Before I tell you more about revocable living trusts (RLT), I want to tell you that my father was once a Probate Judge and he insisted that I draft an RLT for him and my mother. I and my ex-wife are using RLT’s. Why? Have you ever asked yourself what would happen to your family and your estate if you were in a serious accident? What if you ended up in a coma or worse? What would happen to your loved ones if you died? Even if you die with a will, managing your estate is really an expensive hassle. Professional fees will be thousands of dollars! If you pass away without a Will, it’s even worse! In many cases, the key to avoiding more pain in suffering in these cases is a Revocable Living Trust Package.
Every attorney thinks he can draft a will, but estate planning is the most complex of laws encompassing federal and state income and estate taxes and property laws. Some Internet Ads try to sell you cheap documents you only partly understand. What do they know about Tennessee law, about tax law and about your desires and your future ambitions?
You don’t want just anyone to help with your estate plan. As a former IRS attorney and Accredited Estate Planner with over 35 years’ experience, I can meet with you personally, learn your goals and express your goals in your estate plan so you will feel confident about the well-being of your loved ones. In 2017, I was one of two Tennessee attorneys selected as Super Lawyers in taxation.
If you are ready to do the right thing, use my Estate Planning Questionnaire. Then we can meet to design your personal Revocable Living Trust Package. If you need more info read on.
ESTATE PLANNING NEEDS — AT DEATH
Should you consider a will, alone, or should you use a revocable living trust as your main estate planning document? A will merely transfers your property at your death. Furthermore a “simple will” does not operate in a simple way after your death. Your executor must take the will through Probate.
WHY WORRY ABOUT PROBATE?
What about when you die? Why worry about Probate? I can tell you. I regularly assist Executors with their Probate duties. I give my Executors a checklist with over three pages of duties. Just a few: appear in Court and prove the will, provide bonds, inventories, accountings, deal with creditors, Tenncare, Social Security, IRS, banks, brokers and insurance companies, find, manage and dispose of assets, collect income, satisfy heirs, file income, gift and death tax returns and more. Why put your family through all this grief?
ESTATE PLANNING NEEDS — DURING LIFE.
While you are alive, it is not unusual to temporarily (or even permanently) lose your ability to handle your affairs as the result of sickness, accident or old age. Without planning, you will need a court-appointed guardian; a costly, embarrassing experience. What do you do?
As the Motley Fool says in The Truth About Living Trusts:
However, a living trust — a single document that combines the provisions of a will and a financial power of attorney — can offer additional asset-management muscle both while you’re alive and long after you’re gone.
For the vast majority of my clients, I recommend a Revocable Living Trust Package (RLT Package). With an RLT Package, you get a revocable living trust, back up will, durable general power of attorney and advance care plan. This package is generally the choice of the experts.
The RLT package gives you superior control of your property and your affairs, during your life and thereafter. The documents in your RLT package provides carefully designed instructions in case you lose your ability to handle your affairs temporarily or permanently.
During your life, the RLT Package:
- Efficiently manages your property
- Is easy to change
- Avoids conservatorship
- Handles your medical affairs
After you pass away, the RLT Package:
- Avoid Probate (even in another state where you own property)
- Manages and protects your property for those you love.
- Is very difficult to challenge.
- Consists of private contracts, unlike a will, which is public.
REVOCABLE LIVING TRUST
Let’s talk about the Revocable Living Trust first, followed by the rest of the RLT Package below. To understand an RLT, you must first understand trusts. A trust is a legal relationship under which you, the Grantor, give money or property to your Trustee, to manage for one or more Beneficiaries.
A revocable living trust is created during your life. To create an RLT, you, as “Grantor,” sign a trust agreement that I custom draft for you. You are usually your own trustee, which allows you to retain control as long as you are willing and able. You are also the beneficiary during your lifetime. The RLT is designed to benefit you. If you don’t want to manage your trust during your life, you can name another trustee. A trustee can be any competent adult or a company licensed to act as a trustee. A revocable living trust is revocable, so you can easily change it with a notarized amendment.
If you lose some how capacity to manage the trust or pass away, your successor trustee manages the trust according to your trust agreement. The trust agreement has almost infinite possibilities. As an Accredited Estate Planner, with over 35 years’ experience, I can help you design the trust to meet your goals.
For example, who is the best successor trustee? Your successor trustee may be a person or a corporation. I can discuss the pros and cons to help you make the best decision. Are you worried about your successor trustee’s ability to manage and invest your hard earned life savings? If so, you can specify an investment advisor to assist the trustee. You can even suggest certain investments.
After your death, your trustee may simply distribute shares to adult beneficiaries. However, the trustee can also manage and protect your property for family members or others who need it, such as minor children, grandchildren, the elderly or the disabled. You can tell the trustee how and when to spend trust assets on the beneficiaries. For example, the trust agreement can authorize the trustee to use income or assets for education of a beneficiary and can distribute half at age 23 and the rest at age 25. The trustee can make early distributions if the beneficiary does well as a student.
With protection of your assets in mind, I advise and use a “spendthrift provision,” to protect the trust property from a beneficiary’s creditors, even from a divorcing spouse.
TAXES & YOUR TRUST
Tax-wise, a RLT generally is invisible. During your lifetime, you as Grantor pay taxes on trust income, so the RLT need not file a tax return or get a tax identification number. After your death, the RLT property is generally part of your estate. A RLT can manage retirement and life insurance benefits if they are payable to the RLT, but retirement benefits paid into a trust can cause substantial income tax consequences. I can avoid such consequences with special drafting.
THE REST OF THE RLT PACKAGE
If any property remains in your name alone at your death, it will escape the trust agreement. This can be a trap since such property will have to go through Probate. So the RLT package includes a Pourover Will to transfer such property to your RLT.
Durable Power Of Attorney
Part of the RLT Package is the durable general power of attorney DPOA. The DPOA authorizes an “attorney in fact,” to act on your behalf. For example, the attorney in fact can sign contracts on your behalf and can transfer any stray property into the RLT. The DPOA works even if you lose mental capacity. The DPOA can be useful if you lose mental capacity or are simply out of town when a document needs to be signed.
Advance Care Plan
The “Advance Care Plan” authorizes people you name to make medical decisions for you. It also allows you to tell your doctor whether you want him to withhold selected treatments if you end up with serious medical conditions. For example, you can tell him that if you have terminal cancer, you do not want treatment for a second condition.
A RLT package for a married couple includes a Will, Power of Attorney and Advance Care Plan. Minimum charges are:
Simple Will………………………………… $650.00
Will with kids under age 18…………………….. $900.00
Revocable Living Trust………………… $1,900.00
Tax planning adds $500-$1,000 to the cost.
Potential Probate savings, alone, will cost several times the cost of an RLT package.
DO IT YOURSELF?
I strongly advise against drafting your own documents or trying internet forms. You get what you pay for. By the time your documents are tested, it will be too late to fix them. Do you think that an experienced estate planning attorney would want to provide cheap documents online? What do they know about Tennessee law and about tax law? These are constantly changing. The internet won’t meet with you personally and seek to understand your goals so you will feel confident about the well-being of your loved ones.
Regardless of how you plan your estate, you will need professional help for many tasks, such as filing Federal and state income, estate and gift tax returns, handling tax audits, caring for trust property, paying debts and taxes, and finally, satisfying family members. These will require filings with the Government and often entail negotiation with banks, brokers and insurance companies.
Use my Estate Planning Questionnaire to organize your information and begin the decisions needed to protect your and your loved ones’ futures. Then I will meet with you in my office to design your personal Revocable Living Trust Package. Have you asked yourself if a friend needs a RLT package.