Trusts. What kind? Do it yourself?

[bibsoconner]

Hello,

I have a non-real estate question hence the “Other” forum.  I have been dragging my feet on setting up a trust.  I gather I need to, because everyone else seems to have one, and I definitely want to keep up with the Joneses.  My very limited research thus far indicates it primarily helps with probate, both the length of time and the expense.  I have to say, it’s a strange thing to make an investment where I’ll never know how it worked out.  I mean, I’ll be dead!  In any case, it seems to be $3000-$5000 at an attorney firm. AND there could possibly be additional costs, like if you need to change it (new property, different directives, etc.).  The amount of money that could be saved during probate varies but could be $10000-$20000?  Do these estimates seem correct?  As you can see, I’m questioning its utility!

I also see that there are irrevocable and revocable trusts. Irrevocable are more complicated to change but seem to be favored for reasons not clear to me. I would think we have a very boring situation compared to others.  One house (paid off – 2.5 million?), 2 incomes, in our 50s, 3 kids, beater cars. Our only possible complication is the possibility of inheriting land in a french island and I stress that’s just a possibility.  No rental properties, bitcoin piles, businesses, drug labs, etc.

So the questions..

1.  Trust. Worth it? Why not just a will and let the kids wait a year through probate?

2.  Revocable or irrevocable?

3.  Extra costs/complications after setting up?  To change? During taxes?

4.  Use a law firm (recommendations?) or do it myself?

5.  Simple sites explaining the pros/cons and how to do it, or what to look for in a firm to do it. Even if the advice is “Use a firm”, I want to know generally what is going on and why.

Thanks!

Dave

[Hobie]

At least put the property in a trust.  It is a cakewalk for your kids to deal with after you are gone vs. probate.  Probate forces a judge to try to figure out your intentions.  And your kids will have to pay an attorney to deal with it.  Ain’t cheap… especially if it gets complicated or contested.   Do anything to avoid probate!

Trusts are easy to change during your lifetime.  One thing to consider are the future spouses of your kids.  They can be a problem if, say your 3 kids are equal co-owners of a property.  What happens if at that point your own kid passes and the other kids become partners with a ‘disliked’ spouse.   The trust can spell out and clarify the what-if’s.  How well do the kids get along with each other and handle their own finances now?  How about setting up some kind of college fund for future grandkids?  Trust can do that.

Personally, I feel it is better to spell out as much as possible your wishes.  It does make it easier for the siblings to proceed when you pass.  ie.  must sell the house within X years, favorite art piece goes to X and it also designates someone to be the ‘boss'( trustee)  to oversee its execution.

Might be worth $3k if the atty really knows family dynamics and asks those kind of questions during pre-interview and you have a million questions.  Otherwise a $1500 atty to write it up if indeed you have a very simple estate.

And, don’t forget to fund the trust.  ie.  re title the property into the trust name.  Otherwise it is not valid.

[XBoxBoy]

I’m no expert on this, but have been down the route of hiring a lawyer, creating a trust etc.  From my experience a trust is only a part of the of package. More important is the will and a power of attorney/medical directive. The will is what makes it so you can avoid probate and the medical directive is what makes sure if you become unable to care for yourself your wishes are known and who decides for you. Depending on the value of your estate, a trust might be needed or might not. The will and medical directive are always good to have.

So just to emphasis: Make sure you get the will and medical directive, not just the trust.

A couple small suggestions:

1) Think about the name of the trust.  Attorney’s like to pick names like: “Johanna and Bethany Smith Revocable Family Trust of 2024”.  The problem with that is the name is long and it publicly identifies you. If you place assets in the trust the deed or stock accounts will have that for the name. If you name is long enough, it actually becomes too long to fit into the forms you will be filling out. Real estate in your trust will now have your name on the public records. (Which maybe is okay, maybe not, depending on how much you value your privacy.) Maybe a little thing, but boy I wish we had named our trust something simple like “The Big Dog Trust”.

Try to keep your trust simple.  How to disperse assets should be in one section. Then if you want to amend your trust amendments are simple.

 

[Author]

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