This is a topic that has surfaced before, but it's happening more often these days because estate tax laws have changed dramatically. So here is the issue: Married couples call and tell me they "already have a living trust." Then I ask, "What kind of trust do you have?" They say, "What do you mean? Kind of trust? It's a LIVING trust!"
Couples are often surprised to learn there are several kinds of living trusts. They are all indeed "living trusts," but there are different "kinds" of living trusts. Like jelly beans, there are different "flavors" of living trusts.
I explain to clients that it's like walking onto a Toyota dealership lot. You don't just say, "Hey Mr. Dealer, give me a Toyota!" He's going to inquire what kind of Toyota you'd like, what suits your family, your specific concerns/needs, etc. Perhaps a simple Corolla would be good, maybe a Camry, or perhaps a Prius or a Sienna?
The problem is that many clients have no idea what kind of living trust they have. In many cases, in reviewing it, we find it's not the kind of trust they want. Why do they have a trust they don't want? Either the attorney who prepared the original trust simply gave them whatever "Toyota" he had on the lot (whatever standard living trust he/she used) or the attorney didn't ask the right questions of the clients so he/she can better recommend one type of living trust over another. In short, I have found that over 90% of the time, most couples who already have a living trust have no idea what kind of trust it is or what in the world the trust actually says.
If you're not sure what kind of living trust you have, or what the specific provisions of your trust actually say, or if it's simply been a very long time since you had your estate plan (including your trust) reviewed, call us today and make an appointment for an estate plan review. We want our clients to not only "have" an estate plan, but more importantly, to actually understand it! Wouldn't that be nice?
Hello, everyone. This is Robert Mansour and today I'd like to talk to you about putting your children on your bank accounts, on your real estate, et cetera. A lot of people try to handle their estate planning matters by basically adding children to their account. For example, somebody in their 60s or 70s might add their 30-year-old or 40-year-old daughter or son onto a bank account, an investment account, or sometimes they'll put the children on the real estate, on title with them. The thinking behind that is, well, with respect to bank accounts, they figure, well, this way the child can write checks, the child can make withdrawals, make deposits, et cetera.
The problem with that is that whenever you add a child to a bank account or an investment account or real estate. You have effectively added a bull's eye to that asset. How does that work? Let's say that son or daughter gets in any kind of trouble. Let's say they're going through a divorce. If they're going through a divorce, it is conceivable that the attorney for the soon-to-be ex spouse decides that they want a piece of that account, or they want a piece of that investment, or they want a piece of that real estate. The next thing you know, you're owning that asset with an ex son-in-law or an ex daughter-in-law, or you have to give them a portion of that.
Why? Because your son or your daughter is on the account. That means that they own the account, just like you. Let's say they get into some kind of creditor problems or a bankruptcy or a law suit. They're driving down the street one day and they hit a little boy on a bicycle. The next thing you know, that little boy's family is coming after your son or daughter, and everything with their name on it, including your asset. Sometimes you have to ask yourself, "Am I creating more trouble by adding somebody to my account?" There are other ways of handling this, and there's other avenues that you can pursue with a proper estate plan. Sit down with an attorney and come up with a plan that protects you, but also allows your children the tools, or gives them the tools, rather, to assist you if they have to. This is Robert Mansour, thank you for watching.
I can't tell you how many times clients tell me, "Yeah, I put my IRA in my living trust." You see, an IRA is an Individual Retirement Account. It is owned by an "individual" - not a living trust. It's the same thing with 401k accounts and 403b accounts and most other retirement accounts. They don't go "in" your trust.
In fact, in many cases, these types of accounts won't have anything to do with your living trust. The reason is that retirement accounts are distributed to a designated beneficiary. When you set up a retirement account, they will generally ask you to designate a beneficiary on a "beneficiary form" - someone who will get that retirement account when you pass away. Then you should designate a secondary/contingent beneficiary. You designate a beneficiary (both primary and secondary) by filling out forms these companies give you when you open the account.
Therefore, if you name your cousin "Sally" as your beneficiary, then your cousin "Sally" gets your IRA when you die. What you say in your living trust is irrelevant. The beneficiary form trumps your will or your trust. Imagine your IRAs are on an entirely different planet. The only thing that governs the distributions of a retirement account is the beneficiary form. So you see, these retirement accounts don't go "IN" your living trust. In fact, they generally have little, if anything, to do with your living trust.
