Monthly Archives: February 2018

Trusts: Real Estate and the Trust

In order to accomplish its goals and purposes, a trust must be “funded”—meaning the trust must own the assets of the creator of the trust. It needs to have assets in it. Often, one of the largest assets is real estate. This could simply be a personal residence but might also include other real estate such as rental property, a second home or even vacant land. Real estate is transferred to the trust by executing a deed that is then recorded with the county (or St. Louis City) recorder of deeds. There are times when this is most effectively accomplished by an immediate transfer by deed at the same time the trust is signed. Other times, a “beneficiary deed” is used to facilitate an automatic transfer upon death. There are also occasions in which unique circumstances surrounding the property (such as shared ownership with another person) may require some varied approach. Regardless of circumstances, we work with our clients to handle real estate transfers seamlessly as part of their estate planning.

Trusts: If I Have a Living Trust, Do I Also Need a Will?

A trust generally functions as a replacement for a Will. Most clients are drawn to a trust due to its ability to avoid probate (unlike a Will) and the opportunity to provide ongoing support or distributions to named beneficiaries. In many ways, a trust is a superior estate planning tool to a Will.

So, if you have a trust, do you also need a Will? Yes. The creation of a living trust should be followed by the titling of assets in the trust. In other words, the trust needs to become the owner of the client’s assets/property. The methods and particulars of this vary from asset to asset (and in some cases involves simply naming the trust as a payable on death beneficiary) but as a general concept, the trust needs to become the owner of the assets that belong to the client. When this is done effectively, a Will is no longer needed and probate is avoided. One could, in theory, simply not prepare a Will at all in this scenario.

 

However, there are sometimes hiccups. I have worked with clients and families that completely forgot about a certain account or investment. Or occasionally, the client made a mistake and failed to property re-title an asset. So, what happens when an asset or two fails to make it to the trust before death? The related Will transfers it there (to the trust) upon death. This would require a probate process (only for those forgotten assets) but the Will would move those assets to the trust—where they perhaps should have been from the beginning. However, it is important to note that there are some nuances to this—as some accounts name beneficiaries—in which case a Will would be unable to “fix” a missed account. Having a Will does not to replace the necessity of re-titling assets to the trust, but it often does go a long way to help when there are oversights.

Trusts: What Can I Expect to Pay to Create a Trust?

When making decisions about estate planning, nearly everyone has at least one common question: What will it cost? While my primary focus is always on getting the best outcomes for my clients and creating the best and most straight-forward plan for them, I am also very aware of the pressing concern of price. When I began practicing many years ago, I quickly learned that my clients were looking for the best advice and best guidance they could get—but also at a reasonable price. From the very beginning of my practice, I became committed to excellent service at reasonable rates.

Someone may be able to go online and create a cookie-cutter trust document—that may or may not suit their needs and may or may not be legally valid. Sometimes these are really low cost—perhaps only a few hundred dollars. Often these are also really low quality (or worse!). Some attorneys also offer very low cost “estate planning.” Unfortunately, this also frequently correlates to attorney inexperience and/or to very low-quality planning. “Will an online trust meet my needs?” I am sometimes asked. It “might”—but it probably will not.

I charge only flat fees for estate planning. That means free initial consultation, no additional charge for subsequent meeting and/or drafts of documents and one unchanging fee that is clear from the beginning of my service. I regularly provide a straightforward fee schedule to other professionals and to potential clients.

For an individual, I generally charge $1,600 to prepare a full gamut of estate planning documents (Will, trust, general power of attorney, healthcare power of attorney, advance health directive, related real estate deeds). That fee would be only marginally higher for preparing all of those documents for both spouses or partners if I am working with such (generally $1900 total). In the event I am preparing something less than all of these documents, my fees would be reduced accordingly. For example, if a given situation requires simply having a trust in place, the cost may be about $900. Excellent service, experienced guidance and reasonable fees. These standards have proven to be the right way to serve my clients.

Trusts: How to Choose a Trustee

When creating a trust, the selection of trustee is of paramount importance. Typically, the creator of the trust would declare himself or herself as the initial trustee—to serve as such as long as he/she is alive and mentally competent. For a joint spousal trust, this would generally entail having joint trustees (the spouses). Trustee selection becomes more central when determining who to name as “successor” trustee—in other words, who will serve as trustee after the creator dies (or becomes mentally incompetent). The successor trustee will fulfill two general duties: (1) manage trust assets prior to distribution (investment, etc.) and (2) make trust distributions within the parameters established within the trust document.

When counseling clients regarding selection of a successor trustee, I generally emphasize the important characteristics of (i) financial acumen, (ii) trustworthiness, (iii) communication skills and (iv) a commitment to understanding and carrying out the client’s wishes. Often, a close family member is well situated to serve as a successor trustee. Other times, a friend or professional colleague is best suited for this role. We also frequently consider the possibility of an institutional trustee (bank, lawyer, trust company, etc.). For most clients, an institutional trustee is not ideal due to the related fees—but there are situations where this is preferred. Every situation and every client is different, so there is truly no one-size-fits-all answer to trustee selection.