Blog

This year this blog is following a hypothetical couple through their lives to see what role estate planning had on their family. To review prior articles, go to SeamonLawOffices.com/Blog.

Our story follows a couple I refer to as “John” and “Sue”. They established their estate plan as young parents, then later they updated their plan to address concerns over their adult daughter’s poor decision-making. During that meeting we discussed that a nice advantage revocable living trusts have over last will and testaments is that assets in a trust do not need to be probated. They really liked that benefit of a trust, but at the time avoiding probate was not one of their major concerns.

After our meeting, Sue realized that since her parents had recently purchased a second home in Florida, her parents’ future estate administrations were likely to be more complicated. Sue recalled that each state has its own probate process and so her parents would have a probate for their West Virginia property and one for their Florida property. Sue encouraged her parents to consider whether a living trust would be a good option for them.

As a result of Sue’s prodding, Ben and Ida contacted our office to learn more about living trusts. Their goal was to make things easy for each other and then for Sue once they both passed away, but they were concerned about maintaining complete control over their assets. They were very happy to learn that with a living trust they could control all decisions regarding the trust and trust assets while they were living and had decision-making capacity, but that control could naturally transition to Sue as they either lost capacity or passed away. They decided a living trust was an efficient solution to avoid probate completely while maintaining complete control over the trust and the trust assets.

They chose Sue to serve as their successor trustee when neither of them was willing nor able to serve any longer, but they were curious about that process as well. They wanted to understand how Sue would know what to do and how to make sure she treated the other beneficiaries fairly. I explained that the trustee has a fiduciary duty to follow the terms of the trust and that the trustee can use the trust funds to pay professionals to assist her. I also explained that if they have concerns about Sue, they could choose a professional trustee instead of Sue. They decided they were confident Sue would do a great job, but just in case it was too much for her at the time, they would name their bank’s trust department as an alternate to Sue, meaning if Sue was unable or unwilling to serve upon their death, then the bank’s trust department would serve as trustee.

Ben and Ida were curious how the assets would be transferred (ie. funded) into the trust. They did not want to have to open new bank accounts or go to a lot of trouble. They were relieved that in most cases it is very easy to retitle existing accounts to the trust although they would need a new deed to transfer their real properties into their trust.

Fortunately, these discussions were a lot easier for Ben and Ida because they already had a great estate plan in place, so adding a living trust was a very easy transition for them.