Now, that being said, some people may choose to make their living trust the BENEFICIARY of their retirement account. Now that's what they might be thinking when they say their IRA is "in" their living trust. So while the IRA might be payable to a living trust as a beneficiary, the IRA is not "in" the trust as real estate, bank accounts, investments, and other assets actually titled in the name of the trust would be. Some practitioners are fond of advising their clients to name their living trust as the beneficiary of a retirement account . I'm not terribly fond of this approach for several reasons:
1) Naming a trust as the beneficiary of your retirement account may be entirely unnecessary. It puts an administrative burden on your trustee to make sure the required minimum distributions are withdrawn every year and distributed to the beneficiaries.
2) There may be negative tax consequences if you name a living trust as the beneficiary of a retirement account.
3) It's logistically much simpler to name human beings as beneficiaries of a retirement account. Naming the trust as the beneficiary can be an administrative nightmare and cause unnecessary complications.
I tell my clients that if they name their living trust as the beneficiary of a retirement account, they have to ask themselves WHY they are doing so.
So here's my basic advice when it comes to retirement accounts: Name your spouse as your primary beneficiary (it's usually required anyway). If you're unmarried, name anyone you want. Then name your children (or anyone else you want) as secondary/contingent beneficiaries.
Now this assumes your beneficiaries are in good shape and you don't have any major concerns about how they would handle an inherited retirement account. However, if you do have significant concerns, then you may indeed wish to name your living trust as the beneficiary. While it may cause a small administrative burden for your trustee, it might be better than naming an irresponsible beneficiary to your retirement account.
You can also change your mind over the years. For example, while my children are young, I've named my living trust as secondary beneficiary on my retirement accounts. However, once my children get older and have good heads on their shoulders, I will probably name them directly instead of naming the living trust. That would probably make life easier for everyone.
If you need help with your estate plan, feel free to contact us at (661) 414-7100.
Hello everyone this is Robert Mansour, and I wanted to make a brief video about an issue that sometimes raises its head in the field of estate planning. One of the tools that I help clients with is something called an advance health care directive. An advance health care directive is part of the estate planning legal tool box as I call it. A health care directive is where you name someone called your "agent," to be your health care advocate. They're not only the person who decides "pull the plug" and all the cliches that go with that, it's more. This person is going to be my legal advocate. This is the person who's going to make sure that I'm taken care of properly. This is the person who has the legal authority to talk to health care professionals, to make decisions on my behalf etc. It is a very important tool.
When you walk into some hospitals and some settings like that, sometimes what they do is they give you a form to fill out right when you walk in and they'll say, "Do you have a health care directive with you?" And you'll say, “No I don't," and they'll say, "Well here - sign this." They give you their own health care directive. Why is the hospital giving you their own health care directive? Did you ever think about that? Is it to protect you or perhaps to protect the hospital?
Of course there is some good measure to have one especially if you don't have one at all. You might want to fill out the one that the hospital gives you at the very least, but generally speaking that hospital form that they give you is not effective immediately. It is effective only upon the declaration of your incapacity by a physician or perhaps two physicians or I've seen even three physicians.
You've named this person in this document, but they can't really help you because you haven't yet been declared incompetent or incapacitated by a physician so they can't really be your advocate. They don't have any legal authority to do anything until that happens. Now you might be saying, "Why would I want them to help me?" There's many times when you need a health care advocate and you have capacity, you're fine, but you need somebody else to have that power to act on your behalf. That's one limitation of some of the forms that I see hospitals have people sign.
Another limitation is the following: Generally speaking the form provided to you by the health care facility does not allow access to the health care records. Why wouldn't the health care facility want you to have access to the health care records? Well it's very plain and simple. They don't want your family looking at those health care records, they don't want your agent to have access to those health care records because they don't want anybody questioning or reviewing anything that they did at the hospital or at the health care facility.
Generally speaking you want to make sure that the health care directive you have not only authorizes that person to act on your behalf, but also allows them access to the medical records. The form that you sign at the hospital invariably will not allow that to happen. Be very careful about the forms that you sign when you're in that kind of context. If you have a health care directive already that allows for those things you might say, "Oh no thank you very much, I already have a health care directive." Then make sure your agent brings it to the hospital. Thank you very much for watching this video. I hope you found it helpful.
If you need help with our estate plan, call our office at (661) 414-7100 for more information. If you already have an estate plan and you'd like it reviewed, please let us know.
Estate planning can be used to protect an aging parent. Here is an approach I recently recommended to a client whose mother had been conned out of $300,000.
