Any tips advice on living trusts?


#1

Any tips advice? We were quoted $2400. Do’s/dont’s? Seems like the right route but feel like I’m flying blind here. Thanks!


#2

I did mine through legal zoom. It was easy and way cheaper then 2400. They also give you access to a lawyer who we talked to on the phone before finalizing things.

Wrote a post about it- Google Dads Dollars Debts, Living trust. There are affiliate links there so if you use them I can make some cash.


#3

There is a lot more to creating a trust than just some boilerplate legal documents.

To work the trust needs to be properly funded, so new deeds need to be made to transfer the real estate to the trust. Funding letters need to be sent to everyone you have assets with.

Depending on the desired distribution of assets up death there may be more advanced considerations. I.e special needs, divorce, lawsuits.

I remember when Suzy Orman was selling her garbage trust of 400 bucks. People would buy it find out you still need a Lawyer for the deads and by the time they got done DYI’ ing there estate planning it ended up costing them more money for a worse product.

Now I know what your going to say, well michael my situation is simple so that’s why I DYI. For 20 years I have had clients parade their ”genius” children in my office.

99% of the people I meet with insist there situation is simple. ”oh our kids are thick as thieves, their best friends” and of course ”they don’t want our money” then sure enough when the client gets sick and goes to the nursing home or passing away the kids can’t get their hands on the money fast enough.

If the attorney is charging 2400 and you have real estate, that price is reasonable and on the


#4

Living trusts are oversold today. They used to be very popular because due to the low death tax credit amount, estates as little as $600,000 were subject to estate tax. That number is $11 million now. If your estate is more than that then the estate tax savings is a big issue.
There are other reasons to have a living trust, mostly to take advantage of naming a successor trustee.
Asset owned in a trust also avoid probate, but most assets avoid that any way via going directly to beneficiary or to joint property or investment owner.


#5

If you’re very high profile (or have a spouse who’s one) and/or a great amount of wealth, it’s worth it. Be sure you work with someone who specializes in these types of entities and does them regularly for clients. Even better if you can find an attorney who also specializes in whatever field and/or business you work in. Hope that helps!


#6

Two things I will always spend good money on Layers and CPA’s. (yes some are not worth the price)

I could write a book about IRS and Estate Planning disasters. I won’t even do my own tax return even though I’m trained. Why you may ask, bc ironically my professional insurance won’t cover me on my own return.

So I pay a CPA to file my tax return. Why do I want insurance, because I have seen ”simple situation.” clients win the ”IRS audit lottery ” and end up going through hell.


#7

Joint tendency and beneficiary designations don’t control how the money is distributed to the beneficiary.

I love my wife, and because I love her I’m not leaving her 3 mill cash in a lump sum. Do you know why? Because everyone in town would be hitting her up with some crazy business idea or some sob story.

Same thing with my kids, if I get hit buy a by you think I want my kids getting some huge lump some.

Avoiding probate and controlling the distribution of the estate is reason enough, irregardless of estate taxes.


#8

That is a reasonable price. Here is my experience in the distribution of my dad’s trust and my aunt’s


#9

We had a house that was not in my daf’s Trust. It almost went to probate but the judge allowed us to put in the trust. It could have gone the other way


#10

Yeah some judges are cool if there is a poor over will or if they can determine that the asset should of been in the trust. I wouldn’t rely on a judge being cool thought.


#11

We are in the process of getting a trust completed. We’re working with a lawyer & I feel the expense is worth it.

However, I want to know if anyone in the Forum knows about or has thoughts on a bypass trust vs. a QTIP trust. Originally, our lawyer was planning to do a bypass trust, but now suggests the option of a QTIP trust.

My husband is disabled, with poor short-term memory & poor judgement (I am his Rep Payee, but he isn’t conserved). If I die first, I wanted to protect my half of the trust from unscrupulous people that might try to take advantage of my husband (like a new wife). I wanted to make sure our daughter at least inherited my half of the trust (my half couldn’t be changed, but my husband could change his half). This is why we were going to go with the bypass trust.

Then the lawyer noted that there would potentially be capital gains taxes for our daughter with the bypass trust (for example, if we purchased property and added it to the trust).

However, with a QTIP trust, there would not be capital gains taxes. The only risk with the QTIP trust is that at some point in the future, the laws could change and the 11 million cap could be lowered, and then she would face capital gains taxes.

By the way, we live in California, where there is no estate tax.
I would appreciate any thoughts about which might be better - the bypass trust or the QTIP trust?
Thank you!


#12

I’m a bit confused with what you trying to do.

Do you want your half to go directly to your daughter or do you want it to be held in the b side of the trust for his benefit and care, then go to your daughter upon his passing?

When you are talking about capital gains are you referring to capital gains on death? Currently, there is a step up in value upon death so the trust wouldn’t negatively inpact your daughter.


#13

Thanks for your reply, Michael -
What I’m trying to do is to protect our assets in a trust & protect our daughter’s inheritance if I die first. I’ll be the trustee of the trust, but if I die first, other trustees have been designated (my husband is not able to manage money due to his disability). First in line is our daughter as trustee (we only have one child & she’s 21). But if husband got remarried, 2nd wife could talk him into changing the trust & potentially exclude our daughter from inheriting anything. (See the sad story of Casey Kasem’s first family https://bit.ly/2FtvcUE - of course Kasem was super rich, more than we’ll ever be, but this kind of thing happens all the time, unfortunately).

Our lawyer said this about the bypass trust: If I die first, my share of our estate would go into a special, separate trust for my husband’s benefit (until he dies) then it’s dispersed as planned.

The lawyer said that with a bypass trust, if we had assets that went up in value (like a house), that our daughter would have to pay capital gains tax on the step-up basis in the house between the time of my death & my husband’s death. This would be the same for other assets, it sounds like.

But with a QTIP trust, our daughter would not pay capital gains taxes at all. However, the lawyer admits that this is a BET that the laws won’t change. With a QTIP trust, her potential tax bill could be bigger if the laws change, but right now a QTIP would allow for no estate taxes & no capital gains taxes on the growth of the estate.

I’m confused about all this so I still may not have explained it well. I did find this info: https://cdn2.hubspot.net/hub/235518/file-897762684-pdf/docs/bpass_qtip.pdf

Looking for pros vs. cons between bypass trusts & QTIP trusts, as well as anything to look out for or be aware of…

Thank you!


#14

Had ours done a few years ago through a lawyer and I was very happy with it. It cost us $900 and she spent a good amount of her time with us discussing our needs.