Revocable living trust questions

[bigbikerrick]

Hi Folks, I thought I would ask the group's opinion, as there are many folks here with alot of "life experience" . about 20 years ago  we had a trust created for us, since a guy we were using as a financial planner suggested. At this point we have to either update our trust since most things in it have changed.I only had 1 Guzzi when I had the trust made, and now there are another 2 in the stable, so they need to be added to the trust( Guzzi Content) Every year around tax time, It comes to mind that we need to update, redo or dissolve our trust. When we had the trust made ,the guy told us it was to protect from going through probate, in case my wife and I died. He also mentioned it would protect our home, etc. from being included in a lawsuit, I think.
We have a pretty simple personal financial picture, Im retired, wife still working for a few more years(mostly for health insurance) we have one son, 31 years old. my questions are, what are the group's opinions of revocable living trusts in general? Are they a good thing to have? Is it something we can re do ourselves, using something like legal zoom, or another type of service like that? Ive been tempted to attend one of those "trust seminars" that are offered in the paper, but have not gone, for fear its a hard sell deal, like one of those timeshare presentations, etc. where they hassle you to buy their services. Ive had some folks tell me all one needs is a will, and thats it. all advice, and opinions much appreciated, as I will soon be sitting down with my wife, and Turbotax, and the Trust thing will once again be discussed.
Thanks, Rick.

[Lannis]

Hi Folks, I thought I would ask the group's opinion, as there are many folks here with alot of "life experience" . about 20 years ago  we had a trust created for us, since a guy we were using as a financial planner suggested. At this point we have to either update our trust since most things in it have changed.I only had 1 Guzzi when I had the trust made, and now there are another 2 in the stable, so they need to be added to the trust( Guzzi Content) Every year around tax time, It comes to mind that we need to update, redo or dissolve our trust. When we had the trust made ,the guy told us it was to protect from going through probate, in case my wife and I died. He also mentioned it would protect our home, etc. from being included in a lawsuit, I think.
We have a pretty simple personal financial picture, Im retired, wife still working for a few more years(mostly for health insurance) we have one son, 31 years old. my questions are, what are the group's opinions of revocable living trusts in general? Are they a good thing to have? Is it something we can re do ourselves, using something like legal zoom, or another type of service like that? Ive been tempted to attend one of those "trust seminars" that are offered in the paper, but have not gone, for fear its a hard sell deal, like one of those timeshare presentations, etc. where they hassle you to buy their services. Ive had some folks tell me all one needs is a will, and thats it. all advice, and opinions much appreciated, as I will soon be sitting down with my wife, and Turbotax, and the Trust thing will once again be discussed.
Thanks, Rick.

I have SOME life experience, I've paid attention to my financial planning, it's working so far, I update my will as necessary, have a good lawyer and financial adviser, etc.

But I've never heard any reason why I should have a "trust" of any sort?   I'm not in business so I don't need to limit liability with a corporation, my family affairs are not at all involved, my boys will get whatever I've got when I'm gone, and I don't have enough investment income to shelter it in Liechtenstein or the Cayman Islands.

So what are they for and why do you have one ..... ?   Must be some good reason I haven't thought about .... ?

Lannis

[LowRyter]

 :pop

[PirateDentist]

My understanding is that any assets in the trust are not something that can be touched if you are sued for some reason or other.  Our trusts, one for my wife and one for my self, will create trusts for the kids as the assets are transferred from us to them.  Again, I would suggest leaving those assets in their trusts because they are protected.  You are also not suppose to have to go through probate with a trust.  Because your trust is revocable you can change it at any time.  Hope this helps.  P.S.  We live in Illinois and some states my have different rules.

[wrbix]

Major advantage is to avoid the inevitable delay and paperwork headaches of Probate for your successor(s). Protection of assets from law suits is variable

[Gliderjohn]

If important to you a trust allows your assets to stay private. When a will is probated that information is open to the public.
GliderJohn

[bigbikerrick]

Hi Lannis, re;
So what are they for and why do you have one ..... ?   Must be some good reason I haven't thought about .... ?

Im kinda wondering the same thing, Lannis, Probably to avoid probate is the reason, I think.
Rick.

