How to get a Living Trust without expensive attorney fees??

bookertJune 9, 2008


Anyone with insight on how to set up a legal Living Trust please advise.

Here's the scenario:

Mom is getting on in age, single, owns her manufactured home, retired (lives on SS income), enter hint of health problems.

I'm her only living child, don't want to go through probate if anything happens. (she brought this up!)

Was going to put house in my name except the tax base would go up and increase my taxable income!

Car is in both of our names.

We picked up a CD from Staples that gives one the ability to print forms, but we took it back thinking they wouldn't hold up legally if something were to happen and if we didn't fill it out correctly. We don't want to be ignorant, but don't have the money to go through an attorney as we were told they charge approx. $800 and up.

Thanks to anyone with firsthand knowledge of this, it's very much appreciated!!!

Any other helpful hints would also be welcomed!

(should I also get a Living Trust for my family too?)

Have a blessed day!

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My mother, my sister, and I bought a book (think it was Nolo Press at the time, about 10 years ago). We filled out the forms, created a trust. Moved her home into the trust and her larger bank accounts. She died 5 years ago. We took the trust papers to an attorney to get any advice. He wasn't impressed with the trust, but he gave us a little advice and helped us apply for a tax number of some sort. Since my sister and I agreed on everything, the settlement of her estate went very well. No probate. No problems. We had to file a couple of tax returns after my mother's death.
Good luck.

    Bookmark   June 9, 2008 at 4:18PM
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Depending on the size of the potential estate, a living trust may not be necessary. Many states have streamlined and simplified laws involving modest estates making probate unnecessary.

It may be possible to draw up a valid trust document yourself (but that is not a given), but you may need advice on whether you need one in the first place.

Good luck.

    Bookmark   June 9, 2008 at 4:52PM
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Is there a Senior Center near you? You could probably get some opinions there. Who knows! Social Security may have some advice, too.

A trust is an entity, not unlike a person. It needs a tax ID number and has to file tax returns all along -- not just after the grantor dies. A big mistake some people make is creating a trust and not funding it -- putting property INTO the trust. If you don't, you may end up with probate anyway.

    Bookmark   June 9, 2008 at 5:48PM
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First question - does your Mother have a will? If not, she needs one.

You do NOT want to put the house in your name. If you take title to the house before your Mother passes away, her basis (what she paid for the house) becomes your basis. If you wait until you inherit the house, your basis becomes what the house was worth the day she died. What your basis is becomes important when you sell the house. You will pay capital gains tax on the profit from the sale of the house. Profit = sales price - basis - closing costs. I am assuming that you do not want to move into the house at some point in the future.

I do not believe that at revocable living trust needs to file tax returns until the grantor passes away if the grantor is also a trustee of the trust. The grantor can continue to use his or her name and social security number on the trust assets. The income goes straight to the grantor's tax return. You need to talk to a tax professional to see what the ramifications of a trust might be in your situation.

    Bookmark   June 10, 2008 at 7:23AM
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Suze Orman gives advice on this; if you go to her webpage. She is a financial adviser (on tv) and having worked with lawyers is aware of the situations of each state. She has also written books.

    Bookmark   June 10, 2008 at 11:45AM
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To all respondents,

Thank you all for your comments.

Yes, I am aware of the tax ramifications,which is why we didn't put her house in my name.
Our concern is if she for some reason had to go into a convalescent home would they take her home?
Her wish is for her very small estate to go to her grandchildren when she passes, if she doesn't outlive them!
She has a will but it is terribly outdated.
Do the DIY wills hold up in courts?

Yes, there is a Senior Center in her town, good idea!

What about a paralegal? Anyone know if that might be a good avenue to take? Anyone have any experience in using one?

Again, thanks for your help, these forums are of great help to those of us whom need unsolicited advice etc..

    Bookmark   June 10, 2008 at 12:07PM
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Please don't depend on a DIY will. Wills are the most contestable thing on the planet. The issue isn't with the court, it's with the surviving family/friends. "She promised me xyz when she died!!"...nightmare...Death brings out the greed in people like no ones business.

Is the manufactured home on land or in a park? If it's in the park, talk to the ownership and see what their policy is. Chances are someone will need to pick up the bill. If its on land, assuming she owns it outright, it should be reasonably protected...although I'm not a lawyer, so I wouldn't swear to that.

What you need to research is the size a 'Small Estate' is considered in your state. If assets are below that amount it will simplify things greatly.


