Downs Law Firm, P.C.
Downs Law Firm, P.C.
Probate is what’s left over When someone dies, property will be transferred from them to someone else by Title or Contract. One form of trust transfer is a Revocable Living Trust. When I think of a Trust, I picture a “Box” to take the title of the property. Assets transferred into the trust, or “Funded into the Trust”, do not need to be transferred through the probate process, because the death of the Trust creator does not affect the title of the property. The idea is to put the property into the box while you are alive. If you do so, where is the title when you die? It’s in the Trust, just as it was before death. Probate is not needed to help change title. However, a Living Trust is not a magic box. It will only avoid court for assets that are transferred to it. To avoid Court, you must do work: you need to dedicate the time, effort and persistence required to transfer the titles. For most banks, account numbers stay the same. The checks don’t need to say “Trust” on them as long as the statements do. The account will still be in your social security number, as the trust is not separate taxpayer while the Grantor is living. Not all assets get funded into a Trust. Assets such as Life Insurance, retirement plans, deferred compensation accounts, thrift savings plans, and annuities are handled by beneficiary designation and are not transferred into a revocable trust. Automobiles are not usually transferred into a Trust. We estimate that most of our clients spend 20 to 30 hours on the funding process, mostly in filling in new account forms and waiting for bank personnel to figure out how to do what you are asking. You can take consolation in this: if you don’t go through this effort, your chosen loved one who is named executor will be doing so. A large part of the gift a trust represents to the family is that you spend the time and effort, so they don’t have to. It also means revising deeds so that the titled owner is the Trust. When someone dies, we meet with the successor trustee, and are focused on what the titles say, and who are designated beneficiaries on the contracts. That is where the rubber meets the road. What if things are missed. We create a short will, called a “Pour over Will” to catch loose ends which get missed in the funding process. The Will simply says “Put the probate assets into the trust” in legal mumbo jumbo. To use this type Will, you need to go to the probate court and open a probate filing. In Maryland, for estates of under $50,000, the process is relatively simple and is often opened and shut on the same day. A significant added bonus to a living trust is that is works very well to allow management of assets if you are no longer able to do so. But
Life rarely remains the same and those changes mean it is time to take a fresh look at your estate plan. Time marches on and a person’s life changes. That creates the situation of there not being a doubt of whether an estate review is necessary but simply becomes a questions of when it will be reviewed, according to the New Hampshire Union Leader in “It’s important to periodically review your estate plan” Most people get their original wills and other documents from their estate planning attorney, put them into their safe deposit box or a fire-safe file drawer and forget about them. There are no laws governing when these documents should be reviewed, so whether or when to review the estate is completely up to the individual. That often leads to unintended consequences that can cause the wrong person to inherit, fracture the family and leave heirs with a large tax liability. A better idea: review the estate plan on a regular basis. For some people with complicated lives and assets, that means once a year. For others, every three or four years works. Some reviews are triggered by changes in life, including: Marriage or divorce Name Changes Death Large changes in the size of the estate A significant increase in debt The death of an executor, guardian or trustee Birth or adoption of children or grandchildren Change in career, good or bad Retirement Health crisis Changes in tax laws Changes in relationships to beneficiaries and heirs Moving to another state or purchasing property in another state Receiving a sizable inheritance Beneficiaries in need of protection due to Special Needs, creditors, or Tax Problems. What should you be thinking about, as you review your estate plan? Here are some suggestions: Have there been any changes to your relationships with family members? Are any family members facing challenges or does anyone have special needs? Are there children from a previous marriage and what do their lives look like? Are the people you named for various roles—power of attorney, executor, guardian and trustees—still the people you want making decisions and acting on your behalf? Does your estate plan include a durable power of attorney for healthcare, a valid living will, or if you want this, a DNR (Do Not Resuscitate) order? Has your estate plan addressed the possible need for Medicaid? Do you know who your beneficiary designations are for your accounts and are your beneficiary designations still correct? Your beneficiaries will receive assets outside of the will and nothing you put in the will can change the distribution of those assets. Have you aligned your assets with your estate plan? Do certain accounts pass directly to a spouse or an heir? Have you funded any trusts? Finally, have changes in the tax laws changed your estate plan? Your estate planning attorney should probably take a look at the impact of state law changes, as well as federal. Reference: New Hampshire Union Leader (Jan. 12, 2019) “It’s important to periodically review