Revocable Living Trusts

Most clients want to create a revocable living trust just
to avoid probate issues, because they see probate as a necessary evil. This is
not true. Minimizing probate costs is good, but make sure to do it right. Two
ways to appropriately detract from probate expenses is to take all of your
different trusts and accounts, and consolidate them all to one place. This
eliminates the vast majority of paperwork. Secondly, don’t let your kids and
other heirs fight. How you handle things while you are alive will affect how
quickly your probate goes. The more civil the heirs are, the shorter and
cheaper it will be. Make sure everything in your will is clear, and covers all
possible situations. Once this is done, revocable living trusts can be a great
tool in estate and financial planning, but use them correctly and for the
proper reasons:

1. Revocable living trusts allow people to stay in control
of their assets for a lot longer than they would be able to otherwise by
working together with an institution. For example, they can make themselves a
co-trustee together with a Bank or other institute. This will protect older
clients from those who “prey” on senior citizens.

2. If you have a second home or vacation home, and you
want to avoid ancillary probate, re-title the house to a revocable trust.

3. Revocable living inheritance trust / gift trust -A
client inherited money or received gifts. This client it married and wants to
keep these inherited assets segregated. (Keeping them segregated means that
they remain immune from equitable distributions in the case of divorce.)
However, more often than not, the assets end up getting commingled. Set up a
revocable living inheritance or gift trust. Re-title the assets in name of the
trust. Pick a family member (not the spouse) to act as co-trustee with the
client, and get a tax id number for the trust. This will protect these assets
in the case of a divorce

Revocable living trusts are a phenomenal planning tool,
and while they are often misused, there are lots of creative and useful ways to
implement them.

The previous tip is based on a
short lecture given by Martin M. Shenkman, Esq. To listen to the full audio
clip, search “Revocable Living Trusts” on www.LawEasy.com