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HOW LONG DOES IT TAKE TO SET UP A REVOCABLE LIVING TRUST?

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On average, it takes about 2 to 4 weeks to get the revocable living trust in place; then, it takes another few weeks to 6 months to get the trust fully funded. This is a relaxed pace; if there is an emergency, such as a terminally ill client, the entire process can be sped up.

You and your family are protected the moment that you sign your living trust document. It is effective immediately. Funding takes longer.

Funding refers to the transfer of assets into your living trust or changing the beneficiary designation on life insurance, retirement accounts, and annuities. This can take awhile because you need to send out letters of instruction and fill out forms.

It’s important that you don’t take it for granted that an asset is funded, unless you receive written confirmation that the change in title and/or beneficiary designation has been made. Sometimes paperwork disappears.

Keep a list of all your assets, designating which assets have been funded. Keep proof of your funding in the same file with all your important documents.

Proof would include a change of beneficiary statement listing current beneficiaries or a quarterly financial statement from an investment, showing the name of your trust, not your name and not joint names with a spouse. You can likely look online to confirm funding of accounts.

Just keep a copy of your most recent statements. It’s important that your loved ones know of all of your assets because there are $32.9 billion in unclaimed assets; don’t let yours be among those.

In addition, funding is essential to an estate plan that works. Your trustee and trust only control those assets funded into your trust. This is extremely important if you become incapacitated and when you die.

If you have questions about setting up and funding a revocable living trust, consult with a qualified estate planning attorney.

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Revocable living trusts are widely used and are now part on the everyday vernacular; however, if you don’t fully understand the advantages and disadvantages of setting up a revocable living trust, you are not alone.

In a nutshell, living trust advantages include:

  • Control: Using a trust permits you to stay in control during any period of disability and even after your death. Otherwise, without a trust, the courts and state law take over and you lose control.
  • Probate Avoidance: A fully funded trust avoids probate, saving your family money, time, and hassle, and keeps everything private.
  • Lower Overall Cost: A fully funded trust lowers over-all costs by avoiding living probate (i.e. guardianship) and death probate. A trust is often used to minimize or totally avoid the state and federal estate tax as well (for married couples.)
  • Convenience: Your loved ones avoid court interference, with increased convenience and reduced hassle.
  • Confidentiality: When probate is avoided, nothing is filed at the courthouse or in any other public forum. Your business stays your business.

In a nutshell, the disadvantages of setting up a revocable living trust:

  • Upfront Legal Fees: The costs of setting up a living trust are more than the costs of a simple will; however, the overall lifetime and death settlement costs are much lower.
  • Funding: A perceived disadvantage to a living trust is that your assets have to be funded into your trust. This takes filling out change in beneficiary forms, change in title forms, and filing real estate deeds. However, funding only has to be done once and it’s a lot easier for you to do it than your loved ones. who don’t really know what you own. They may miss assets or probate may take months or even years if you don’t have a fully funded trust.

If you’d like to discuss the advantages and disadvantages of a revocable living trust in your individual situation, consult with a qualified estate planning attorney.

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Yes, but no. When you have a fully funded revocable living trust, your final asset distribution is in your trust; and, technically, if you have all of your assets funded and no minor children, you don’t need a will. In this case, your trust is called a “will substitute.”

However, it is prudent to execute a pour-over-will, which is used to distribute any assets intentionally or inadvertently left outside your trust or any assets flowing into your estate at the time of your death, such as the repayment of debts or monies from a car accident or malpractice claim.

In addition, if you have minor children, the will, or the pour-over-will, is used to appoint guardians to raise and care for your minor children if you die.

If you die without a will, any assets not controlled by your trust or by beneficiary designation will be distributed pursuant to state intestacy laws and heirs, not of your choosing, may receive an inheritance.

In addition, if you die without a will and you have minor children, the court will decide who raises your children, not you.

The only beneficiary of your pour-over-will is your revocable living trust. If needed, it picks up any assets not funded into your trust, and pours them into the trust. This is done through the probate process.