    Bookmark   June 11, 2008 at 12:49AM
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I think that "avoiding probate" has been *far* oversold as a benefit of living trusts. Living trust proponents, IME, usually overstate how expensive, difficult and lengthy the probate of a simple estate is. I'm a lawyer, I prepare living trusts when requested, and I still think that the vast majority of living trusts do nothing but make more money for lawyers. (I'm happy to take the money, of course, though I nearly always advise against it.) Honestly, if $800 is what's standing between you and a professionally-prepared living trust, I can't imagine that the estate is big enough that probate is a real concern. Living trusts were created as a way for the rich to keep their financial affairs private, because probate records are open to the public.

As far as whether a DIY trust will hold up, it may well, simply because the only ones who might contest it are creditors or other beneficiaries. (Though Jim24 is correct that estates are often contested.) If you pay the bills and your entire family (including the children of deceased siblings) agrees with what you're doing, there's no one to contest the trust.

Unfortunately, the usual sort of living trust (a revocable trust, where your mother would maintain control over her assets and have the right to change the terms of the trust) won't protect her estate from Medicaid estate recovery. (There is another sort of trust, an irrevocable trust, where your mother would give up the assets and the right to change the terms of the trust, but that has exactly the same effect as giving your assets away. Then you get the stepped-up basis on the house and you have the five-year lookback period for Medicaid.)

The bottom line is, many (most?) people are trying to do what you're trying to do - impoverish the parent so that the state will pay for long-term care, while still keeping the assets in the family. The government, not unreasonably, is trying to make sure that individuals use their own money to pay for their own care, as much as possible.

I think Chisue's suggestion of speaking with someone at a senior center for advice is a great start. This is a ridiculously complicated area of law, and even lawyers who know far more than I have a tough time keeping up.

    Bookmark   June 11, 2008 at 1:25PM
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Nobody has mentioned it here yet, so I will:
Whether you go for the trust or stay with a will, don't forget to have an Advance Medical Directive (AMD) drawn up. Without one, my sister's MIL might have been left on a respirator even though she was 'brain dead' within a few minutes of her stroke.
That, and a Durable Power of Attorney are generally parts of a Revokable Living Trust but also make the process a lot easier with only a will.

    Bookmark   June 11, 2008 at 8:16PM
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I have to agree with some of the others that I don't understand why you are adverse to probate. In many states probate is a fairly simple matter. It isn't in California where I live - simple, yes, but also incredibly time-consuming, so a trust makes things much simpler for non-spousal heirs.

If you are the only living child, then a will, a power of attorney, and a durable healthcare power of attorney should be all you need. I'd suggest you investigate (Nolo Press, which started in Berkeley in 1971, is famous for its consumer assistance in minor legal matters such as wills and powers of attorney), or, a more recent e-business that also helps with such matters. For simple legal documents for people with modest assets such as your mom, such a modest-cost solution should be adequate.

And remember that YOU need the same legal documents as your mom!

    Bookmark   June 12, 2008 at 11:50AM
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I think that your first worry is what would happen if your mom became sick, could they take her house? In most states the property holder is allowed to own a house, one car and have under X amount of dollars ($10,000 in some states)before they have to pay for long term care. The state cannot make her sell her home. So if the estate is not very big, your first worry may not be a worry at all. A call to the SS office will give your guidelines for this. If the estate is not very big, then probate really is not an issue, if she has a will. Make sure the will is up to date and reflects her current wishes. The questions about the house, land etc will have a bearing on all of this. Hope this helps. IMHO I have seen too many people have a living trust and NOT fund it and unless you have guidance in this the document is worthless

    Bookmark   June 12, 2008 at 7:32PM
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Bmmalone, you're right that in many (most?) states, a single person can qualify for Medicaid benefits without selling the home (a married person with the spouse staying in the home always can), but that doesn't prevent a Medicaid recovery lien. It's still a valid concern.

    Bookmark   June 13, 2008 at 2:19AM
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Check around to see if there are lawyers that help out seniors. Here we have Council on Aging that guides people also this state has a ton of stuff for seniors. Some lawyers have legal aids that will do simple wills, and other necessary papers. The main thing is to make sure you have all the necessary papers to take care of her. Social Security and other insurance companies have papers she and you can sign to authorize you to pay bills, find out what has to be paid get medical help. Be sure and file for Medicare A & B. The social worker at the hospital also will help you. Not sure about Medicade. The social worker should be able to help you.

    Bookmark   June 13, 2008 at 8:23PM
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