Estate planning - what type of trust?

[Anonymous]

A number of years ago we set up irrevocable trusts where each spouse would be the primary beneficiary of each others trust followed by our children when both spouses pass. They are also designed to protect our children (now married adults) in case of a divorce so that the dollars in trust are not part of their joint assets. Trusts can be very complicated and you should not just use some template trust as everyone's circumstance is different. You can save some time and legal fees by going on line and studying things to consider when setting up a trust so that when you meet with an attorney you are not starting at ground zero.

[Anonymous]

Anonymous wrote:No trusts, just wills and proper POD or beneficiaries on all eligible accounts.

Most people don't need trusts.

+1 And trusts can create problems where none would have existed if you did not have a trust. If you don't need a trust, don't get one. It's a money maker for lawyers and not always good for the heirs.

-signed a lawyer married to a lawyer who is about to strangle her FIL's estate and trust lawyer who never returns phone calls.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:No trusts, just wills and proper POD or beneficiaries on all eligible accounts.

Most people don't need trusts.

You do if you die and have minor children.

AFAIK, If you don't set up trusts, your children will get all their money when they turn 18. Our trust gives them a portion of the money when they hit a certain age. I'm not an expert - would someone who knows to comment on my statement.

A testamentary trust is a trust that comes into existence after you die through operation of your will-- it prevents your kids from getting their full inheritance at 18 (assuming you set up the trust with a different age). I think pretty much any competent estate lawyer (or the willmaker software) will draft a will that establishes a testamentary trust for children.

The question OP has is whether she needs more, which most likely would be a revocable ("living") trust that would hold assets during her life and then convert to be an irrevocable trust on her death. My advice is probably not. Having a living trust is more cost/trouble than they are worth given that probate isn't that much trouble (e.g., you have to put your house into the trust while you are alive and then the bank doesn't want to refinance the mortgage unless you take it back out).

[Anonymous]

Anonymous wrote:

Anonymous wrote:It seems that avoiding probate is another issue we didn't talk about, and a living trust would do that. Would that be a reason to have one?

That's usually the #1 reason that attorneys will give you, but unless you have a particularly complicated estate, it is really not necessary. I've taken several estates through probate in different jurisdictions as an executor (and not an attorney), and it is really not that big of a deal. My legal fees for a local estate attorney were much less than what the deceased would have paid for establishing and maintaining trusts.

It really depends on where you live. I’ve take several estates through probate — in some states it’s no big deal. In California, if you have any assets at all and don’t have a trust, you’re nuts.

[Anonymous]

I know this is old post, but why do you need a trust if you’re in CA? We live in VA but have assets that originate there (stocks).

[Anonymous]

Anonymous wrote:I know this is old post, but why do you need a trust if you’re in CA? We live in VA but have assets that originate there (stocks).

Probate is brutal in CA. It is for property owned in California. But stocks originated in CA (assuming you likely mean a tech company stock) is not considered property owned in CA unless you are a resident.

[Anonymous]

Anonymous wrote:

Anonymous wrote:No trusts, just wills and proper POD or beneficiaries on all eligible accounts.

Most people don't need trusts.

+1 And trusts can create problems where none would have existed if you did not have a trust. If you don't need a trust, don't get one. It's a money maker for lawyers and not always good for the heirs.

-signed a lawyer married to a lawyer who is about to strangle her FIL's estate and trust lawyer who never returns phone calls.

Can you elaborate on the bolded?

We had irrevocable trusts set up years ago when our kids were infants. The way they are structured, assets can either be titled to the trust or a pour over will moves the assets in our name into the trust. All of our financial assets (bank acct. brokerage, Insurance policies, etc.) either are jointly held, are in the name of the trust or names the trust as the primary beneficiary. We never got around to titling the house in the name of the Trust (having read about issues with holding it in Trust) but hold it jointly (in VA).

My Trust itself names me as the Trustee, my spouse after me and two other family members succeed my spouse in sequence. My kids are the beneficiaries and will get full control of 50% of all assets at 21. What kind of problems could this cause?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:No trusts, just wills and proper POD or beneficiaries on all eligible accounts.

Most people don't need trusts.

You do if you die and have minor children.

That is not true. Without a trust, the will goes through probate.

Stupid.

[Anonymous]

If one has all of their beneficiaries properly designated, doesn't that avoid probrate?

[Anonymous]

Anonymous wrote:If one has all of their beneficiaries properly designated, doesn't that avoid probrate?

Depends on the type of assets you have.

[Anonymous]

Anonymous wrote:

Anonymous wrote:No trusts, just wills and proper POD or beneficiaries on all eligible accounts.

Most people don't need trusts.

+1 And trusts can create problems where none would have existed if you did not have a trust. If you don't need a trust, don't get one. It's a money maker for lawyers and not always good for the heirs.

-signed a lawyer married to a lawyer who is about to strangle her FIL's estate and trust lawyer who never returns phone calls.

Agreed. People who are concerned about probate being a public process usually lose sight of the fact that transparency and court deadlines can be a good thing.

[Anonymous]

If DH and I each have a revocable trust set up, then if one of dies does that person's revocable trust turn into an irrevocable trust at that point?

More specifically, as is all of his goes to me, and all of mine goes to him. But after that, do all of his assets that come to me, are they then subject to the rest of his trust heirs that comes after me (and vice versa for him)? Or once each of our assets go to the other can they do what they want with them at that point?

[Anonymous]

Anonymous wrote:If DH and I each have a revocable trust set up, then if one of dies does that person's revocable trust turn into an irrevocable trust at that point?