Here's the backstory:
Jim and Shannon were married for over 35 years. They had one son name Matthew. Jim was a big time executive who generally handled all the money and most financial decisions. Shannon, while certainly involved, generally handled other aspects of their life together. Jim passed away suddenly from a heart attack leaving Shannon with about $800,000 in investments and a fully paid off house worth about $500,000. With that kind of nest egg, Shannon was relatively comfortable as she didn't lead an extravagant lifestyle. They had a living trust together which owned most of their assets. Their trust provided that upon Jim's death, Shannon would remain sole trustee over the entire trust. Indeed, that is a very common scenario.
Two years after Jim's passing, Shannon met a guy named Bill on Match.com (a dating website). He too had lost his spouse a few years ago but never had children of his own. They started talking on the phone once a week, and then soon every other day. Then they met for lunches and dinners. Soon after, they were a full fledged couple. Shannon couldn't believe she met someone who shared so many of her same interests. He met her family, and she met his. They even imagined a future together.
After nearly a year of courting, Bill gathered the courage to tell Shannon about a special project he'd been working on for nearly 3 years. He explained that he and several other philanthropists were building a school in Ghana for underprivileged children. Shannon was so proud of him and wondered why he never brought it up before. He explained he was embarrassed because they were about $300,000 short and the project had stalled. She exclaimed, "I want to help you! Let me give you the money..." He resisted and explained he could never accept such a gift from her. Notwithstanding Bill's objections, Shannon wired the money to Ghana the next morning. Then she called Bill to tell him the great news. Bill's phone rang, and rang, and rang.....
Where did Bill go? He was off to the next widow for his next big score!
So what happened after that?
Shannon's son Matthew called me several days later to tell me his mother had been conned out of $300,000. The authorities told the family they had little chance of recovering the money. Matthew asked me what could be done to help reduce the chance of this (or something like it) from happening again. Since Shannon was the remaining sole trustee of her living trust (since Jim had passed away), she was totally in charge of the entire estate. I recommended she consider appointing Matthew as her co-Trustee on the trust and provide that all trust transactions would now require 2 signatures. Therefore, in the future, Matthew's consent and cooperation (and signature) would be required to conduct transactions involving the living trust.
At first Shannon was concerned this would hamper her ability to manage her estate. I explained this was for her protection, and she ultimately agreed. To provide Shannon with some peace of mind, Matthew set up a small account for his mom at the bank. It was only in her name, and they agreed to keep about $2000 in that account at all times. This was going to be her "fun money." She could write checks, use an ATM, etc. without needing Matthew as her co-Trustee. This was entirely her account to do with as she pleased. By creating this account, we limited her exposure from future con artists and others who might try to influence her. Matthew would be able to keep tabs on this account and worst case scenario, she'd be out $2000 versus $300,000. The rest of the estate remains in the family living trust with Shannon AND her son Matthew as co-Trustees. Now, we had two "gate keepers" instead of one, making things much more secure and less susceptible to the influence of outsiders.
This kind of arrangement might work well for your family if you similar concerns. Don't wait for someone to take advantage of a parent. Living trusts aren't fool proof. After the death of a spouse, visit an attorney to discuss how to best protect yourself and your ultimate beneficiaries. There are a few measures you can take to minimize the chances you will be bamboozled by con artists.
So many clients call my office and say, "Hi, our situation is very simple. How much do you charge for something simple?" Then I start asking them questions, and they quickly realize it's not as "simple" as they thought. Here is a list of some of the things we cover:
1) Is this a blended family or not? What is the family situation?
2) What kind of trust might be best for them. A basic trust? An AB Trust? A Disclaimer Trust?
3) Should their powers of attorney be effective immediately or upon their incapacity?
4) Who should have access to their medical records?
5) What kind of medical treatment do they want if they are sick?
6) Who will be in charge of their estate if they can't manage things? Who will be second and/or third in line? Are they naming co-Trustees? Is that a good idea? What will happen if there are disagreements?
7) When will those people be allowed to act? What is the triggering event? Is their authority effective immediately and will there be any limitations?
8) What will happen, if anything, upon the first spouse's death?
9) Will the surviving spouse have the ability to make changes to their trust?
10) Who will get their estate after they die? How will that happen? What if the people they choose die before them? What happens then?
11) What if one of their beneficiaries is disabled?
12) What if their children are in the middle of a divorce, bankruptcy, or lawsuit? How can we protect them from losing their inheritance?
13) What types of assets do they have and how should those assets pass?