[inditx]

Trusts clearly outline your wishes as to whom to bequeath what to without probate and delays of court, paperwork etc.. as has been said here already. They also prevent or at least strongly dissuade any contesting of wills and such.

The other thing it does is allow the purchase of certain firearms, suppressors and the likes without having to gain approval from the highest local law enforcement office. Again, states vary in these things but your local attorneys know.

I would recommend a good attorney and not count on legal zoom etc. I suspect legal zoom or the like would not ask nor would you want to divulge your most intimate financial details to them. And more likely than not, they would not be along to help or support at your demise should questions/problems arise with it's execution.

I am not a lawyer and I may or may not personally know about firearms or suppressors and such things.   :-\

[bigbikerrick]

If important to you a trust allows your assets to stay private. When a will is probated that information is open to the public.
GliderJohn

Im not really concerned about the privacy issue, John, but if a trust will make things easier for my son when my wife and I are gone, then its worthwhile, if not, who knows....
Thanks Rick.

[bigbikerrick]

Trusts clearly outline your wishes as to whom to bequeath what to without probate and delays of court, paperwork etc.. as has been said here already. They also prevent or at least strongly dissuade any contesting of wills and such.

The other thing it does is allow the purchase of certain firearms, suppressors and the likes without having to gain approval from the highest local law enforcement office. Again, states vary in these things but your local attorneys know.

I would recommend a good attorney and not count on legal zoom etc. I suspect legal zoom or the like would not ask nor would you want to divulge your most intimate financial details to them. And more likely than not, they would not be along to help or support at your demise should questions/problems arise with it's execution.

I am not a lawyer and I may or may not personally know about firearms or suppressors and such things.   :-\

Oh Wow, I wasnt aware of the firearms thing....must be for fully auto weapons? My neighbor has an Uzzi, and he told me he had to get something signed by the local chief of police.I think it was very expensive, too.
Rick.

[inditx]

Actually, anything considered class 3 would be covered but the trust can also bequeath as per your wishes for whatever is included, land, vehicles, etc. Even charitable type vehicles can be included.

And yes, this prevents having to ask for local law enforcement approval and I've heard in smaller towns, that may or may not be an automatic approval.

Just saying'.

inditx

[chuck peterson]

I thought revo and irrevo trusts were meant to avoid the tax man for the next generation...

[PeteS]

I am not sure of the differences in terms between a revocable and irrevocable trust are but many people create irrevocable trusts to preserve their assets for their heirs if they have to go into assisted living. Otherwise the nursing home can claim most of them until they are spent and Medicaid takes over. Some years ago the law was changed so the trust had to be created at least 5 years before someone had to go into a nursing home otherwise the assets are not protected. Real estate can be entered into the trust and would also be protected from the nursing home but unlike cash, it  will be subject to capitol gains tax when transferred to the heirs.

Pete

[Gliderjohn]

Quote from bigbikerrick:

Im not really concerned about the privacy issue, John, but if a trust will make things easier for my son when my wife and I are gone, then its worthwhile, if not, who knows....

I am currently the trustee for a fairly involved estate. Yes, the trust makes going through the system easier but how difficult carrying out the trust is, is up to you. The person's estate that I am trustee for died unexpectantly and had many investments, vehicles and a couple of properties. The records of all these things were not centralized or organized and it has taken me a large amount of time and hassle to locate important documents, etc. and I am still afraid I may have missed something. Please have your stuff organized and in one central location that is known to the trustee otherwise you are not doing them any favors.
GliderJohn

[Triple Jim]

My parents set up a revocable trust years ago.  As I understand it, if you buy a vehicle, rather than change the trust, you just need to title the vehicle in in the name of the trust, so the trust owns it.  If you didn't do that, you should be able to transfer the vehicle, house, etc., into the trust's name.  In the case of a motorcycle or car, you can get a new title for it.  A house would need a new deed.

Same disclaimer:  I'm not a lawyer.

[Lannis]

Trusts clearly outline your wishes as to whom to bequeath what to without probate and delays of court, paperwork etc.. as has been said here already. They also prevent or at least strongly dissuade any contesting of wills and such.

Thanks!   When my grandmother (1996) and my mother (2011) passed away, we kids handled each of their estates.   

They had good, lawyer-generated wills, and there was no trouble at all about their estates, disposition of their assets, insurance payouts, etc.   The probate cost was very low (HAD to be less than setting up a trust), and it was all cleared and done in a short time.   

