney I'm seeing normally charges $800. She's giving me a reduced rate since I'm a yoga teacher. ($500.00.) I think it's well worth the cost.
Another thing about a trust is that it protects you from lawsuits. Your house is safe. Just a note of warning from a lawyer with 32 years of experience (no I don't do trusts). The quote above like everyone else's posts is state specific. In my state a trust certainly won't protect you from lawsuits.
In my state a trust certainly won't protect you from lawsuits..
And in my state (MA), you don't need a trust to protect your house, just file a homestead exemption, which was about $30 to file at the Court of Deeds, IIRC.
San Onofre Guy
4-17-13, 4:47pm
Don't cheap out on this. I set up estate planning upon attaining single hood ten years ago, mainly to keep my assets from going to my children too early. My wife and I met with my attorney last month to update everything. Thirty percent of his work involves litigation from poor estate planning. Every situation is unique. All plans should be looked at at least every five years. Do a favor to your heirs and plan properly and by that I mean don't do estate planning via a website, it most likely will get contested.
awakenedsoul
4-17-13, 6:13pm
Just a note of warning from a lawyer with 32 years of experience (no I don't do trusts). The quote above like everyone else's posts is state specific. In my state a trust certainly won't protect you from lawsuits.
I'm in California. I feel much better getting all of this taken care of and handled by an experienced attorney. My Dad wants me to specifically wait for his grandsons to get any money until they are older. That's what he did with us. I was 47, and that was a good time. I had learned some financial discipline by then.
. And in my state (MA), you don't need a trust to protect your house, just file a homestead exemption, which was about $30 to file at the Court of Deeds, IIRC. Same here in Florida. Actually it's even a little better. We don't have to pay any filing fee. It happens automatically by operation of law if you qualify under the state Constitution.
Why would you put it into a trust? Help me understand this please?Trusts are generally used to avoid probate - a long and expensive public court process that settles your estate. Probate can often take years and cost thousands of dollars depending on the size of your estate. With a trust - especially a revocable living trust - all your assets stay in your name and you can do whatever you want with them. Sell your house, transfer assets and spend them, etc..and you can change the terms of the trust whenever you want to accomadate changes in your life. It's basicly just like you would without a trust. But upon your death, those assets transfer to your named beneficiary without the need to go thru probate, and can do so just as soon as a death certificate is issued. Even small estates often have to go thru probate - especially if you own real estate property - and it is a major hassle and expense.
As for me I don't have a trust. Instead I have listed a beneficiary for all my financial accounts (assets that you have where you are allowed to name a beneficiary - like IRAs, 401ks, bank accounts, pensions, even vehicles here in Calif, etc... - don't have to go thru probate). As for my house, which is co-owned with my sister, we have the deed set as "joint tenents with rights of survivorship" which means if one of us die, the other automaticly gets the house without having to go thru probate or have it in a trust. this is the same deed set-up most married people have. Once we sell the place and get our own seperate home in about a year and a half, then I'll probably get a revocable living trust to cover that.
In the state I live in... we can put a beneficiary on the house deed and avoid probate. The cost was $30. We have no need for a trust. I do POD (paid on death) and TOD (transfer on death) for savings and brokerage accounts. These enable me to designate beneficiaries and avoid probate as well. In some instances, a trust is not needed. You may want to read and check further.I wonder how many other states allow you to name a beneficary on your house deed. They don't in Calif but it would make it much easier if they did. I think Oregon is one of the very few states that allow that. Anyone know any more?
I think there's a big risk that any complicated trust arrangement could end up leaving more money to the trustee, in terms of reasonable and customary compensation for administering the trust, than to beneficiaries, if you really go down the path of having a trustee like a bank. .
