Author: Craig Watson
During the last several years, Revocable Living Trusts have been increasingly marketed by radio commercials advertising internet websites. In addition, many retired citizens have been inundated by telephone solicitations and direct mail fliers. The pitch is usually an invitation to a neutral sounding location, such as the local public library community room. Some invitations even include a free meal. So what is a Living Trust, do you need one and what harm could come from responding to a radio ad?
A Living Trust is basically a three party contract between the Grantor, Trustee and Beneficiary of the trust. Usually, the person who sets up the trust (you) initially occupies all three positions: trustee, beneficiary and grantor. The grantor is the person who arranges to have the trust drafted. Note that the grantor must convey his property to the trust. The family home and other real estate are conveyed by a deed. The investment accounts, CDs, etc. are funded into the trust by changing the ownership of the account at the institution where the account is held. The trust agreement defines how the assets will be invested, who will benefit, and when the trust terminates. The trustee is the person who agrees to manage the assets in accordance with the trust agreement. If the trustee becomes ill, mentally incapacitated or otherwise unable to serve, the trust agreement should name a successor trustee to take over management of the trust assets. If the beneficiary dies, the trust agreement typically requires the trustee to distribute the trust assets to the grantor’s children. Trusts often serve as a substitute for a Will. The property in the trust is not subject to probate at the grantor’s death because the trust owns the property instead of the grantor. If the deceased grantor owned no property (because it was all owned by the trust), there is no need for a probate, thereby saving the costs of probate.
A properly funded and drafted Living Trust offers worthwhile advantages. Possibly the most significant advantage is that the transfer of the grantor’s property to his eventual heirs is planned far in advance of the grantor’s death, often while he is still healthy and active. After all, the grantor is more familiar with the location, description and title of his various assets. After the grantor’s death, the bereaved surviving spouse and/or children are very relieved and thankful that they do not have to worry with probating the estate. The grantor has thoughtfully provided for everything. In addition, the existence and value of the family’s assets are kept private. In this day and age of the Internet, it will soon be possible for a financial products salesman to go online from the comfort of his office and identify probated estates holding investment assets and then call the widow and sell a high commission investment.
The primary use of a Living Trust in a financial product salesman’s marketing scheme comes during the process of funding the grantor’s property into the trust. At that point, the salesman has earned the trust of the grantor and has an apparent need to ask the grantor about all of his assets. Once the salesman has learned the details of the grantor’s investments, the salesman is in position to sell the grantor a high commission investment.
Trusts are also marketed by radio ads directing you to an internet website. The ad assures you that you will save money in attorney fees by trusting the internet website. The author has clients who paid for these low cost internet trusts with unsatisfactory results. You spent a lifetime accumulating these assets. Why would you trust a cookie cutter document from an unknown internet website to plan your estate?
If you are interested in having your estate planned or you are investigating a Living Trust, ask a friend, banker, or CPA for a referral to an attorney who specializes in estate planning. More and more attorneys are specializing and limiting their practice to a single area of the law. The quality of work delivered by a specialist is usually superior to that delivered by a general practitioner. Best of all, your attorney will not try to sell you a high commission investment when you are placing your assets into the trust. Responding to that radio ad could be hazardous to your wealth.
Craig Watson’s law practice focuses on Estate Planning, Probate, Guardianship and Elder Law. Formerly a CPA, he has 25 years of experience. Call 903-813-8500 or go to www.craigwatsonlaw.com.