Living Trust right for You?

mugnainiJanuary 3, 2007

My Parents are in their mid-fifties. I need advice about what circumstances a person should get a Living Trust. What are the benefits in doing so ? I have gotten two opinions one said they don't need one, other advised to get one now. How do I protect their heirs ? They have a formal will and trust

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In our family we just put our kids names on the house and money as "transfer on death". It hasn't been a problem so far. My sis uses a trust that takes effect after she dies. I like that because it leaves the money and property in your control to spend, sell, etc., but I don't have anyone that I trust. LOL

    Bookmark   January 7, 2007 at 8:46PM
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A trust is a good way to avoid probate. Many people tend to think of trusts as something that ties their assets up leaving one living on an allowance. My parents established self-directed trusts for themselves, dividing assets equally and within their own trusts each could buy, sell, spend, dissolve the trust, designate heirs, do whatever. A trust keeps everything in one place (except for things that can't be put in trust, like pensions, house?,)and trustees, heirs, etc. aren't left sifting through boxes, drawers and mountains of papers to identify assets when someone dies. If you've ever been executor/trix for an elderly relative or someone who didn't have things in order, it can be a nightmare.

I'll be seeing a good lawyer to establish a trust as soon as I get my act together this spring. I'm going for the whole package: updated will, durable power of attorney, living will/medical directive. As Martha Stewart says, "it's a good thing."

    Bookmark   January 21, 2007 at 6:02PM
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I just finsihed up settling my mother's estate. She had a living trust, however it was not everything had been deeded to the trust, so there were compilications. I think for poeple with modest circumstances, a trust is really important if there is real estate because that can cost thousands to go through probate (2-5% of value depending on the state). And if a persons has real estate in two different states, then it is really important to have a trust. I haven't set up a trust for my property yet, but I do have Transfer on death on all bank and investment accounts, so that they will go directly to my heirs.
I was given the advice when I retired to have my retirement account use as a beneficiary "my estate". I found out later that that is the worst way to do it, because that would cause those benefits to go through probate. So I corrected this.

The problem I've found is that many attorneys don't like the trust system. Here in Iowa, probate costs are 2% of the estate. If the trust and Transfer on Death systems are done correctly, that will take a lot of work away from attorneys. I've had friends who were not even informed of the pros and cons of trusts when they visited attorneys. They were just told to prepare a will.
Good luck

    Bookmark   January 22, 2007 at 2:10PM
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The KEY is going to a lawyer that specializes in wills, trusts, estate planning, Elder Law etc. The fees for establishing a trust can be high, but I found one that gives a discount for belonging to AARP. When it comes to estate planning, sometimes a little peace of mind is worth paying for.

    Bookmark   January 22, 2007 at 4:04PM
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My brother in law was one of the heirs to the aunts estate. They lost 60% of the money to lawyers. I like the living trusts and "transfer on death". Lawyers usually never encourage you to use the transfer on death or a living trust. It leaves them with nothing except the fees to set up a trust. They get nothing if you use the transfer on death. You don't need a lawyer to set up a living trust, just an estate planner who has a lawyer who looks over his documents. My nephew earns his living setting up living trusts.

    Bookmark   January 27, 2007 at 9:06PM
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It is not a good idea to put your heirs name on your real estate -- especially your house. By doing that, they become joint owners. If they are sued, then the house becomes an asset that can be taken. That goes also if one of them gets divorced. It becomes an asset that their spouse could be awarded a share of. That doesn't even address the stepped up allowance if the property is passed down through a will.

One of the big advantages to a trust, is that there is always someone in place who can "manage" the assets of the trust if you become unable to. If you become impared through a stroke or dementia, then there is something in place to help manage the assets. IF you have to go to court to have someone appointed, then the courts could do whatever they feel is best, not you.

Think long and hard before putting anyone else's name on any real estate that you wish to pass to your heirs. None of the well known money advisors like the idea at all. (It can cost them a fortune in taxes after you die, if they want to sell the property.)

    Bookmark   January 31, 2007 at 8:38PM
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I'm struck by a different aspect of this question that the trust issue itself.

Is there some reason that your 50-someting parents can't manage their own financial affairs? Have they asked for YOU to provide guidance on how to protect their heirs? Is it not their choice how (or even if) to do so?

