[outahere]

Yesterday we had a meeting with a local attorney to get all of our estate planning documents updated to reflect Florida law. During the course of the conversation, the attorney recommended that we create a revocable trust and change the house deed to name that trust as the owner, as well as change some of our bank and brokerage accounts. While it does seems to make sense, and would make things considerably easier/quicker for our son down the road, I have to wonder if there is any down side to doing this.

Any ideas or comments?

Thanks.

[alanmcdonald]

We have set up such a trust. Will need to update when we become full time Villagers later this year.

The main advantage is not having to go through probate when the first person dies.

Make sure both husband and wife are listed as trustees and can act independently.

[Bonnevie]

but if your son is your designated beneficiary on bank and brokerage accounts, doesn't that avoid probate?

[OBXNana]

I was an only child. Life after my parents passed away was so much easier because they did exactly what your Attorney suggested. I was on every account and when my father passed away, the transition to helping my mother when she began to fail, was so easy.

When I was young my father opened an account with his name and my name. Years passed, I married, and added my husbands name to the account not remembering when I was 8 years old my father was on the account. When my father passed, we had to pay the state tax on one third of our own money because his name was on the account. The next day, we were in touch with all our children to make sure we were no longer on their accounts we opened for them as young children.

[outahere]

Originally Posted by Bonnevie

but if your son is your designated beneficiary on bank and brokerage accounts, doesn't that avoid probate?

He is the contingent beneficiary on the accounts, but that only takes effect if we both pass away at the same time. Otherwise the accounts go to the primary beneficiary and, we know from experience, that you can not have a beneficiary on an inherited IRA or 401(K).

The only way to avoid probate is if his name is on the accounts, or if they are owned by the trust. The problem is if he should be sued and found liable, the accounts with his name on them would be taken to settle the debt. That is also true if we were to put his name on the deed to the house - we could be forced to sell to settle a judgement against him.

According to the attorney, probate in Florida can take anywhere from 6 months to a year and, according to Florida law, you must have an attorney represent you in Probate Court. The law also states that they must charge a minimum of 3% of the estate (they can charge more). Anything going through probate is tied up until the court rules. That would be especially bad in the case of a house, which would have to be maintained, taxes paid, etc. until the court rules.

[Villageswimmer]

Another factor is that the trust protects assets in the case of divorce of, in this hypothetical case, the son. if son inherits normally, DIL would, essentially, share in ownership of the assets. Assets in the trust are "owned" by the trust; I.e., only the beneficiaries named therein.

There is also strong argument for the confidentiality inherent to trust as opposed to will and probate.

[Wandatime]

Suze Orman says the same thing about trusts. And I did hear that probate in Florida is a pain and takes at least six months. Here is why Suze thinks it is vitally important:

Why everyone needs a living revocable trust

[Biker Dog]

Also, Florida does not recognize a living trust from another state.. We had to redo our trust when we became Florida residents.

[rubicon]

We have a revocable trust. Our attorney suggest that we place our home with the trust upon the death of the first spouse. We may not wait and we have been considering placing our children on the deed because in our situation there is nothing to indicate any dispute

[manaboutown]

Revocable living trusts are an incredible estate planning tool and offer many options no matter one's circumstances. If one's situation changes the trust conditions can be amended or a replacement trust drafted. Probate costs can be substantially reduced. Spendthrift provisions can be employed and bankruptcy and divorce protection of the assets can be accomplished.

[outahere]

Originally Posted by rubicon

We may not wait and we have been considering placing our children on the deed because in our situation there is nothing to indicate any dispute

As I indicated in my post above, you could potentially be opening up yourself to losing your house if one of your children gets a judgement against them, and they are on your deed. You should also check the tax consequences if you place them on the deed. I think they may have a tax liability on their portion of the value of your house. I'd suggest consulting a real estate and/or tax attorney before proceeding.

[tcxr750]

Don't forget to populate your trust with the assets you choose. You could create a trust and nothing would be in it. Check with the lawyer to see who does this.

[Bizdoc]

I have been going thru the problem of "odds and ends" outside of joint ownership/beneficiaries with my mom following the death of my father. The biggest problem is dealing with Treasury Direct to get the securities into her name (she's the joint owner but did not have her own separate TD account). She's now demented and cannot legally sign anything. TD's original suggestion was to become her guardian - when I talked with a guardianship attorney, I discovered the process in FL would probably take longer than she has to live. Probate would have been expensive and could drag on longer than lives, thus throwing things into probating stuff twice.

However, she provided in her durable POA that I could establish a revocable trust. Now, it has to conform to the beneficiaries in her will, but it is doable. Since the trust "outlives" her, it can still accept checks, etc made out to her (not to her estate). Have now done so and it solves some of the issues of transferring assets.

At the same time, I had a rev trust set up for me. Why? I can foresee the same potential problem of not being able to handle my affairs and having some assets not be accessible by a POA (and yes, I've had banks try to tell me that her POA was not valid!) And be sure that you understand the potential problems of not including the ability to change beneficiaries if you don't grant that power to your POA. I funded the trust with a nominal amount to make it legal.

The points above about spendthrift, etc are all good ones. I also like the fact that the trust is nice and opaque - you don't have to tell anyone outside of the trust what is going on (so long as you comply with things like tax law). The trust outlives you. You can instruct your successor trustee(s) as to what you want to happen with your assets without having to amend your will or your trust.

As a side note, check *all* of your accounts and insurance policies annually to make sure that you have valid beneficiaries and contingent beneficiaries/PODs.

[rjm1cc]

Depends on what you are trying to accomplish. Pass assets, probably not. Name beneficiaries on each account. If you put your residence in the trust be sure the terms let you keep your homestead exemption.

[shcisamax]

If both husband and wife's names are on all accounts and real estate, is there any reason for a revocable trust to be set up? Of course, that would assume both would not pass at the same time.