Ask Terry Questions estate planning

estate planning

By Terry Savage on December 11, 2017 | Financial Planning / Retirement

When doing a revocable living trust what is included or necessary within the trust? Seems when you talk to attorneys they attempt to sale you all these additional services that add up and before you know it you are several thousand dollars into the process. What would be the most economic way to have one completed and be secure that it was properly completed and legal?

Terry Says

Well, it's likely that your estate package will cost at least $1,000 to create a revocable living trust --and all the attendant changes.  It all depends on the complexity of your estate.  The RLT is better than a simple will, because it keeps everything private, out of probate court -- and because your designated successor trustee can act if you become incapacitated. Your family won't need a court order to take actions on your behalf. Here's what you really need:  The Revocable Living Trust itself, and then a "pour-over" will to cover everything not specifically titled in the name of the trust at your death. You MUST change title to all titled property (likely with the exception of your car!) into the name of the RLT -- so that upon your death those properties do not have to go through probate, the process of changing title. That means you must change the title of your  home, vacation home, investment accounts, etc.  Importantly, you likely WONT want to change the beneficiaries of your retirement accounts into the name of the RLT -- because individual beneficiaries can stretch out the growth of that tax-deferred account. Your estate planning attorney should give you a copy of the relevant portions of the trust so you can change the title on the properties.  Sometimes they will offer to do it for you at a small fee, but you can do this on your own. At the same time as you do this planning, your attorney might set up an IRREVOCABLE life insurance trust, to become the owner of a newly purchased insurance policy, with the trust as the beneficiary.  This money is OUTSIDE your taxable estate because the trust owns it.  (You gift the trust money each year to pay the premiums.)  The trustees, whom you name when you set up the trust, are instructed to use the proceeds either to pay any estate taxes or for other planning uses.  (Remember if you OWN your own life insurance policy, the proceeds from it are considered part of your estate and subject to estate taxes if your estate is over roughly $5.5 million.) And even with a RLT, you'll want a healthcare power of attorney (if you cannot act for yourself)  and you'll likely want to create a Living Will -- to express your wishes re end of life care. So this is just an overview -- and all of the above is complicated and requires an estate planning attorney.  Yes, it e costs can add up.  But, Yyou pay them now, using an expert, because you won't be around to fix it if you make a mistake!

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