So a "trust" is probably for something that's above our family's pay grade and social stratum .... including me.   I've got a pretty simple will!

Lannis

[bigbikerrick]

Quote from bigbikerrick:
I am currently the trustee for a fairly involved estate. Yes, the trust makes going through the system easier but how difficult carrying out the trust is, is up to you. The person's estate that I am trustee for died unexpectantly and had many investments, vehicles and a couple of properties. The records of all these things were not centralized or organized and it has taken me a large amount of time and hassle to locate important documents, etc. and I am still afraid I may have missed something. Please have your stuff organized and in one central location that is known to the trustee otherwise you are not doing them any favors.
GliderJohn

Thanks John, Thats excellent, common sense advice. Rick.

[bigbikerrick]

My parents set up a revocable trust years ago.  As I understand it, if you buy a vehicle, rather than change the trust, you just need to title the vehicle in in the name of the trust, so the trust owns it.  If you didn't do that, you should be able to transfer the vehicle, house, etc., into the trust's name.  In the case of a motorcycle or car, you can get a new title for it.  A house would need a new deed.

Same disclaimer:  I'm not a lawyer.

Yes, Jim, what you describe, is exactly how vehicles bought/sold need to be processed. Problem is most of us dont keep that up to date, I need to get busy on that, Question is is probate really a bad thing that should be avoided with a trust, or is it really no big deal, and if you have a decent will, that is all you need ? im not sure...
thanks Rick.

[ChuckH]

The other official document you might want to consider is the one that specifies your "Health Care Representative".  It will appoint the person who will have the capability/responsibility to answer questions and make decisions concerning your medical treatment in the event you are incapable of making them yourself.  It goes without saying that you and this person should have some serious, heart-to-heart discussions about your desires concerning end of life decisions.

[bigbikerrick]

I thought revo and irrevo trusts were meant to avoid the tax man for the next generation...

Im not sure, Chuck, maybe . would it possibly protect my son from paying excessive estate taxes? Im not sure.
Rick.

[Dilliw]

The trusts were more popular in the past and still are depending on what state you are in or how big your estate is.  The feds have moved the exclusion from $650k in 1999 to $5.43M in 2015 and most states have dropped the "pick up" tax, so in most cases a simple will covers it.

Your trust was probably done a long time ago.

[bigbikerrick]

The other official document you might want to consider is the one that specifies your "Health Care Representative".  It will appoint the person who will have the capability/responsibility to answer questions and make decisions concerning your medical treatment in the event you are incapable of making them yourself.  It goes without saying that you and this person should have some serious, heart-to-heart discussions about your desires concerning end of life decisions.

Excellent point, Chuck!  I believe you are referring to a "medical power of attorney" that is part of my trust, as well as "legal POA" my mother had those documents , and they helped immensely when she had an unexpected stroke, that left her incapacitated. The legal POA enabled me to instantly take care off all her business, and health insurance/medical bills crap just as if I was her.
those 2 documents were a Bigtime help!  Thank you, Sir. for pointing that out.
Rick

[bigbikerrick]

The trusts were more popular in the past and still are depending on what state you are in or how big your estate is.  The feds have moved the exclusion from $650k in 1999 to $5.43M in 2015 and most states have dropped the "pick up" tax, so in most cases a simple will covers it.

Your trust was probably done a long time ago.

Yes, my trust was done a long time ago, My assets are no where near those limits you stated, what is the Pick up tax?  Is that an estate tax?
Thanks Rick.

[Dilliw]

Pick up tax was a tax that the States added to the federal tax.  Most are eliminated but here's an up to date list:

http://www.nolo.com/legal-encyclopedia/state-estate-taxes.html

[bedevil]

I can identify with you. We set up trusts originally on the advice of a planner we were using at the time and I had the same vague feelings every year that I should look at an update. The trusts for my wife and I were originally done in 1996. After procrastinating for years we just completed the update in November, so the process and reasoning is somewhat fresh in my mind. So here comes my take on it, but bear in mind I am not a lawyer so this will be simplistic.

