Ask Terry Questions living trust — role of the lawyer?

living trust — role of the lawyer?

By Terry Savage on November 09, 2014 | Financial Planning / Retirement

I am doing one with a lawyer, but ,other than the bare bones portions he inserted, I have provided 100% of the remainder…most of which includes objectives, what the successor trustee should do re my care and putting me in a home, finances, and of course beneficiaries upon my death…are there other required elements of a LT in order for it to be effective?? the problem here is that you dont know if your lawyer did a good job, because you are deceased!!!!

Terry Says:  Absolutely true — and that is the reason that I always tell people to use a competent estate planning attorney in your state of residence!  But you make a good point, so even if there isn’t a question involved here, I want to post your comment about who does what in the estate planning process.

Yes, you are absolutely correct that YOU are the one who has to make a list of everything you own (and then remember to transfer title to those things that carry title — house, savings accounts, some investment accounts that are not retirement accounts, for example) into the name of the living trust.  And YOU have to decide who will be the successor trustee — someone you trust to carry out your wishes (who might not necessarily be the “beneficiary” of any of your money).  And YOU have to decide who gets what — even the family heirlooms, or artwork, or things that don’t carry a title but do carry sentimental value.

It’s the lawyer’s job to set this up legally and correctly.  And to make provisions if you think someone might “challenge” your decisions after you are gone.  And to follow the laws of the state.  And to advise you whether — all these provisions aside — you might be above the taxable Federal estate tax limit (currently $5.25 million) but far less in many states including Illinois.

In that case, your attorney might suggest you set up an IRREVOCABLE trust to purchase and own your life insurance, outside your estate.  Remember, if you OWN your own life insurance policy the full face value is part of your estate — along with your home, your retirement accounts, and all your personal property.  That might put you well into the taxable level for state estate taxes.   So keeping your life insurance owned by a separate trust (gifting money to pay the premiums each year) is one technique for having liquidity outside your estate to pay any taxes that might be owed.

A good estate planning attorney will discuss this and more, things like leaving money to a minor child (you can’t) or setting up provisions for them until they reach the age of majority, or leaving money to a handicapped child (you shouldn’t, so you won’t disqualify them from state programs), or other special issues that might come up.

You do YOUR homework, and the attorney will do his or hers.  Choose a competent attorney.  Since you are probably from Chicago (I’ve had a slew of emails since I mentioned this on WGN last week), contact the bar association.  Or I will give you a woman I chose to do my best friend’s estate:  Janna Dutton  — or 312-899-0950.

Recent Financial Planning / Retirement Questions



a personal
finance question