It’s generally recommended that you fully fund your trust; this means that all of your assets are either titled in the name of your trust or their beneficiary designation has been changed to the name of your trust.

Because we discuss “trust funding” so often and stress titling all of your assets into the name of your trust, it’s easy assume that your trust owns the assets. In truth, the trustee of your trust owns the assets. While you are alive and well, the trustee is likely you so you maintain full control over your assets.

If you become incapacitated or die, your successor trustees own the trust assets and manage and distribute them for the benefit of your beneficiaries.

While, technically, some folks can go without a will if they have a fully funded revocable living trust and no minor children, it is not recommended. Execute a new pour-over-will anytime you update your trust.

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As you likely have experienced, getting married brings lots of changes to your estate plan, so updates are needed. As life changes, your estate plan must also change to reflect your current personal and financial situation as well as current law. As a benefit of updating, you also will benefit from newly established planning techniques as well.

If you’ve recently gotten married or are preparing to do so:

  • Consult with a Qualified Estate Planning Attorney

No doubt about it, you and your new spouse will need to totally revamp your estate plans when you get married, or, in preparation of marriage. This is not a path to go alone.

  • Health Care Documents

You likely want to name your new spouse as your agent under your health care proxy. Your agent can make health care decisions on your behalf if you cannot. In addition, discuss your wishes for a living will and organ donation with your spouse; then, get your wishes in writing.

  • Financial Documents

Consider naming your new spouse as your agent under your financial power of attorney and as a trustee of your revocable living trust. As in all estate planning documents, name contingent trusted helpers as well; don’t just name your spouse.

  • Passing Financial Assets

If your spouse is dependent upon your income and assets, be sure to make your spouse a beneficiary of your will or trust, retirement plans, life insurance, pensions, and annuities. However, if you have children from a previous relationship, consult with a qualified estate planning attorney to balance these interests; otherwise, you might unintentionally disinherit your children.

  • Final Arrangements

Chat with your spouse about what is important to you regarding final arrangements. Do you want the body to be buried, cremated, or both? Do you want certain people invited, a specific clergy person to speak, or a special song to be sung?

  • Love Letter

Write your spouse (and other loved ones) a love letter and keep it with your estate planning documents and other important papers. It will create a lasting legacy and, likely, become the most treasured inheritance.

If you’ve recently gotten married or are about to, consult with a qualified estate planning attorney to update your estate plan.

 

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Thank you to all the Veterans who have served and continue to serve our country, as well as to the families of Veterans! Through your sacrifices, you have given the rest of us peace and freedom.

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The heartbreak and financial crisis of divorce strikes 50% of all first marriages and 60% of all second marriages. It’s normal to be concerned about protecting your children’s inheritances from divorcing spouses. As a bonus, you can protect their inheritances from creditors and predators, as well as divorcing spouses.

The key to protecting your children’s inheritance is to pass the inheritance in a lifetime individual trust share. The trust is available for your child’s health, education, and maintenance but can’t be taken by divorcing spouse, creditors, and predators.

If you pass an inheritance outright and the assets go into your child’s individual name, he or she is likely to commingle them with the spouse so the inheritance becomes marital property; and, even if kept separate, they can be considered by the judge in property distribution during divorce.

In addition, creditors such as in a bankruptcy, malpractice claim, business failure, medical crisis, or car accident lawsuit have the opportunity to seize your child’s assets when the inheritance is in the child’s name.

Predators are unscrupulous friends, relatives, financial advisors, charities, conmen, and clergy who pounce on heirs. Your child can blow off the predator by explaining that his or her assets are all tied up in trust.

For the maximum asset protection, name an independent trustee of the trust or name your child beneficiary as a co-trustee with a professional trustee such as a CPA, trust company, or estate planning attorney. If the child serves as his or her own trustee alone, the judge may force assets out of the trust. It’s not worth the risk.

The best way to give and the best way to receive an inheritance is in a lifetime, asset-protected, individual trust share. To set this up for your children and avoid their inheritances being taken by divorcing spouses or predators, consult with a qualified estates planning attorney.