More specifically, as is all of his goes to me, and all of mine goes to him. But after that, do all of his assets that come to me, are they then subject to the rest of his trust heirs that comes after me (and vice versa for him)? Or once each of our assets go to the other can they do what they want with them at that point?

*if one of dies does that person's revocable trust turn into an irrevocable trust at that point?* - No.

A trust has the following:
Grantor - The one who creates the trust (in this case your husband).
Trustee - Typically your husband, after his death you, others (your sister, his brother, etc.) after you.
Beneficiary(ies) - Folks that get the grantor's assets after his death.

Typically, your DH would name you as the first Trustee after him as well as the primary beneficiary after you. You'd do the same. This way, if he dies first, you become the trustee of his trust and transfer his assets to his primary beneficiary - you. If he names multiple beneficiaries, you'd deal with it accordingly.

The nature of the trust (irrevocable vs revocable) remains the same. A simple irrevocable trust would end after its primary purpose has been satisfied (e.g. assets have been transferred over to beneficiaries). You could set things up such that the trust can create irrevocable trusts on the grantor's death. e.g. DH dies with $3M. His death triggers the creation of 3 irreovocable trusts - one for each of you and your two kids (for example), each with $1M with a stipulation that you cannot withdraw more than 4% from the trust each year until your kids reach a certain age (for example).

[Anonymous]

Anonymous wrote:

Anonymous wrote:If DH and I each have a revocable trust set up, then if one of dies does that person's revocable trust turn into an irrevocable trust at that point?

More specifically, as is all of his goes to me, and all of mine goes to him. But after that, do all of his assets that come to me, are they then subject to the rest of his trust heirs that comes after me (and vice versa for him)? Or once each of our assets go to the other can they do what they want with them at that point?

*if one of dies does that person's revocable trust turn into an irrevocable trust at that point?* - No.

A trust has the following:
Grantor - The one who creates the trust (in this case your husband).
Trustee - Typically your husband, after his death you, others (your sister, his brother, etc.) after you.
Beneficiary(ies) - Folks that get the grantor's assets after his death.

Typically, your DH would name you as the first Trustee after him as well as the primary beneficiary after you. You'd do the same. This way, if he dies first, you become the trustee of his trust and transfer his assets to his primary beneficiary - you. If he names multiple beneficiaries, you'd deal with it accordingly.

The nature of the trust (irrevocable vs revocable) remains the same. A simple irrevocable trust would end after its primary purpose has been satisfied (e.g. assets have been transferred over to beneficiaries). You could set things up such that the trust can create irrevocable trusts on the grantor's death. e.g. DH dies with $3M. His death triggers the creation of 3 irreovocable trusts - one for each of you and your two kids (for example), each with $1M with a stipulation that you cannot withdraw more than 4% from the trust each year until your kids reach a certain age (for example).

Thank you for taking the time to answer this. And if I can impose a bit further..... So, my revocable trust names DH as my first beneficiary. After that, when he dies, then it goes to DC1 & DC2. My desire is that if I die he should have all the money and do with it as he pleases. I don't want him stuck with "my" second tier beneficiaries. (If that makes sense.) We were encouraged by our financial advisor to do this, and I agreed in case we both died at the same time. (We were traveling a lot at the time.) If, as soon as one of us dies, the remainder of the trust beneficiaries is void, then no problem. As expensive as this was to set up, I don't want to dive into a whole other expense if I'm concerned for no reason.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If DH and I each have a revocable trust set up, then if one of dies does that person's revocable trust turn into an irrevocable trust at that point?

More specifically, as is all of his goes to me, and all of mine goes to him. But after that, do all of his assets that come to me, are they then subject to the rest of his trust heirs that comes after me (and vice versa for him)? Or once each of our assets go to the other can they do what they want with them at that point?

*if one of dies does that person's revocable trust turn into an irrevocable trust at that point?* - No.

A trust has the following:
Grantor - The one who creates the trust (in this case your husband).
Trustee - Typically your husband, after his death you, others (your sister, his brother, etc.) after you.
Beneficiary(ies) - Folks that get the grantor's assets after his death.

Typically, your DH would name you as the first Trustee after him as well as the primary beneficiary after you. You'd do the same. This way, if he dies first, you become the trustee of his trust and transfer his assets to his primary beneficiary - you. If he names multiple beneficiaries, you'd deal with it accordingly.

The nature of the trust (irrevocable vs revocable) remains the same. A simple irrevocable trust would end after its primary purpose has been satisfied (e.g. assets have been transferred over to beneficiaries). You could set things up such that the trust can create irrevocable trusts on the grantor's death. e.g. DH dies with $3M. His death triggers the creation of 3 irreovocable trusts - one for each of you and your two kids (for example), each with $1M with a stipulation that you cannot withdraw more than 4% from the trust each year until your kids reach a certain age (for example).

Thank you for taking the time to answer this. And if I can impose a bit further..... So, my revocable trust names DH as my first beneficiary. After that, when he dies, then it goes to DC1 & DC2. My desire is that if I die he should have all the money and do with it as he pleases. I don't want him stuck with "my" second tier beneficiaries. (If that makes sense.) We were encouraged by our financial advisor to do this, and I agreed in case we both died at the same time. (We were traveling a lot at the time.) If, as soon as one of us dies, the remainder of the trust beneficiaries is void, then no problem. As expensive as this was to set up, I don't want to dive into a whole other expense if I'm concerned for no reason.

I think that's how your's is set up.. If you die and DH survives, he gets all you have. If both of you die, DC1 and 2 get everything. Assuming DH survives, he gets everything and can do what he pleases with those assets. He just has to re-title them to himself or to his Revocable Trust.