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Lawyers/accountants love revocable trusts. What's the gain?



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amother
Papaya


 

Post Thu, Jun 25 2015, 10:18 pm
Im in my fifties and mention was made by my accountant to have a lawyer put my house into a revocable trust. He said family members will have less problems after death with probate, because trust is clearer when distributing assets, and also protects me in my senior years. How?

What are the advantages of a revocable trust? What are the disadvantages?
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Amarante




 
 
    
 

Post Thu, Jun 25 2015, 10:58 pm
The benefit is that assets don't have to go through probate as they would if there is a will. Therefore the assets can be used immediately by the beneficiaries it's less of a hassle and less expensive.

Also, you can name anyone to be the Trustee which is helpful if something happens and you are no longer able to take care of your finances. Typically spouses are co-trustees and then also a child. I am a trustee for my parents' inter vivos trust.

During the life of the owner of the trust, it can only be used for tne benefit if the owner. It has been helpful as I was able to write checks to pay for things when my father was sick.

The Trust document names the beneficiaries but the beneficiaries don't have any legal right until tne death when the proceeds are distributed. You can change the beneficiaries as often as you like. It's like a will but legally and administratively much better.

It's inexpensive to set up and well worth it if you have any assets.
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amother
Papaya


 

Post Fri, Jun 26 2015, 8:50 am
Is anything accomplished if you put only your house into a trust and have cash in the bank in your name?
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amother
Burlywood


 

Post Fri, Jun 26 2015, 9:05 am
amother wrote:
Is anything accomplished if you put only your house into a trust and have cash in the bank in your name?


That is the main thing you want to accomplish. Back accounts can be passed by beneficiary designee. In the unlikely event you need a guardian the outside assets can be placed in trust.
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Amarante




 
 
    
 

Post Fri, Jun 26 2015, 9:42 am
amother wrote:
Is anything accomplished if you put only your house into a trust and have cash in the bank in your name?


Once you have set up the Inter Vivos Trust (or Living Trust as it's popularly called), you want to make sure that all of your assets are in the name of the Trust which includes your house, your bank accounts and any brokerage accounts you may have.

You go to the bank and have them change the names on the account so that it is now the Amarante Family Trust. You add the Trustees as signatories. During your life, it's just like any other bank account as you write checks and sign your name. However, your Trustee can also access the account but during your life, they can only use it for YOUR benefit - I.e. to pay your mortgage, doctor bills or whatever else you authorize. If for some reason, you are unable to do it yourself, they can take care of expenses without having to use their own money. Think about what might happen if for some reason, you couldn't write a check or cope with figuring out bills.

This is a critical part of the estate planning because it accomplishes two goals: First, anything that is held in the name of the Trust immediately passes to the beneficiaries of the Trust and secondly, the assets of the Trust can be used you are unable to do so yourself.

If you become too ill, your Trustee can then immediately write checks to pay mortgage and other necessary expenses.

There really is no reason to leave anything out of the Trust and every reason to include everything. It's a bit of a hassle to do it because you need to fill out the paperwork but you will be very grateful to have done so - speaking from personal experience.

There is no reason to be afraid of setting up the Trust - it's inexpensive; you still have full control of your assets while you are living and you can change your beneficiaries as much as you like.

Without the Living Trust (Inter Vivos Revocable Trust), your assets would be tied up until the will was probated. Potentially a real headache for your children (assuming they are the heirs).
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amother
Burlywood


 

Post Fri, Jun 26 2015, 10:53 am
Amarante wrote:
Once you have set up the Inter Vivos Trust (or Living Trust as it's popularly called), you want to make sure that all of your assets are in the name of the Trust which includes your house, your bank accounts and any brokerage accounts you may have.

You go to the bank and have them change the names on the account so that it is now the Amarante Family Trust. You add the Trustees as signatories. During your life, it's just like any other bank account as you write checks and sign your name. However, your Trustee can also access the account but during your life, they can only use it for YOUR benefit - I.e. to pay your mortgage, doctor bills or whatever else you authorize. If for some reason, you are unable to do it yourself, they can take care of expenses without having to use their own money. Think about what might happen if for some reason, you couldn't write a check or cope with figuring out bills.

This is a critical part of the estate planning because it accomplishes two goals: First, anything that is held in the name of the Trust immediately passes to the beneficiaries of the Trust and secondly, the assets of the Trust can be used you are unable to do so yourself.

If you become too ill, your Trustee can then immediately write checks to pay mortgage and other necessary expenses.