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If you have young children (i.e. children under the age of 18), you need to carefully plan your estate to protect and provide for your children. You’ll need the basic estate planning documents to protect yourself as well, with additional documents and consideration for your children.

  • In your will, you name guardians to raise your children if you die. Name back-up guardians as well in case your primary guardians are unable or unwilling to serve when needed. Be sure to ask permission before naming them; it’s a huge responsibility and you want your children to be wanted.
  • Don’t distribute assets to your minor children in a simple will. Children are unable to inherit and if you try, the court will intervene and take over. In addition, the children will get their full inheritance when they turn 18, which may not be a good thing.
  • Instead, provide individual lifetime trust shares for your children in a revocable living trust. These assets will be available for their health, education, and maintenance but can’t be taken by future creditors or divorcing spouses. Your children can serve as co-trustees as they get older and learn about managing money, earning a living, and living within their means, with progressive levels of trustee responsibility.
  • Execute a first responder authorization which appoints trusted friends and neighbors to stay with your children in an emergency, until your named guardians arrive.
  • Because your will is only effective if you’re dead, you also need to appoint stand-by guardians in a separate document. This guardianship authorization is effective if you are incapacitated, but alive, and unable to care for your children.

If you have young children, consult with a qualified estate planning attorney to best ensure that their needs are met and they are protected.

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As long as you have testamentary capacity (i.e. you’re mentally competent), you can make changes to your will. You can change it a little, change it a lot, or completely revoke it, any time you want.

However, it is imperative that you work with a qualified estate planning attorney so that your changes are legally valid and well understood by your executor, the courts, and your beneficiaries.

In the “olden days” (i.e. pre-computers), small changes would be made via a “codicil.” A codicil is a small change, an amendment. Wills used to be a zillion pages long and hand written or type written. To avoid re-writing or re-typing the entire will, a codicil was drafted.

Multiple codicils could be confusing or even misplaced and, thus, were ineffective.

Now, in the computer age, codicils are rarely used. The entire will is redrafted on the computer, easily reprinted, and re-executed.

Both a codicil and a new will must be legally executed in order to be legally valid. If your will is not executed legally, it has no value and is as if you have not made any change.

Typically, your will must be signed by you at the end of the document, witnessed by two adult witnesses, and notarized.

To best ensure that your will works, meaning that it does what you want it to do:

  • Never make any handwritten comments on the documents.
  • Make updates every three to five years or sooner if your spouse dies, you get married or divorced, your executor becomes disabled or dies, you move to a new state, or you have a new child in your life.
  • Always work with a qualified estate planning attorney; there is a class action lawsuit in California now pending wherein a will downloaded from LegalZoom wasn’t properly executed; and, therefore, it wasn’t legally valid.

If you’d like to make changes to your will, you have the power to do so. Consult with a qualified estate planning attorney to best ensure that your changes are effective.

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You should own your property in accordance with your needs, goals, and up-to-date estate plan, designed by a qualified estate planning attorney. Proper asset ownership is a key to a successful estate plan; and, most people don’t own their assets properly. If you have a revocable living trust, fund your assets into the trust.

If you do trust-based planning, your estate planning attorney will tell you to fund all of your assets into the name of your trust. This is the only way your trust will work and won’t be just a pretty pile of papers in your desk drawer.

How to Fund Your Trust

For example, you change the name on your bank accounts and investment accounts, to the name of your trust.

You transfer the title of your house to the name of the trust, and change the beneficiary of your life insurance policies, annuities, and retirement plans to the name of your trust.

Assets Your Trust WON’T Control

Your trust can only control assets in its own name; therefore, your trust does NOT control:

Assets in your individual name
Assets you own jointly with someone else
Tenancy by the entireties assets
Assets with a beneficiary designation, unless the title and beneficiary have been changed to the trust
Assets with a “pay on death” or “transfer on death” designation
Assets with a “in trust for” designation
Assets in your spouse or children’s names
If you’ve done estate planning, specifically trust planning, make sure that your plan actually works by making sure you own your assets properly. For guidance on your individual situation, consult with a qualified estate planning attorney.