    Bookmark   February 1, 2007 at 7:26AM
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"One of the big advantages to a trust, is that there is always someone in place who can "manage" the assets of the trust if you become unable to."

Make sure that if you set up a trust, it allows the beneficiary(s) to change bank trustees if they aren't working out. Some bank trustees are notorious for giving beneficiaries the runaround. Even when the trust document clearly states what the funds are to be used for.

A link that might be useful:

    Bookmark   February 22, 2007 at 5:22PM
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Do you have to use bank trustees? I thought anyone could be the trustee.

    Bookmark   February 27, 2007 at 7:18AM
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No, a person entering into a trust can name anyone they choose as trustee. In the event someone has no close or trusted relatives, banks that offer these kinds of financial services to clients can be named. It happens - childless widows (widowers) who may have siblings who are in the same age range, etc.

I think what dreamgarden might be alluding to is the difference between the irrevokable and revokable living trusts as far as making changes. With a revokable trust, only the person establishing the trust and/or the trustee could request a change. Any presumptive heirs to the estate involved have no legal standing to make changes even if they feel the bank, or whoever happens to be the trustee, is doing a bad job. I haven't done much research on the irrevokable trusts, so can't comment on those.

    Bookmark   February 27, 2007 at 6:14PM
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I am some what new to this forum. Mostly lurk over at kitchen but I just had to chime in and say PLEASE educate yourselves. I have never seen such miss information about trusts as I have seen on some of these forums. We have a trust, my family members have trusts, my father has a trust and set up a bypass trust after my mother passed away. All I can say is once you understand how a trust works you will ask why would any body not have one.

First you are in charge of all your assets. No one can ever tell you how to handle your money. Only when you and your spouse, if you have a family trust, die dose someone else step in and liquify the estate and close out the trust. That someone is who you specify. It would never be a bank or attorney unless that's what you want. If one spouse dies the other spouse, trustee, manages the trust. If the trust is properly funded, meaning you put all your assets in the trust, this can be done very quickly with out probate or anyone telling you what you have to do.

One of the biggest mistakes people make with a trust is not funding it. By that I mean they don't put there assets in the name of the trust. In our state anything over 30 thousand should be in a trust due to anything under 30 dose not need to be probated. All real property should be in the trust. You can still sell it, rent it or even give it away if you want but when you die it passes directly to your beneficiaries with the stepped up value. Meaning if they sell it they will not be paying capitol gains.

Also even when you have a trust you still need a will. It's usually a very simple will stating that everything you have is in a trust. It will have a pour over clause. Meaning anything not in the trust was an error and should be included in the trust. You name the same beneficiaries in the same order as the trust. Usually husband to wife, wife to husband, then children or even the family dog if that's what you want. It will name the executor of the will , usually the same executor as the trust.

This is a very simple explanation. I am just a normal housewife but if I can search the web and figure all this out anyone can. Our family dose have a very good estate planning attorney. And yes he cost a few penny's but I learned all this before we went to him. The legal ways to save estate money is not only for the rich. Why would anyone pay to have someone else close out there estate when they don't have to.

And just one more thing. Having a trust dose not mean you are trying to hide things from the government as far as LTC goes. At least in our trust. It clearly states all assets are to be used to take care of the trustees for health care, nursing home care, ect, until all assets are exhausted. If anything is left then and only the dose anything pass to beneficiaries, meaning children or the family dog.

I found a very good web site that explained everything you ever wanted to know about trusts but it is hosted by a attorney and I don't know if I can post it here.

I hope I haven't offended anyone here, being new here and all, but this is an important subject and one of the most misunderstood.

    Bookmark   March 27, 2007 at 1:27AM
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Partst, I wiuld love for you to try to post the web site about trusts. My husband and I definitely need some kind of trust. He is a 62year old civil engineer (still working) and I am a retired school teacher (age 60). We have no children. We really need an estate planner or someone to help us figure out what we need to do. We live in Lexington, Ky. So if anyone knows of a good estate lawyer/planner in the area, we would really appreciate it. My email is Sorry this is so long but I just discovered this site and I can see I will be spending a lot of time here!

    Bookmark   April 8, 2007 at 11:26AM
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