In Calif the amount of money a trustee of a trust, or an executor and a probate lawyer of a probate, can get is defined by legal statute as a certain percentage of the estate or trusts value and no more - and no less. Since most people assign someone they know - usually a family member who will inherit anyways - to be the trustee or executor, there is often no payment made. I was the executor of my Mom's estate (went thru probate) of approx. $100K and was technically allowed to take approx $8,000 as fee (same as the probate lawyer got). I didn't take it. I was also the truteee to my Dad's approx. $100K estate and didn't take a fee. And since there was no need for a probate, we didn't need a lawyer. Thus eliminating his fees plus the many other fees that add up to a couple of thousand (court fees, etc...) we would have had to pay if it wasn't in a trust. So doing a trust is the way to go. It doesn't have to be complex at all - can be very simple with just your home. But IMO it's a lot cheaper to pay $1500 or less now to set up a trust than to have your estate have to pay thousands in attorney fees and possibly executor fees if it goes thru probate. Leaving that much less for your heirs.
But IMO it's a lot cheaper to pay $1500 or less now to set up a trust than to have your estate have to pay thousands in attorney fees and possibly executor fees if it goes thru probate. Leaving that much less for your heirs.People keep saying that but I don't buy that it applies to a typical person. There are surely anecdotal situations where professionally-crafted trusts are a good thing, but the advocacy for trusts hasn't done a conscientious job outlining specifically what situations prompt the high costs of probate (which, anecdotally, I didn't encounter when settling my late mother's estate five years ago). In my experience, when the details are as light as this, and there is a profit motive on behalf of those getting the $1500 to keep quiet the parameters of those who should vs. shouldn't engage their services, I'm suspicious. Since I haven't see any such detail proving definitively why a professional would be better, I'm still considering the $30 Suze Orman Will and Trust kit.
awakenedsoul
4-20-13, 3:30pm
It's a personal decision. The woman I hired charged me $500.00 (reduced rate from $800.) It includes the power of attorneys. A friend of mine said that when her brother died, his estate went through probate and they took a fifth. In my case, I have assets currently worth $200,000. 20% of that is a lot of money to lose. Real estate prices are going back up in California, and at the height of the market my home was worth $330,000. (It's paid off.) So, I'm doing this in essence to protect what I have. Also, my dad is dealing with my brother's probate situation right now. My dad is 84. He had to pay for the burial, court costs, etc. This way, it's all taken care of in advance. I'll send my parents a copy of the trust, and I feel like I have more control. A lot of it depends on your family situation. In my case, I realized that if something were to happen to me, my parents would probably send my brothers over. They would get everything. That's not what I want. If it went through probate, my assets would go first to my parents, and then to my brothers. I'm also going to include things like, "If I get married or have children in the future, my assets will go to them." My SIL has been taking things from my parents, and I don't want her in my house. I don't trust her. My brother didn't trust or like her, either. She was the first one over there, wanting his $27,000. Forerunner, electronics, etc. He didn't have a will. He wouldn't have wanted her going through his things. This happens a lot in families. In my case, it's also for privacy, too. When your single you don't have a spouse as a buffer.
A friend of mine said that ...This is the kind of thing I was referring to earlier.
He didn't have a will.Yeah that's just silly. We put together our own wills in an hour a few years back and filed them at town hall in twenty minutes. There's really no excuse to pass away without a will. :)
awakenedsoul
4-20-13, 5:26pm
bUU,
I'm not saying that you should get one. It depends on the value of your estate. Years ago my father recommended I wait to get a trust until after I inherit some land that my grandfather purchased. You know best whether it's worth it in your case, or not. When a sibling dies, and you see what happens, it can really jolt you.
My closest friend, (who I named as trustee,) is in a situation right now that's making it difficult for her children. Her ex husband just died, and he hadn't taken care of his affairs. (His best friend was an attorney.) They had three children with him. One of them died at 17. Her other two kids are having to go to their father's house and try to sort everything out. They can't afford it, they are devastated, and his brothers are there trying to take everything. It's a mess. He made millions of dollars in his lifetime. Many people start a hand written will and don't finish. It's good that you have that done. I was guilty of procrastinating with mine.