There really is no reason to leave anything out of the Trust and every reason to include everything. It's a bit of a hassle to do it because you need to fill out the paperwork but you will be very grateful to have done so - speaking from personal experience.

There is no reason to be afraid of setting up the Trust - it's inexpensive; you still have full control of your assets while you are living and you can change your beneficiaries as much as you like.

Without the Living Trust (Inter Vivos Revocable Trust), your assets would be tied up until the will was probated. Potentially a real headache for your children (assuming they are the heirs).


I strongly disagree with you. Assets that can avoid probate by beneficiary designation are fine to leave out of the trust. A simple durable power of attorney will accomplish the paying of bills in the event the settlor is incapacitated.

I have drafted thousands of trusts and I never had the person take over the assets using the trust. Banks and brokerage firms are familiar with durable powers of attorney. States have a statutory form. When someone wants to use the trust to take over, the brokerage and banks must run it through legal. Using a durable power of attorney is a much quicker approval because you don't have to remove the trustee and set up the contingent trustee.

OP check with your lawyer if the durable power of attorney will not accomplish the same.

You can not put everything in a trust. For instance if you distribute IRA assets in trust you lose the best tax benefits for the beneficiaries.
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Amarante




 
 
    
 

Post Fri, Jun 26 2015, 11:10 am
amother wrote:
I strongly disagree with you. Assets that can avoid probate by beneficiary designation are fine to leave out of the trust. A simple durable power of attorney will accomplish the paying of bills in the event the settlor is incapacitated.

I have drafted thousands of trusts and I never had the person take over the assets using the trust. Banks and brokerage firms are familiar with durable powers of attorney. States have a statutory form. When someone wants to use the trust to take over, the brokerage and banks must run it through legal. Using a durable power of attorney is a much quicker approval because you don't have to remove the trustee and set up the contingent trustee.

OP check with your lawyer if the durable power of attorney will not accomplish the same.

You can not put everything in a trust. For instance if you distribute IRA assets in trust you lose the best tax benefits for the beneficiaries.


I am currently in a position in which I, as Trustee, am writing checks to cover expenses for my father. A Power of Attorney would be much more complicated and serve no purpose. This way, we can both handle day to day financial matters. He can write checks and I can write checks. How can you say that you have never heard anyone use a Trust in this manner when specifically one of the reasons for an Inter Vivos Trust is to enable the Trustee to use assets during the life of the person for the person's benefit.

I've never heard that it is better to use a Power of Attorney rather than have assets in a trust. Any assets not in the trust would then have to be handled with a will and be probated and couldn't be touched until the will is probated.

If there are specific assets that need to be kept out of the Trust for a limited purpose, then the attorney will advise. In my parents trust they had IRA's, brokerages, real estate and personal property and all assets were put in the Trust.

All I can say from personal experience, is that I am extremely grateful that I don't have to deal with getting the Bank to authorize transactions based on a Power of Attorney - especially when the last thing you want to deal with is even more administrative paperwork and making sure that everything is signed and authorized.

Powers of Attorney end upon the person's death which leaves things hanging.

But in terms of the original question, the reason that attorneys and CPA's advise a Living Trust is to avoid probate; to enable a person's needs to be taken care of if they are unable to do so and to make things easier in general.
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amother
Burlywood


 

Post Fri, Jun 26 2015, 2:49 pm
Amarante wrote:
I am currently in a position in which I, as Trustee, am writing checks to cover expenses for my father. A Power of Attorney would be much more complicated and serve no purpose. This way, we can both handle day to day financial matters. He can write checks and I can write checks. How can you say that you have never heard anyone use a Trust in this manner when specifically one of the reasons for an Inter Vivos Trust is to enable the Trustee to use assets during the life of the person for the person's benefit.

I've never heard that it is better to use a Power of Attorney rather than have assets in a trust. Any assets not in the trust would then have to be handled with a will and be probated and couldn't be touched until the will is probated.

If there are specific assets that need to be kept out of the Trust for a limited purpose, then the attorney will advise. In my parents trust they had IRA's, brokerages, real estate and personal property and all assets were put in the Trust.

All I can say from personal experience, is that I am extremely grateful that I don't have to deal with getting the Bank to authorize transactions based on a Power of Attorney - especially when the last thing you want to deal with is even more administrative paperwork and making sure that everything is signed and authorized.

Powers of Attorney end upon the person's death which leaves things hanging.