14) How should they hold title to each asset?
15) Do they have any sons-in-law or daughters-in-law that may pose a problem?
16) How well do their children get along?
17) What if they move to another state?
18) What should happen with their real estate after they pass away? Will it be sold, rented, etc.?
19) Are there any beneficiaries with special issues (alcoholism, substance abuse problems, bankruptcy, money control issues, etc.)?
These are just some examples of what we talk about during that first meeting. Many clients are very surprised to learn just how much goes into all of this. If you are looking for something "simple" and you're not asking difficult questions, you might end up with something "simple" that doesn't offer you and your family much protection. You may end up with a house of straw that crumbles when you need it the most. Also, it's important to know HOW to use your plan...not just "have" a plan.
Our office typically offers free consultations for people who have no estate plan in place. There is no pressure, and we think you will find the first meeting very informative. You have nothing to lose. Call our office at (661) 414-7100 to see if we can help you. We serve Santa Clarita, Valencia, Canyon Country, Newhall, Castaic, Stevenson Ranch, and surrounding communities. We have clients all over Los Angeles and Orange Counties.
When it comes to estate planning, creating a will, or preparing a living trust, many people have a similar vision in their mind - it's the person on their death bed with family all around. The lawyer is standing at the bedside, and the elderly sick person is signing legal documents. People think that estate planning is something people are supposed to do when they are sick, nearly dying, or very old. While it's certainly better to prepare an estate plan than to not have anything in place, waiting till you are very old or very sick is not the ideal time to prepare an estate plan. This is not something you want to do while you don't have your wits about you. You don't want to be under duress while doing it.
So when should you start thinking about it? If you are 18 years of age or older, at the very least you should consider preparing an Advance Health Care DIrective and a Durable Power of Attorney. The former gives your named agents the authority to make health care decisions for you if you cannot. The latter allows you to name agents who can act on your behalf in most other circumstances. When my son turned 18, I had him prepare both. Once you start to get a bit older and accumulate some assets, then you might consider preparing a will or better yet, a living trust. Each of these legal tools addresses what happens with your assets if you pass away. A living trust helps in many other ways that are too broad to address in this blog post (but that information is available elsewhere on this website).
While most of my clients are in their 40s and 50s, I have many clients who are older than that and many who are younger. A good lawyer can help you figure out what estate planning tools would be appropriate for your situation. Also, with respect to each estate planning tool (living trusts, wills, etc.), there are different variations on each that you should consider. This is not a "one size fits all" solution. Of course there are commonalities, but your will, trust, etc. should address your specific situation.
As a rule of thumb, once you are at least 18 years of age, it would be good to consider a health care directive, HIPAA Authorization (allowing release of medical records), and power of attorney. As you get older, think about adding more legal tools to your war chest. It's never too early to learn how these legal tools can help protect you and your family.
Hello, everyone. This is Robert Mansour. I wanted to make a brief video today to explain that your living trust only governs assets that you actually own. I had a client recently and he brought this living trust to me, and he had been divorced for several years, and in his living trust he had all kinds of things written there. I think it was kind of a trust that he downloaded from the Internet or something like that, and he had a lot of assets listed in the trust that were real estate, bank accounts, things like that.
Probably a good dozen pieces of real estate were listed in his trust, and he asked me to review these trusts and give him my opinion, and so I was reviewing the living trust and I found a lot of problems, but the biggest problem that I found, was that none of the real estate properties that were listed were actually his. They were in other people's names, in his former spouse's name, in another trust that's not his trust. I think it belongs to his former spouse.
I asked him, I said, "What are you doing writing all of these things down in your trust?" He was, "Well, I want these things to go here and there, and I want them distributed to so-and-so, and I want this parcel of real estate distributed and so-and-so," and I said, "You realize there's no magic powers in a living trust?" You can't just write down any asset you want, and suddenly, that asset is going to magically go to so-and-so.
I said, "You don't even owned these things. These things are owned by other people, so you can't just by virtue of listing them on some kind of a schedule or listing them in the trust, they're not going to magically go to those people when you die." He said, "So what's going to happen?" I said, "Nothing. Your living trust is meaningless. There is nothing in your trust that you actually own." He doesn't have the legal authority over any of those assets.
This also happens when clients simply write down their assets. Maybe they own those assets, never mind assets owned by other people. They own the assets and they write them down in their trust, and they list them, and they mention them in the trust, and they think that by virtue of simply listing them in the document or writing them down on a schedule of assets of some sort, simply by writing them down or putting them inside of their binder, that that magically means that that asset is now governed by their trust.
