July 15, 2011,
M.T. asks from Chicago, IL on July 14, 2011
HELP, Need Advice on Living Trust
What are the benefits of establishing a Living Trust for my father? My mom recently passed away and my dad has been changing all his accounts to include mine and my sister's name (along with his), as joint accounts. He plans to add ours to the title on the house as well. He has actually talked with two attorneys, one saying that adding our names is sufficient and one saying he needs a trust. I understand (or at least have been told) that my husband and I needed one because we have young kids, but we're not sure if he needs one now, considering my sister and I are adults. Any help, advice, insight, would be greatly appreciated!
2 moms found this helpful
S.B. answers from Houston on July 14, 2011
My dad has a living trust. From what I understand it is a tool to help with inheritance taxes. My dad has all his assets in the living trust. I don't believe a living trust has anything to do with who gets the kids if parents die. That is in the will. I would go ahead and do the trust even though your names are on the accounts and house it still will be subject to inheritance taxes.
W.H. answers from Sacramento on July 14, 2011
a trust will keep the estate from going through probate. probate can take forever and be very expensive. go to a lawyer who specializes in living trusts, it's worth it.
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M.M. answers from Chicago on July 15, 2011
I highly recommend he sets up a trust. Everything that he owns, except his
car would be named in the trust. Then he is the trustee and then he names a successor trustee. He has to have a lawyer write up a pour over will - which essentially pours all of his assets into the trust.
Then, when he passes away, the successor trustee takes over and does what he wants done - according to what he stipulated in the trust. The estate does not go through probate and the state where you live does not receive a % of his estate.
If the estate is over the threshold for inheritance (used to be 2 million in assets), then there is an inheritance tax that has to be paid.
Please contact an attorney who specializes in estate planning. You will pay about $250 / hour for their work - better than paying the state.
J.R. answers from Glens Falls on July 14, 2011
My understanding of the difference with a living trust is that portions of it can be enacted in your lifetime so you can appoint a representative to act on behalf of your estate if you are incapacitated, you can do power of attorney for financial and medical decisions, you can specify other desires should you be incapacitated. There is no tax advantage for the beneficiaries of a revocable living trust. An irrevocable living trust (IRLT) has tax advantages but the assets you can keep under an IRLT are limited and there are a few other requirements that make it a little more complex to maintain. Adding your names to joint accounts is not necessarily a good idea as should anything happen to the financial affairs of you or your sister, your creditors could go after your dad's house. In the event of his death, it would bypass probate and might be possible to bypass inheritance taxes, but you would also have to check into whether this wouldn't be viewed as a gift that exceeded allowable gift tax exemptions. I would ask the attorneys for pro's and cos and specific tax advantages and "what could go wrong" scenarios. Good luck.
C.O. answers from Washington DC on July 14, 2011
I'm sorry for your loss...I've not lost my parents (thank God) so I can't imagine your pain and emptiness!!!
I can't help you with this one...but I can tell you I'm sorry!!! HUGS TO YOU!!!
R.K. answers from Appleton on July 14, 2011
He may be trying to protect his assets in case he needs to go into a nursing home or assisted living. A nursing home costs $5000/month and assisted living costs $2500/month. The way it usually works is the home takes a bank draft monthly from his bank accounts and then does a reverse mortgage on his home. Once the money is gone he would qualify for MA to cover his expenses. He could get long term care insurance to cover those expenses. Medicare does not cover those costs unless they are recovering from an injury or surgery or on hospice.
If hs puts you and your sister on the deed to the house and his bank accounts the home can't take all the money he has worked to save all of his life. Talk to an insurance salesperson and a wills and trust or probate attorney to get the best advice you can.
My Mom refused to get the long term care insurance. Currently she is on hospice to help care for her. She has heart failure and her doctor gave her about 6 months to live about 2.5 months ago. I am currently home caring for her until she passes. If she had taken out the long term care insurance I could be out working and earning a living but since she did not the only way to protect her assets is to be here taking care of her. We share a house and have for 10 years. In Feb of '07 she fainted and fell, breaking her arm. At that time she required surgery to put a steel plate in her arm. Since then my Mom has been too weak to make her own meals or shower without assistance. It's a strain to care for an invalid and work. Someone has to be here 24/7 to care for her. At this point she can't even go to the bathroom unassisted. My sister was stillborn and my brother was killed in a car accident 16 yrs ago, so that leaves me to care for and make all the decisions for my Mom. My kids will step up and help but they all have children of their own, so their time is limited.
L.F. answers from Chicago on July 14, 2011
I don't know that it's a very good idea for your father to put you and your sister as joint account holders on his accounts and on the title of your house.
If anything happens to your sister or your finances, you won't be able to claim bankruptcy. They will take your father's money and his house. Even if you and your sister are financially responsible people, you never know what might happen (like a medical catastrophe) that could put you in a financial bind.
You should get power of attorney for his finances so that you can make financial decisions for him if he is unable to do that for himself.
The trust will make it much easier for you and your sister to inherit your father's assets once he passes away. You will pay much less in taxes and probate, so it will be worth the attorney fees to have this set up. Plus, it makes it easier for your sister and you to divide the assets in the event that there are unequal sums of money in the would-be joint bank accounts when your father passes away.
It's good that you are thinking about this now while your father is still healthy. My father didn't do anything other than draw up a will. He suffered a stroke and was in a persistent vegetative state for about a year and a half until he died. My siblings and I had to go through hell and high water to liquidate his assets so that he could get the care that he needed.
I am so sorry for the loss of your mother. I lost my mother when I was a child, and the loss is still so heartbreaking.