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Does My Family Need A living Trust?1. Do you have only a Last Will & Testament currently in place as your estate plan?Commentary: Probate will be required of all assets transferred by a stand-alone Last Will and Testament – regardless if testamentary trust provisions are included or that the will is being used as a “pour-over” to a living trust. When someone dies with any asset(s) in his own name, even if a valid will is in place, probate will be necessary since the assets are titled in the name of that deceased person (unless transferred by a payable-on-death clause). A will is not a contract that can otherwise control and transfer assets, for it becomes nothing more than a testament of the deceased. Therefore, probate court requires that a court-approved executor enter into court-sanctioned contract with court-approved heirs in order to retitle the decedent’s assets to the executor who later delegates the assets to the heirs. This probate process cannot be avoided because a deceased person is obviously unable to transfer his own property; therefore, the court has to step in as his proxy and do it for him. 2. Does the value of your probate estate exceed $200,000 (which is the maximum statutory limit for allowing informal probate)?Commentary: A probate estate is that part (or all) of the estate that is owned outright by a decedent. If the value of a probate estate exceeds the maximum statutory limit of $200,000 ($50,000 in many states) then the probate estate will have to be formally probated. Formal probate requires several months – sometimes-even years – to complete; and it includes hearings, appraisals, accountings, recordings, public notice filings, court fees, attorney fees, executor fees, and public recordings. If the value of the probate estate is less than statutory limits then the estate can be probated by affidavit. That method is generally not problematic – although it still becomes a matter of public record. 3. Do you share ownership of your assets with anyone else (including a spouse) as joint-tenants-with-rights-of-survivorship (JTWROS), or as tenants-in-common (without a trust)?Commentary: JTWROS ownership provisions were created by statutory law and exist only to provide asset owners with a probate avoidance device. When a JTWROS tenant dies, the surviving tenant receives all interest in the property without probate. However, JTWROS ownership provisions could prove to be a very bad choice because of loss of control, forfeiture of protection, and possible transfer tax consequences. Consider the following points regarding JTWROS-owned property:
4. Do you have post-mortem control issues/ concerns that are not being addressed?Commentary: Without a trust in place, a decedent has essentially forfeited all post-mortem control of his estate. A trust must be used if the estate owner wants to address:
5. If you do have a living trust in place, is it set up to meet your current planning needs and objectives including being fully funded?Commentary: Creators of living trusts often end up not having their current planning goals and objectives adequately addressed. The reason is because they simply keep putting off getting the changes done, or they don’t want to go back to the person(s) who originally helped them. They may also have unfunded or only partially funded trusts in place and need assistance to complete the job. Again, realize that all assets not transferred to a trust will need to be probated at death even if a pour-over will has been established in conjunction with the trust. 6. Are your trust and health-care documents electronically recorded on an encrypted database with 24/7 password access via the Internet?Commentary: Estate planning documents can easily be misplaced over time. It becomes a serious problem when the decedent’s family needs access to those documents but cannot locate them, or even the lawyer who originally drafted the plan – he may be deceased himself! New technology provides electronic recording venues that can be conveniently accessed through a secure Internet platform. That technology should be utilized. Final Analysis:If the answer is “yes” to one or more of Questions 1 through 4, then a living trust should be considered. If the answer is “no” to one or both of Questions 5 and 6, then certain actions should be taken as to
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