One reason our trusts were originally set up was, as someone else put it, to "avoid the tax man", or at least limit his take. That's no longer the case for us. Federal estate tax exclusions are now so high all but the wealthiest people won't pay any estate taxes to Uncle Sam. That's not necessarily true for the states, since each has different thresholds. Based on this, I figured our lawyer might tell us the trusts were no longer necessary, but he recommended we update them and leave them in force. The big reasons to do so were:

1. As others have mentioned the trusts allow you to avoid probate. I don't understand exactly how probate works, but the trust apparently allows you to avoid some significant complexities and make funds available to your heirs earlier.
2. It provides a measure of protection for your children if your surviving spouse remarries and attempts to leave all the assets you helped accumulate to his/her new spouse rather than your kids. When we did our trusts this was on my mind. A good friend of mine at the time was in the middle of a lawsuit with his much younger stepmother. His father, a fairly recent widower with sizeable financial assets, at age 67 had married the 26 year old daughter of his best friend (soon to be former best friend) and promptly dropped dead a few months later. Guess who inherited everything!
3. It can control how your kids get your money if you and your wife pass at the same time. Rather than them getting everything at your passing and promptly blowing it on frivolous stuff at a young age you can control how much of the estate they get access to at different ages so that the last of it doesn't get to them until they are presumably more mature about handling money.

There may be other reasons but those are the ones that stuck out to me. So, having made the decision to continue with the trusts, lots of stuff had to be updated. The main thing is that people who were designated with responsibilities to manage the trust had to be updated, and a few changes brought upon by new laws needed to be incorporated.

Anyway, that's my take. I'm sure we have a least a few Guzzi riding lawyers who lurk here and can provide a better explanation.

[rocker59]

Im not really concerned about the privacy issue, John, but if a trust will make things easier for my son when my wife and I are gone, then its worthwhile, if not, who knows....
Thanks Rick.

A lady I knew died of cancer at a relatively young age.  She had one daughter.  Probate took two years because she did not have her affairs in order.  In that time, the daughter couldn't legally do anything with her mother's property.  Renewing car insurance and homeowners insurance was a big hassle, since the owner was dead.  The daughter couldn't afford to make payments on the house, but couldn't sell or refinance it, either.  It was a mess.

Another person I know had parents with trusts.  The trusts meant that the property was pretty much immediately dispersed, and there was only some minor issues between family members over a few personal items.  It worked very well, and everyone was happy with the division of assets.
If you care about your family, and you have any property, you should have your ducks in a row.  A trust makes it that much easier for your successors.

[Stormtruck2]

Difference re revocable and irrevocable trust.

Revocable can be dissolved by the grantors (whomever set the trust up)

Irrevocable cannot be dissolved except by court order or death of the grantor, or at a  time stated in the formation documents. You cannot set up a perpetual trust. Usually the trust will dissolve and assets disbursed after the death of the next or second generation descendants of the grantor. Irrevocable cannot be touched in most cases or counted as an asst in divorce proceedings or other lawsuits. 

[Kentktk]

This Lady explains why better than anyone.
http://www.suzeorman.com/blog/why-everyone-needs-a-living-revocable-trust/

[Triple Jim]

Although they're generally a very good thing to set up, there are a couple cases in which a revocable trust isn't good.  For example, if I inherit a house, its basis becomes the current market value.  Then if I sell it for that amount, I don't pay capital gains tax.  But if it's in a revocable trust and I become trustee when the original trustee dies, I now have the house, but its basis is the original purchase price.  Then if I sell it, I pay capital gains tax on the difference between the selling price and the original purchase price.

[ChuckH]

...... Please have your stuff organized and in one central location that is known to the trustee otherwise you are not doing them any favors.  GliderJohn

This is a very good point.  In our case, that information is in an Estate Organizer -- one, 4", three-ring binder with many different sections.  Each section contains specific information (with copies) on our Wills, Power of Attorney, Insurances, Trusts, Investments, Real Estate, contacts, etc, etc.  All sections have written instructions on "next steps" to be taken.  Sections that contain a lot of "Lawyer-speak" also have a page that describes in normal words what is being said and what needs to be done.  The contents are reviewed every three or four years and adjusted as necessary.  The book is kept in an unlocked, but shut, fire-proof safe. 

Our son is our Executor.  We are trying to make his job of clearing up the estate as easy as possible after our deaths.