http://www.advisorone.com/2012/04/02/5-important-steps-to-update-estate-plans

Drafting wills, trusts and other estate planning documents is the practice of law.  Even if the documents being offered are “written by lawyers,” laws on the administration of estates differ from state to state and can change year to year; generic forms cannot include any state specific references that could run afoul of another state’s laws.  Also, when you choose and complete your own forms, you have no attorney to ask (and answer) the right questions, decide the right estate planning approach, order and properly complete insurance and retirement plan forms, and confirm that all documents have been properly drafted, signed, witnessed and recorded.

As Timothy E. Kalamaros, a lawyer with his own practice in South Bend, Ind., says, using a DIY will is like “pulling your own tooth with a pair of pliers instead of going to the dentist.”  George Fox, a lawyer with Fox+Mattson in Atlanta, recently sent shared two of his favorite examples, gleaned from a tax group he frequents.  One involved someone who left the form blank where instructions for the DIY will said “[Insert name here]” and wound up leaving $200,000 to “[Insert name here]” instead of to a loved one.  And then there was the poor soul who left “$200.000 to my sister.”  The typo, putting a decimal point where there should have been a comma, became a source of contention.

Finally, having an estate planning attorney provides you with a source of ongoing representation, informing you of changes in the law that may impact your estate and require changes to your plan.

This is a very common misconception.  I meet with a lot of folks who think if they create a will that states their house is left to their children then their house will avoid probate.  However, that house would still have to pass through probate even if the will stated specifically where it was to be distributed.

Probate is the legal process of administering the estate of a deceased person by resolving all claims and distributing the deceased person’s property.  It is the only way to obtain a court order to change the name on legal documents such as titles and deeds.  There are court costs, fees and probate attorneys’ fees associated with probate, not to mention the amount of time the property remains held up in court.

A will guarantees that whatever property distributed under the terms of that will pass through probate.  There has to be something else along with that will that allows the property to avoid probate.  Placing property with titles and deeds inside a trust will allow that property to be distribtued per the terms of that trust outside of probate.

Other ways to avoid probate:

• Joint tenancy with rights of survivorship
• Designated benficiaries
• Payable on death
• Transfer on death
• Beneficiary deeds

A Gun Trust is a special purpose revocable living trust. A Gun Trust is written
to hold only firearms.

http://www.forbes.com/sites/peterjreilly/2011/09/22/gun-collections-pose-special-estate-problems/

Inheritances that are held in trust can be protected from claims by a spouse if your child or grandchild were to divorce.  The assets held in trust would most likely be viewed as not being joint marital property.  Additionally, if your child or grandchild has creditor problems the assets held in trust could possibly protect those assets from being levied upon or subject to a lien or claim.

Leaving those assets in a your revocable trust for children or grandchildren with health problems or who may be too immature to handle a large sum of money are also excellent reasons to have the trust distribute the assets.

To recap, here are the advantages of having inheritances remain in the trust and be distributed pursuant to the terms of your revocable trust:

• Protect inheritance against claims by child’s creditors or spouse
• You can choose to spread receipt of an inheritance over as many years as you direct
• You can choose to provide your child with an income for his or her lifetime, with the remainder passing on to your grandchildren

As always, this is not legal advice and should not be construed as such.  I am always available to discuss estate planning, and trusts specifically, with you and your family to see what would be a good fit.

Name: James Brown

Age: 73

Died: December 25, 2006, Atlanta, GA

Cause: Congestive heart failure due to pneumonia

Family: Six children named in will; many others contending paternity

Estate Mistake: Although he was known for keeping a very tight beat, he left a very loose will and sloppy estate planning, which led to multiple lawsuits and severe tax implications.  His will was contested by several parties, partly because he had not updated the document since 2000.

He also left his mansion and music rights to an irrevocable trust to benefit underprivileged students.  However, the trustees and family are still battling over it.  His assets were not well sheltered so an auction of his personal affects was ordered to help settle the tax bill.

There is not a bright line rule for when one should review documents.  It’s a good idea to give your documents a yearly review to ensure laws have not changed and to ensure everything and every person listed are still around.  I, as well as most estate planning attorneys, do not charge to sit down with their existing clients on an annual basis to ensure everything is correct. 

I also recommend to revisit your documents whenever a life change occurs-new job, retirement, a move, new children and grandchildren, marriage, divorce and death.  Additionally, do not forget to review your beneficiaries with your life insurance agent and certified financial planner.

WHAT DOES A REVOCABLE TRUST DO?

A revocable trust, like any trust, holds an asset and determines to whom or where that asset goes, when it goes there and how it goes there. 

ARE REVOCABLE TRUSTS NECESSARY IF I DO NOT HAVE AN ESTATE TAX PROBLEM?

Yes.  Only irrevocable trusts can reduce estate taxes.  Revocable trusts, however, still have the following very important purposes:

• all assets in the trust avoid probate
• trusts help avoid accidental disheritances with second marriages and blended families
• trusts hold and distribtue money for minor children and grandchildren
• the management of assets in the event of a disability

DO I LOSE CONTROL OF MY ASSETS?

No.  You are still in control of your assets so long as you name yourself as trustee and are competent.  You can also determine who the trustee will be in the event of incompetency or death.

ARE THERE ANNUAL COSTS OR CHARGES ASSOCIATED WITH A REVOCABLE TRUST?

Not usually.  There are no fees if you are serving as your own trustee.  A corporate trustee does charge a small fee.  Trusts, like all estate planning documents, should be reevaluated every 5-10 years to determine whether or not they are still in accordance with local laws and statutes and to ensure they still do what you want them to.  Additionally, you need to update your documents, including trusts, anytime there are changes in your family’s circumstances.

WHAT OTHER DOCUMENTS USUALLY ARE PREPARED WITH A REVOCABLE TRUST?

• documents transferring your property into your trust
• a pour-over will
• durable financial power of attorney
• durable medical power of attorney
• living will

IS A POUR-OVER WILL NECESSARY IF I HAVE A REVOCABLE TRUST?

Yes.  A pour-over will directs that any assets not placed in your trust should be distributed into the trust upon your death.  The pour-over will is a safety net.  This safety net ensures that all assets get into trust.  Sometimes assets are forgotten and not transferred into the trust or an asset in the trust (such as a home) is replaced and new asset does not get transferred.

Name:  Marilyn Monroe

Age:  36

Died:  August 15, 1962, Brentwood, CA

Cause:  Drug Overdose

Family:  Three Ex-Husbands

Estate Mistake:  Marilyn left much of her estate to her acting coach, Lee Strasberg.  The estate itself was not huge, about $800,000.00, but Strasberg claimed a right to her image.  That has led to at least a $30 million dollar payout to a woman Marilyn never met – Anna Strasberg, Lee’s third wife.  Marilyn’s case is often cited as an instance in which a trust would have been best to carry out a client’s wishes.

Name:  Elvis Presley

Age:  42

Died: August 16, 1977, Memphis, TN

Cause: Drug overdose

Family: daughter

Estate planning mistake:  Elvis is probably the most notorious example of a porrly planned estate.  Of his $10 million estate, about 73% was lost in the probate process to estate taxes and other settlemtn costs.  His case illustrates why a trust is often the best way to protect an estate.

A revocable living trust can be used to avoid the costs and delays associated with the probate process and in most states keeps the disposition of the estate out of public view.  The estate plan must also focus on estate taxes in order to not only minimize them, but also to avoid the untimely liquidations in order to pay the tax.  Of course, Elvis did get the last guffaw because he has earned far more money dean than alive.