But in terms of the original question, the reason that attorneys and CPA's advise a Living Trust is to avoid probate; to enable a person's needs to be taken care of if they are unable to do so and to make things easier in general.


You are still mistaken and should not be giving legal advice.

You and father appear to be joint trustees - a position he willingly gave you. Many people do not want to turn over control until the moment it is necessary. This can be accomplished with a triggering power.

IRAs should never be passed via trust or will because you trigger unintended income tax consequences like I mentioned in my other post. It is a stupid way to get beneficiaries their money You rule out inherited IRAs and you don't allow the beneficiary to maximize their assets which is a stupid thing to do.

In addition many lawyers and accountants charge a fee to administer the trust when the trustor dies. This fee is typically a percentage of the assets in the trust. If you pass the assets by beneficiary designation they pass outside the trust and there is no fees. This is smart.

The durable power of attorney is an easier document to use than a trust as I explained it is a statutory form. The clerks and the legal department have dealt with thousands of these exact forms. Each trust is different and takes longer to review.

The poster asked if she could only put her house in the revocable trust. This will avoid probate. She can get the same benefits cheaper and less restrictive with a durable poa for assets with a beneficiary designation. If she wants one of her children to pay her bills at some point, she can file a power of attorney with the bank.

You address confusing probate assets with non probate assets.

Anything that can be passed by beneficiary designation should be passed outside the will.

The truth is that the house should be passed by a life estate deed with retained powers of appointment and avoid the trust and will as well. This is smart.

The power attorney does not leave beneficiary designation assets hanging at death because they belong to the beneficiary the moment of death.

Honestly, you should not give legal advice as I mentioned. You have so many things wrong with your advice.

This advice is general and OP should consult with an attorney for specific advice. Consulting an attorney is smart.
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amother
Coral


 

Post Fri, Jun 26 2015, 5:54 pm
Burlywood amother, you told Amarante not to give legal advice but then you did the same thing. Although you have a disclaimer at the end, that still doesn't negate your assertions.

There are advantages and disadvantages to having a trust, POA, life estate or any other estate planning device. There are many types of trusts, and they serve various purposes, among them Medicaid planning, tax planning, and others. It is impossible for anyone to offer specific advice without knowing all of the facts (and this obviously can't happen via an online anonymous forum).
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amother
Burlywood


 

Post Fri, Jun 26 2015, 6:12 pm
amother wrote:
Burlywood amother, you told Amarante not to give legal advice but then you did the same thing. Although you have a disclaimer at the end, that still doesn't negate your assertions.

There are advantages and disadvantages to having a trust, POA, life estate or any other estate planning device. There are many types of trusts, and they serve various purposes, among them Medicaid planning, tax planning, and others. It is impossible for anyone to offer specific advice without knowing all of the facts (and this obviously can't happen via an online anonymous forum).


She shouldn't give legal advice because she has no training in this field and she is mistaken on many points. I clarified where she is wrong.

It is very possible to offer accurate advice on trusts because most people except for the super wealthy can be pidgenholed. An experienced practitioner can select the correct form trust for the clients within minutes. There are not that much variation. This could be easily done online although I have no interest in doing same.

OP only asked about revocable trusts and limited it to her house. She was given inaccurate advice including some with disastrous tax consequences. I pointed out the serious flaws in that advice and further pointed out the administration fees at death. Why pay them?
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amother
Coral


 

Post Fri, Jun 26 2015, 6:50 pm
It is not enough to "have training in the field". If you offer legal advice and you are not an attorney, you have engaged in the unlicensed practice of law, which is a criminal offense.

True that OP only asked about revocable trusts. An attorney would get a thorough financial history and family background from OP to determine whether that would be best for her situation. It's possible that, in her situation, a revocable trust OR poa would be "disastrous". OP thought she needed a revocable trust bec. that's what her accountant--a NON lawyer--suggested. Nine times out of ten, clients are wrong about what they think would best suit their situation. That's why the meet with an attorney.
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amother
Burlywood


 

Post Fri, Jun 26 2015, 7:05 pm
amother wrote:
It is not enough to "have training in the field". If you offer legal advice and you are not an attorney, you have engaged in the unlicensed practice of law, which is a criminal offense.

True that OP only asked about revocable trusts. An attorney would get a thorough financial history and family background from OP to determine whether that would be best for her situation. It's possible that, in her situation, a revocable trust OR poa would be "disastrous". OP thought she needed a revocable trust bec. that's what her accountant--a NON lawyer--suggested. Nine times out of ten, clients are wrong about what they think would best suit their situation. That's why the meet with an attorney.


