Posts Tagged ‘wills’

Revocable living trust and pour over will. Why do I need both?

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The Question. Why do we have a pour over will when we already have a revocable living trust in our estate plan? Isn’t that repetitive?

Let’s try to answer this age old question.

Quick clarification. Your Trust is the Boss. Your trust is your featured estate planning tool for moving your assets to the next generation. Your Pour over will (Called pour over because it names the trust as beneficiary) should be a smaller player in the whole scheme of things, but it is a necessary role player.

For those folks with one, after you develop your trust document …you add your assets into your trust. This is accomplished by changing the title of the property into the name of the trust or by setting the trust in as the beneficiary of a certain asset. (IE: life insurance). Then, when you die, the assets stay in the trust avoiding the need for a probate of the assets it holds on your behalf.

Here are a three reasons why a pour over will is still necessary….

  1. Guardians. A pour over will can do an important things that a living trust document cannot do. If you have minor children and want to name a guardian for them — someone to raise them if you and the other parent die before they reach adulthood — you must use a will to do that.

 

  1. Human Error. Lets face it. We all make mistakes. One big reason to write a pour over will is that a living trust covers only property you have transferred, in writing, to the trust. Almost no one transfers everything to a trust. And even if you do scrupulously try to transfer everything, there’s always the chance that you’ll acquire property shortly before you die and not have time to put it into your trust. If you don’t think to (or aren’t able to) transfer ownership of an asset to your living trust, it won’t pass under the terms of the trust document. Anything not transferred into your trust prior to your death could instead be subject to probate and distributed under your pour over will. In short, a pour over will acts as a safety net and sends a “forgotten asset” back into your trust.

 

  1. Satisfying the rules for paying a decedent’s last bills. The law says that an estate pays the last bills. The pour over will contains language that passes that statutory obligation from the Personal Representative of an empty estate to the trustee under the trust. This language, coupled with special language accepting the responsibility under the trust, make the bill paying process seamless.

 

Of course, there is more to all of this. The key for anyone with a trust is to seek counsel. Get your questions answered. Also know that a trust is a beautiful thing, but it never acts alone. It always needs the reliable sidekick called a pour over will in order to accomplish its mission.


Choosing an Attorney for Your Estate Planning

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A recent Caring.com article by Susan Kostal, Senior Editor of the Legal channel, tells us who to look for when searching for a Trust, Wills, and Estates Attorney.

The article is a great read for people wondering how to find a qualified Trust and Estates Attorney. Most of the advice in the article is good quality common sense stuff.

Ask Your Friends

According to the article: “If you’re unsure how to find the right lawyer, start by asking friends for recommendations. Who have they used — and liked? You can also ask other lawyers who they would use.”

Look the Attorney in the Eye

Attorney Philip Feldman, head of the trusts and estates practice at Coblentz Patch Duffy & Bass in San Francisco is quoted in the article.  Feldman states that “Clients need to get a sense of who their lawyer is going to be. It’s important to look someone in the eye. This should be one of the most personal professional relationships you’ll have.”

Cost Expectations

Even more excellent advice from Ms. Kostal regarding fees:  “An average flat fee for a basic revocable trust plan may run from $2,500 to $10,000, depending on the complexity of the trust and the size of the estate. Flat fees, however, aren’t necessarily a better deal than hourly rates. And the most expensive lawyer isn’t always the best.

Ask at the outset for the lawyer’s rate. It’s better to know upfront, so that neither of you wastes the other’s time if there’s a huge discrepancy between what an attorney charges and what you’re willing to pay. Generally, the more assets a person has, the more complicated his estate is likely to be, and the more it will cost to put together a thoughtful estate plan.”

We think the advice provided by the article is right on point and recommend that you take a few minutes to read it.

For more information on Trusts: Articles on Trusts and Estate Planning.

 


Why Use an Attorney for Your Will When You Can Download One for Free?

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There are certainly forms out there on the internet or on a book store shelf that just might work for you. However, there is a chance that they will not work for you.  Your heirs can really get burned when these do-it-yourself wills fail to work as intended.

Some time ago, two wonderful new clients came into our office with a homemade trust for us to review. The trust form had many blanks the form’s provider had incorporated into it. Many of the blanks were left unanswered. Unfortunately, when it comes to money mixed with the emotion of losing a loved one, it is very easy to disagree. Those open blanks made the trust so vague that a court would have been required to sort out the language if the trustee and beneficiaries disagreed on what to do. As anyone can tell you, the cost of airing issues in court can consume your assets in no time.

It also became clear that our new clients had no one to assist them with how to use the homemade trust after they bought it from the vendor.  In fact, the vendor made it clear it could not offer legal advice with its form. As a result, the homemade trust was not properly funded.

“Funding” is a term used to describe the process of transferring your property into your trust. Because they had no one to assist them with this, they failed to fund the trust with assets that should have been placed into it while funding the trust with other assets that might have been better off going directly to a plan beneficiary rather than to the trust. These innocent missteps could have spelled trouble and cost a great deal of money after they passed. Luckily we were able to get them on track.

An attorney brings you the experienced advice that only he or she can provide after working in the law area for a number of years. A good quality estate planning attorney spends the time it takes to get to know you and find out what your goals are. Then, after that is determined, the attorney carefully drafts the documents needed for you to achieve those goals. Once the documents are drafted, he or she explains them to you and then assists you with the execution of your plan.

While it is very important to have your estate plan documents drafted correctly, you do not hire an attorney for the documents alone. It is very difficult to assure your plan will take care of you and your loved ones without an attorney’s advice and guidance. In short, the money you use to work with a qualified estate planning attorney is money well spent.