The friend I was referring to wasn't telling me to get a trust. She was telling me her experience in California probate. She's very sharp, and I believe her. California real estate is on the high end, price wise.
There's also the fact that probate is a public thing rather than privately. It has to be disclosed to the public, via publisized newspaper ad you must pay for - $200 or more), and also notificiation of all court orders and actions and info on the value and type of estate have to be sent to anyone -creditors, family members, etc.. - that may have a stake in the person's estate. This is done at each of the many step in the court proceedings which can take up to a year or more even if no one contests anything. That allows those people to file a court order to claim any of that estate (whether they have a valid claim or not) and can hold up probate proceedings n even longer time.
This doesn't happen with a trust. Also, with an probated estate you will need to do an inventory of all personal material assets including things like household items, cars, jewerly, etc... - basicly everything the person owns - and assign a cash value to this stuff (and in the case of high value material assets like jewlery, coin collections, rare cars, etc... you need to hire, and pay for, an appraiser). This inventory has to be filed with the probate court and adds to the value of any probatable estate assets like cash or real estate. The court also send it's own appraiser to value any real estate (and you also pay a fee for this - a percent of the appraised value of the real estate). And then you can only sell the assets at no less than 10% of the appraised value. So a quick low cost sale of things can't always happen. Often, depending on how the will is written if there is one (having a will doesn't stop probate), you can't even sell anything until after you get a court order saying you can sell off stuff. Or if you can sell it, it often requires the court to monitor and approve all sales. Also, any cash or financial assets that don't have a beneficiary listed and has to go thru probate is frozen until you get an order from the court saying you can transfer it to an estate account to use pay for estate things - but not to distribute to heirs. Again, that often requires court supervision. And in the meantime, that money coming out of the probate estate bank account to pay for things means the less that goes to the heirs once it can finally be distributed. In my Mom's case we had to continue paying her $300/month condo association bill, her prop taxes, her utilities, and all the probate costs until we could seel the place - well over a year later. her entire estate was just the condo (sold for $93K) and $40K cash in a savings account. Yet it had to go thru probate and cost use around well over $10K once all was said and done. If it had been in a trust, once we got the death certificate (got it in 2 weeks) we could have sold the place asap for whatever we wanted to sell it for and also get to her savings asap as well.
So in the case of a trust, once you get the death certificate, the trustees can immediately get all the assets to distribute to the heirs, or sell and then distribute the cash to the heirs without waiting on anything. It can be done privately and easily. So irregardless of how someone sets up a trust - do it yourself from Nolo Press books for a couple of bucks, or hire an attorney to do it for you, if someone has probatable assets then I personally think it's best to get a trust. I currently don't have any probatable assets so don't need to do one, but once I do - even if it is just a small condo - I'll put it ion a trust even if that is my only asset just to avoid the costs and headache of probate. This may not be everyone choice but, depending on your state, I think it's it's worth looking into your states laws to see what your individual situation would be.
UGh sorry it's so long I was just typing awayunaware of how long it was.
...So in the case of a trust, once you get the death certificate, the trustees can immediately get all the assets to distribute to the heirs, or sell and then distribute the cash to the heirs without waiting on anything...
This is SO helpful to me! perfect timing! See, what I want is for our estate to be liquidated and passed on quickly, not that they need the money but I want them to not have to fuss around with the thing. Other than what happens to our pets, I really don't give a damn what happens to our "stuff" , so if the trustee wants to sell it for 10 cents on the dollar, ok! Just get rid of it and close up the estate.
And yes, we plan to do a trust.
My mom's estate wasn't set up as a trust but both of us children were co-owners of all of her assets and so, that went easily. I so appreciate that happening quickly. I got a check for 4/5 of her estate within 2 weeks of her death. Now I will say that my brother spent a year working to close out her estate, odds and ends of the sales of her real estate but the bulk of the estate wast quickly dispersed.
