Transferring real estate to a revocable trust requires a deed and is sometimes prohibited by the mortgage company or coop board, if you live in New York City.
In order to maintain optimal benefits from the trust, any new assets must be purchased in the name of the trust or subsequently transferred to the trust. In short, maintaining the benefits of a trust can be more trouble than most people can be bothered with. Orman claims that a trust will eliminate fees charged by executors and attorneys in the probate process. However, a closer analysis of the expenses incurred in probate versus a revocable trust call into question the claim that a revocable trust is always less expensive.
Although the executor of an estate is entitled to compensation by law, a trustee is similarly entitled to charge fees for administration of the trust. In both cases, that role is usually filled by a family member who declines the fee.
Orman claims that attorneys may not recommend a revocable trust because they want to collect the probate fees when the client dies. Simply put, a revocable trust never saves money on taxes. For both income and estate tax purposes, a revocable trust is treated as if you own the assets in the trust directly.
An irrevocable trust, on the other hand, is frequently used for estate tax planning and sometimes for income tax planning. The idea that a revocable trust protects your assets from creditors is another common myth. Creditors can reach any assets held by the trust as if they were owned by you directly. An irrevocable trust, on the other hand, can provide significant protection from creditors. Orman also says that a revocable trust is necessary to allow a loved one to manage your assets if you become incapacitated.
While it is true that the successor trustee you name in the trust document can take over management of the trust if you become incapacitated, a trust is not the only way to arrange for a trusted person to manage your assets in the event of incapacity. A more common way to authorize someone to access and manage your finances is through a power of attorney.
In fact, you should execute a power of attorney even if you have a revocable trust, since it provides broader powers than a trust can provide.
For example, if a hospital needs you to sign financial papers, or other legal contracts need your signature, your power of attorney may do so, while a trustee of a revocable living trust generally may not.
In some cases, a revocable trust is not the only way to avoid an expensive or complicated probate proceeding. The double-walled, water-resistant case is made out of ultra-strong, lightweight, scratch-resistant polycarbonate.
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Log in now. Loading Comments Remember that if you never take the steps to properly fund your trust, then you will not gain any benefits regarding the time or the costs of probate.
If you have indeed put all your assets inside the trust then there should be minimal expenses on that end, but this does not mean you will remove all fees paid in the probate process. To know whether or not something is right for your situation, schedule a sit down meeting with your lawyer to walk through the various expenses and what you should be prepared to deal with if you decide to use a revocable living trust.
The best way to get answers is to have an experienced lawyer help you. The appropriate asset allocation should be based on your goals which include the time frame as well as your risk tolerance and your risk capacity.
This one size approach will negatively impact many people. Neither of these statements is true.
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