The Living Trust War
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by: ryshep13@gmail.com
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The living trust is a powerful legal tool, if it is written well and used properly. Should I use one, you may wonder? Some prominent attorneys advise their patrons to avoid living revocable trusts. While other attorneys give seminars on living trusts saying if you don't have one your hair will fall out, your teeth will rot, and your kids will hate you. Insurance salesmen proclaim that you don't have to pay a lot for a trust, because he has got a special price on the documents when you buy insurance. Nearly all of the battles that take place in the living trust wars are over two main subjects; the probate and the need for a living trust. The fight over living revocable trusts persists as lawyers, trust promoters, insurance agents, and senior advocacy groups all hurl stones at each other. They would all be well to consider it. A living trust will avoid probate in all 50 states, and it is very useful, the trust promoters are right. Regrettably, many who respond to the hard sales tactics from the living trust seminar attorneys, salesmen, or insurance agents don't really avoid probate with their living trust. The high priced attorneys scream that the public is being duped, and they are right because there are those people who have living trusts that don't avoid probate. So here are the skirmishes in the living trust war. First, does the living trust avoid probate? Subsequently, should probate be avoided?nnProbate isn't an evil disease. Instead it is a significant legal instrument. But, the horror stories you have heard about probate, unscrupulous attorneys, and pushy promoters are mostly true. Unless you have a legal reason to make use of probate, you should try to steer clear of it. To sort out all the information that is thrown at you and make informed decisions, you must understand your legal options. There is an important caveat that you must consider if you want to pass as much as possible to your family without any estate taxes.nnIt isn't enough to just have a trust. You should be educated on using the trust during your life and how it avoids probate. It isn't hard to understand and use, but someone has to take the time to train you. Because your lawyer, insurance agent, and or other promoters usually don't make the effort to teach you once they have your initial payment, problems arise. The lawyers are correct when they say it is a waste of money to get a trust, unless you know how to use a trust and what probate is for.nnThe court procedure that a family goes through to get legal authority to sign dad's name when he is dead is called probate. His signature is required to sell the house, to withdraw the savings, to get into the safe deposit box, to sell the stocks, and so on. He can't sign, he is dead, and so who has authority to sign in lieu of him? The probate proceeding allows the court to grant the personal representative (executor or executrix) the authority to sign of behalf of the deceased. Before the court grants this authority, it must be satisfied that all the debts have been paid, and the heirs are protected, as dictated by the will if there is one.nnA probate proceeding is needed, whenever an asset is held by a deceased person and the person's signature is required to transfer the asset. nThe living trust avoids probate by providing the family with a "legal loophole." When you establish a trust properly and use it the right way, it becomes a legal entity that can own your property such as stocks, bonds, bank accounts, houses, etc.nThe trust document directs how the manager or "trustee" of the trust should take care of the property the trust owns, and the document requires the trustee is to use the property and all of the generated income for the "beneficiaries" benefit. As a rule, you will name yourself and your heirs as the beneficiaries and the trustees of the trust. Thereby, you control the trust property and benefit from it, but technically you don't hold it. Your property is in the possession of your trust. Consequently the owner of your property won't die when you do. Just the manager has died. Your trust will define who takes over when you die, your spouse, one or more of your children, your parents, your banker, or whoever you choose will take over as trustee. The manager will sell your property and split the proceeds up between your heirs, or use it to benefit your family depending on what you have directed them to do.nnBecause a dead person doesn't own your assets, none of them will have to be probated. Your new trustee will have complete charge over the trust's assets and can sell them or manage them without any court order. A trust performs without difficulty. Probate isn't needed. At your death if you have not funded the trust there will be a probate because your name is on the bottom line of your assets. The court will have to grant your heirs authority before they can sign your name. Sure, your name is actually on the trust's assets, but only as the trustee, and the laws governing trusts automatically give the new trustee power to sign as trustee after you die or resign.nnImagine that you are running a company when you administer your trust. Even though creating a trust is very different from creating a company it makes a good comparison. On the death of IBM's leader, each of IBM's assets don't require probate. The laws say that a new president can be appointed and the new president will have full power over all of the company's assets, at the death of a president. In a trust, a similar procedure occurs. The new trustee is appointed, and no probate is required. Most people who establish a trust never follow through and make sure all of their assets are "owned" by their trust, so that probate can actually be avoided. Even though there is a trust, probate is not avoided. As a result, attorneys cry that trusts don't work they are a fraud. When living trusts aren't managed properly or drafted properly they can't deliver the results that are promised, but that doesn't make them bogus. Attorney drawn trusts may fall short as well as trusts given to you by the insurance agents and promoters. Some lawyers just "forget" to tell their clients how the trust has to be used in order to avoid probate. Unfortunately, a lot of the insurance agents, promoters, and even attorneys just don't understand well enough to instruct you.nnBesides having the know how to use the trust, you must also get a well drafted trust that conforms to the tax laws. Groups such as AARP and others have stated that less than five percent of lawyers can draft a living trust properly. IF it is well drafted and you utilize it right, you can avoid probating your trust. Ought you to avoid probate is a more difficult question to answer. Somebody can use probate to their benefit in quite a few ways. The probate order can give you some tax advantages in rare cases, it can cut off the estate's liabilities, settle property disputes. The probate estate has the ability to act as a receptacle for insurance and government assistance payments which a trust cannot be receive. In states that have updated their probate laws, probate is not the monster it is often made out to be.nnThe United States has the Uniform Probate Code which is put in place to standardize and streamline the probate process throughout the states. It has been legislated in some form or other by most states. Unfortunately, even in the states where the Code has been adopted, probate is often still a nightmare, time consuming, and very expensive for many families. Subsequent to dad's death, the lawyers, among others, sometimes take advantage of mother and the children who are in a weakened position. When a family member dies, probate is a primary way through which mom and the kids can be swindled.nnThe majority of people can and should avoid the probate process. Yet, when probating an estate will work for the family's benefit, by all means use the probate tool. Even in cases where the living trust is properly in place and being used, a probate can still be conducted on a small scale, while most of the estate passes through the trust and avoids probate. Despite the fact that there is a trust, probate can be a good alternative.nnWhen all is said and done, the living trust is a powerful estate planning tool. When mom or dad become incompetent and can't handle their business affairs or when a family member dies, a trust can give your family big benefits, if it is drafted properly and used properly. Don't blindly rely on your insurance agent, attorney, or any promoter to take the actions necessary to protect your estate. The key to getting the promised benefits from a living trust is to become educated about how to use a living trust. You need to educate yourself about living trusts if you want to get the promised benefit from your trust.nnLee R. Phillips and Kristy S. Phillips are attorneys and authors of the popular book, Guaranteed Millionaire - Using the Law to Protect Yourself and Make Money.
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My Living Trust Will is an information site aimed at helping prepare you and your family for the future through creating a usable living trust will.n
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