I explained, "No, no, no." First of all, you have to own the asset and if you do own the asset, you actually have to transfer the title on the asset to the name of your trust, so you have to file a new deed for your real estate. You have to go to the bank and tell them to move your account from your name into the name of your trust and there's paperwork involved.
Please understand, simply by virtue of listing the assets in your living trust binder and writing them down, that doesn't mean anything. It's important and it's helpful, but that doesn't really mean that the asset is actually in the name of your living trust, and therefore, governed by it. That includes assets that you own, and certainly assets that you do not own, you couldn't even move them into your trust if you wanted to because they're not yours.
There are no magical properties about a living trust, so please understand, properly titling your assets is very important as part of creating a proper living trust. Thank you very much for watching this video. I hope you found it helpful.
Your living trust is not your estate plan.
There is a common misconception out there. Many people think their living trust is their estate plan. You see, some people ask me to review their legal documents. They come to the office with their entire estate planning binder and they say, “Here’s my living trust for your review.” What they don’t often realize is that the binder is NOT their living trust. The living trust is simply one of the tools in the binder. That’s like calling your toolbox a “hammer.” The toolbox is NOT a hammer. The hammer is simply part of the overall toolbox. It’s “inside” the toolbox. Calling the entire toolbox a “hammer” is not accurate much like calling your estate plan a “living trust” is not accurate.
So, when people say they want me to review their “living trust,” I explain that what I really need to review is their entire estate plan. That includes their wills, their property agreements, durable powers of attorney, health care directives and related document, assets, etc. I need to review the entire estate plan. Imagine if you went for a physical exam at the doctor’s office and you said, “Hey Doc, I just want you to listen to my heart. Don’t examine anything else!” Your heart is NOT your entire body. You can’t conduct a physical examination simply by checking someone’s heart. There is so much more to it than that.
Therefore, people call my office all the time and say, “Hey, I need you to do a living trust for me.” I explain that’s like going to the car dealership and saying, “Hey, just sell me an ‘engine’ – I don’t want the wheels, seats, or anything else.” So I tell the prospective client that what they are probably asking about is an “estate plan” which include much more than a living trust. Their natural reaction in many cases is to say, “I don’t have an ESTATE. I’m not Bill Gates!” Then I have to explain that estate doesn’t mean “wealthy” or rich beyond measure. Your estate is simply all that you own, whether you have $5 million or $5000.
If you are going to prepare a solid estate plan, you don’t simply want a living trust. You want to make sure your toolbox is full of all the tool you and your family might need. What good is having a hammer if you don’t have any nails or other tools in the box you might need?
Please give us a call if you have any questions regarding your existing estate plan or if you'd like to learn more about all the options available to you. Call 661-414-7100.
A Certification of Trust is a document you should receive as part of your estate plan. This document basically provides "proof" of your living trust. Some banks, financial institutions, and insurance companies want to see a copy of it before putting your asset in the name of your trust. Some places call it an "Abstract of Trust" or "Certificate of Trust." Basically, this document provides a "summary" of your living trust because the trust itself is supposed to be a private document.
What does it say?
It provides the names of the Settlors (the persons who created the trust - usually that's you!). Other common terms for "Settlor" are "Grantor" or "Trustor". Settlor is the more common and modern term although many banks and other financial institutions still use the older terms. If you are a married couple, make sure the Certification of Trust makes it clear whether one signature is necessary or two in order to manage the asset. For example, do you really want to require both husband and wife's signatures every time you make a deposit or withdrawal?
The certification usually also lists who the successor trustees are. These are the folks you select to take over in the event you are unable to serve as the Trustee of your own trust (due to death, incapacity, or resignation).
Then the certificate usually provides the official name of the trust. For example, "The Smith Family Trust" or "The Smith Family Revocable Trust" etc. I usually like to keep it short for practical purposes.
Finally, the certificate usually provides a summary of the powers given to the trustees so the financial institution provides the trustees with the latitude necessary to manage the asset. Sometimes, the financial institutions will have its own certificate and they won't need the one you have.
Either way, just make sure you do what is necessary to put your accounts in the name of your trust. Remember, not ALL assets go into your trust. Your attorney should give you guidance as to which assets go into your trust and which ones do not.
If you don't have an estate plan and want to learn more, feel free to contact our office to see if we can assist you. Thank you very much, and we encourage you to explore our website for further educational information.