I seriously doubt anyone is going to prosecute Amarante for giving advice. It was clear she wasn't practicing law. She was giving her opinion. It is also clear it is not her field. If she were say a paralegal in a trusts and estates practice, she would know better than most attorneys My experience with clients is probably the opposite of yours. 9 times out of 10 or higher they are correct only they need refinement.

Clients are not fools. They know what legal services they need. Accountants aren't fools either and they are well within the scope of their job to point out the client could benefit from a trust or are you ready to slap cuffs on those that practice that profession also? Her accountant did mention that she should see a lawyer. I don't notice any prosecutions of accountants when they set up businesses which arguably they are practicing law.
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Amarante




 
 
    
 

Post Fri, Jun 26 2015, 7:20 pm
Not sure why everyone but me is another. Very Happy

I take it as a given that no one is actually not going to see a lawyer or doctor or other professional but make important decisions based on what is written on the internet.

The original question was why Inter Vivos Trusts are recommended and they are recommended as a way to avoid Probate which is time consuming and potentially more expensive and may tie up assets after death. I would assume the OP would then find a qualified T&E attorney to determine what is best for her situation.

As for the specifics, most of the people I know and their parents have set up Inter Vivos Revocable Trusts for the reasons that were given by me for the reasons I stated. They used an attorney well versed in elder care law/T&E law and I also met with him after my mother died. I don't know anyone who relied on a Power of Attorney nor was I ever advised by an attorney to go that route.

There are no administrative costs associated with the Trust because the Trustee typically doesn't get paid because they are a family member who is doing it as a service. I am not sure what administrative costs would be charged. If one has very significant assets, then one probably has professional wealth specialists who charge a fee but that has nothing to do with the kind of Inter Vivos Trusts that are set up by middle and upper middle class people.

The only cost is setting up the Trust. If you are appointing a third party professional, that's different but the Executor of an Estate in a will situation is entitled to money unless waived - which family members generally also do.

When I became a Co-Trustee after my mother died, there was quite a bit of paperwork setting me up with the various accounts. And I am very grateful that was done years ago. I was able to build a relationship with my father's broker, for example as well as his CPA in addition to my being able to easily write checks which was invaluable when he was in the hospital and then in a rehab center.

I come from a functional family as do my friends. Our parents have no problems trusting us not to rob them nor are they afraid of giving up control. Very Happy ETA - I can't stress enough how fortunate I am that all of this was taken care of before it was necessary - I.e. my father managed his finances completely on his own until a few months ago. It was hard enough to deal with the sudden decline in his ability to function as independently as he had but it would have been even more awful if I had to broach the subject of trusts and figuring out how to be able to pay for services he needed.

And the same reason, why it's critical to have a Durable Medical Power of Attorney before you actually need one. My father's personal physician knows me and we three are all on the same page regarding how my father wants to deal with medical issues.

Not legal advice but personal experience - my own and that of my friends. LOL My only advice is that the OP should speak to an attorney LOL LOL
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amother
Coral


 

Post Sun, Jun 28 2015, 11:01 am
amother wrote:
I seriously doubt anyone is going to prosecute Amarante for giving advice. It was clear she wasn't practicing law. She was giving her opinion. It is also clear it is not her field. If she were say a paralegal in a trusts and estates practice, she would know better than most attorneys My experience with clients is probably the opposite of yours. 9 times out of 10 or higher they are correct only they need refinement.

Clients are not fools. They know what legal services they need. Accountants aren't fools either and they are well within the scope of their job to point out the client could benefit from a trust or are you ready to slap cuffs on those that practice that profession also? Her accountant did mention that she should see a lawyer. I don't notice any prosecutions of accountants when they set up businesses which arguably they are practicing law.


Clients aren't fools, but they haven't had extensive legal training. Sorry, paralegals don't know better than most attorneys who practice this area of law, that's just silly.

I can think of several situations in which having a client simply use an account beneficiary designation and a POA, instead of transfer to a trust, could be "disastrous"; why having the client do a deed transfer to a child with a retained life estate could be "disastrous"; and why naming a trust as an IRA beneficiary may be the best course of action.

Sure, you can pay $30 for a trust form you found online, or get a POA for free without consulting an attorney, but these types of decisions tend to be far more costly in the long run.

I thought Amarante did a good job of explaining the purposes of revocable trusts.

Anon. bec. I indicate my profession
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