Oh and don't forget those pesky "estate income taxes" you have to file for the estate when in probate (which are seperate from the final personal income taxes you have to file for the deceased). You have to get a seperate taxpayer ID number from the IRS for the estate and file estate taxes (although you may not have to pay anything) for each year the estate is open. Not really hard to do but kind of a pain in the butt and can be confusing. Usually costs around $400 to have a CPA do it. You may also have to file a trust income taxes if you hold onto assets a long time in a trust but can avoid it if you distribute them asap. When my Dad died, he had a revocable living trust naming my sis and I as both trustees and beneficaries. When we got his death certificate we just transferred his property via grant deed (land and house) into my name as I wanted to keep it for myself, and sis went to his bank and they gave her all his money asap (which was the same value as property). It took all of 2 weeks wait to get the death certificate and have everything done. The only other things I had to do was have the property appraised to determine the new basis (value of the property on the day he died) for when I sold it in the future for tax purposes (capital gain or loss) and do his final income taxes. Easy peasy!
In a previous life I worked in the Estates section of a lawfirm and something that stuck with me was how often people had a Living Trust set up to avoid probate and then neglected to transfer title to their assets into the name of the trust, or acquired new assets and didn't put them into the trust, making it pretty much just an expensive peiece of paper.
awakenedsoul
4-26-13, 4:43pm
In a previous life I worked in the Estates section of a lawfirm and something that stuck with me was how often people had a Living Trust set up to avoid probate and then neglected to transfer title to their assets into the name of the trust, or acquired new assets and didn't put them into the trust, making it pretty much just an expensive peiece of paper.
I'm glad you said that. I'm still waiting for the attorney to call so I can go and sign the paperwork. I'll make sure and transfer the house into the trust. Thanks.
We spoke with our financial adviser yesterday and we worked through the issue a bit. Due to our situation, a trust "couldn't hurt" but won't be a major consideration for us, i.e., won't be worthy of spending hundreds (or even thousands) of dollars to set up. We talked a bit about a suggestion a good friend made (Suze Orman's Wills and Trust Kit), and he confirmed what we were thinking, that while a trust set up that way might not "work", it wouldn't make things worse, and wouldn't result in a situation that is worse than not having a trust at all. So we'll probably look into that approach.
In a previous life I worked in the Estates section of a lawfirm and something that stuck with me was how often people had a Living Trust set up to avoid probate and then neglected to transfer title to their assets into the name of the trust, or acquired new assets and didn't put them into the trust, making it pretty much just an expensive peiece of paper.Good point! I think this is very common. I know that the only thing I would need to put in a trust would be my home as I have everything else with a named beneficary as pay on death - even my old truck (Calif DMV allows that). Of course probate is different in every state so some people may not need a trust. Or they may actually want to go thru probate so that the court will handle all the estate according to the will (or laws of sucession if there is no will). Keeps family out of those dealings. I always recommend people read Nolo presses book "How to Probate an Estate" (free at the library) which gives an overall view of probating an estate, the paperwork and sets involved and also has a section for the different rules for each state. They also have a book called "How to Probate an Estate In California" that I used during my Mom's probate and it was pretty invaluable even though I had an attorney do it. A person may even do their own probate and save on lawyer fees and executor fees. Also not all states have a statutory legal fee like they do in Calif. Here both the lawyer and executor get 4% of the first $100K of probatable assets, 3% of the next $100K, and 2% of anything else plus all the other expenses I mentioned before. So it might not be as expensive to do in other states.
Also, if you have probatable assets in more than one state (say you own a house in one state and also a vacation house in another state), you'll have to do two seperate probates - one in each state. With a trust (and both properties title being in the trust) you can avoid that. Married people who own assets together can usually avoid probate when one spouse dies, but that will depend on your state. In some states (non community property states) assets owned together may still have to go thru probate when one spouse dies.
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