Revocable Trust

skipping the revocable trust all together is even less work. What is the purpose of the revocable living trust? How can that purpose be served if the assets are not transferred into it now?

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Mainly, avoiding probate. Advantages in that are *not* tax-related, but rather simplicity and privacy related.

It's especially helpful for title to a piece of real property which is not in the same state (saves executor from having to do probate in a second state), and for immediate access to and use of property (investments, cash).

On Apr 27, 2:30 pm, "Gil Faver"

There is no reason to have a revocable trust if he doesn't transfer his assets to it. He might as well have written a will that establishes a testamentary trust.

The advantage of transfering the assets to the trust are several. The most important is that it is easy to change the trustee if he should become unable to manage his affairs. This happened to my mother, who has dementia. She had a trust containing all of her assets, and was able simply to resign as trustee to have the successor trustee take over the management of her affairs when she was not able to manage her business herself. Without a trust, my brother and I would have had to take her to court and have her declared incompetent, which would have humiliated her. Furthermore, the court might have ordered either a court appointed conservator or extensive reporting to the court of the management of her affairs. Anyway, the trustee was able to sell her house and car after she moved into an assisted living facility.

Dave

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Isn't part of the process of establishing a revocable trust the transfer of assets into that trust? When I had mine done the lawyer who did it also helped me transfer my assets into the trust. It's part of the whole package of service.

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I believe one of the problems is that people forget to transfer something into the trust or some years later acquire a new asset and forget to put it in the trust. Then it turns out probate is necessary after all.

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One way to look at it is, only assets that one would need to sell need to be in a living trust, for example real estate, or stocks not in a retirement account. Cash and retirement accounts (IRAs, annuities) can have beneficiary designations which avoid probate, instead of being in a trust.

I once thought it made sense to have cars titled in the name of the trust but have since dropped that idea (although I might think differently if I had a $50K car).

There is also a thing called a "pour over will" which puts miscellaneous assets into a trust upon death, not sure how this differs from a testamentary trust. A lawyer once told me that no more than $60K of assets should be outside of the trust in order for it to be effective, not sure if that number still makes sense.

Obviously state laws make a difference.

-Mark Bole

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I suppose that happens. For just an eventuality, my trust package includes a "pour over" will, which directs that all non-trust property be put into the trust. Probate would be necessary, but only for the non-trust property. The rest of my estate would not be tied up by the probate court while that property was probated.

Dave

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Pour over wills are used to catch anything that was forgotten and/or obtained after the trust was drafted.

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For someone with only one or maybe two heirs, a simple solution is to have everything held jointly (JTWROS). My wife and I hold every last account jointly, so the survivor will have immediate access to everything. No probate, no trust.

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A little too simplistic -- what if you both die at the same time? (auto accident, for example).

In the case of spouses, often the assets belong to both anyway, either legally or ethically, so JTWROS makes sense. But don't depend on JTWROS for children or other descendants, if there is more than one and you want the money split according to your wishes. It will never work out... unless your kids are space aliens and therefore exempt from the normal inter-sibling issues that inevitably arise in these situations.

As previously mentioned, living trusts can also serve when the trustor is not dead but merely incapacitated.

-Mark Bole

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In addition to Mark's excellent points, properly structured Trust ownership provides asset safety after death.

A JTWROS won't protect your heirs from greedy ex-spouses during nasty divorces. Nor will it help shield assets from a successful lawsuit.

The most common concern I encounter with JTWROS situations is as follows: Husband dies and leaves everything to the wife. Wife remarries. Wife dies and either 1) she leaves everything to YOUR heirs (as originally intended); 2) she leaves everything to new husband; or

3) some combination of 1 and 2. If event 2 or 3 happens, strangers will inherit some or all of your estate. Most people don't like that thought.

Trusts aren't for everyone. But if you're going to leave behind a sizable estate, it's penny wise and pound foolish not to take the precautions.

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Agreed. If there are children or many other heirs it would never work. In our case, there are no kids, and neither of us wants assets to go to anyone not approved by the other. Our wills are specific as to who gets it if we die at the same time.

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IRA accts cannot be in a trust because they must be owned by an individual, cannot be owned by a trust.

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