Suggested Approaches To Living Trusts & Estate Planning

We Offer Information, Experienced Observations and Suggestions — But Not Mandates:

Lawyers, clients, and others differ in their opinions about some of the matters we discuss here. That’s okay. There is no right or wrong in these regards, there is only a philosophy about it. So don’t consider what we set forth here as absolutes you must adhere to or agree with; they are simply our general conclusions, observations and philosophies from over 25 years experience at this. We well know someone’s unique circumstances are sometimes perfectly valid reasons from departing from these generalities. So take them for what they are: suggestions. In the end it is your choice and you should always do what best suits your situation.

Always Remember Your Signature Is On The Will The State Has Written For You As Long As You Fail To Act

At any and all times which you walk around without your own implemented estate plan — by default you have actually been choosing and walking around with the estate plan that the government has written for you. Your failure to sign your own estate plan is as good as placing your signature right on the one the state has made up for you – and this does not necessarily correspond to your wishes. Worse yet, if you die without implementing your own estate plan this “intestate Will” is then subjected to the entire lengthy and expensive probate process.

Chances are, you know what you want, what your situation is, who your loved ones are, etc., much better than an impersonal government. Our guess is you too would like to have a say in your own matters. The only possible way you can do that is to implement your own legal estate plan. On your worst, most indecisive day, you can arguably arrive at a better plan for yourself (than the “state”).

BEWARE: The Search For Perfection Often Leaves You In The Most Imperfect Place Of All

There is a logical order here, and the first order of business should be to extract yourself from the worst possible position. We alert you to this because of the dynamics we often see accompanying people’s efforts to finally put together a Living Trust. Clients tend to delay implementing a living trust for many years after they have already decided they should have one. This occurs for a myriad of reasons – natural human procrastination, the mistaken belief that it is very involved, they can’t quite make up their minds on a few points, they are searching for the perfect attorney, the perfect trust, the perfect price, the perfect timing. On the surface many of these reasons appear understandable and reasonable, but when you take a closer look, the major flaw in such logic is the absolutely terrible position you are allowing yourself to stay in during this time.

In the flawed thinking which often accompanies this line of reasoning, many people believe this waiting period is so they can make a good decision. If you read the above then you now realize such a notion is a misnomer. Whereas you may think you have not yet made a decision in this important matter, you actually have because without your own estate plan your signature is on the one the state has made up for you. Again, on your most indecisive day you can probably arrive at a better estate plan for yourself (than the “state”). (Did you know that without a trust an 18 year old would gain uncontrolled use of an inheritance?)

Avoid The Tendency To Procrastinate:

Our best advice is not to procrastinate on implementing a Living Trust. It should be an important financial priority. A Living Trust is a plan for managing and transitioning your entire life’s accumulations.  Such is no trivial matter. Establishing a trust is relatively inexpensive, straightforward, and simple; getting caught without one is nightmarishly expensive and complex. Avoiding it, meaning to get to it, putting it off, or not wanting to think about it does not alter the reality that you leave your family extremely vulnerable. Those vulnerabilities are further magnified for young parents who have no established legal plan for their young or minor children. For the sake of your family and estate we urge everyone to take care of this important matter and avoid the common but mistaken tendency to put it off.

It’s Better To Take Care Of These Matters When You Can Joke About Your Mortality Instead of When It Is Staring You In The Face!

A Basic Choice About What Your Loved Ones Will Be Left To Endure

At its most fundamental level you are faced with a choice as to what you want your spouse or family to face when you pass away. Do you want to needlessly force them to endure an agonizingly slow, highly bureaucratic public process characterized by steep legal fees, a complete loss of control, and sacrifice of privacy, OR do you want a much easier, shorter, straightforward process that keeps the family in control, preserves privacy, and is characterized by far lower legal fees? If you want the former, you choose a Will to pass your estate (which signs you up for probate). If you want the latter, then you will choose a Living Trust to pass your estate. It is as simple as that.

Stick As Closely To The K.I.S.S. Principle As You Can

In our experience, the closest thing to a perfect estate plan is one whose inheritance provisions are simple and straightforward, and whose objectives allow the trust to be wound up and dissolved in short order. Most clients implement a Living Trust with the overall goal of making the distribution of their estate as inexpensive, speedy, and uncomplicated as possible. That is exactly what happens when you structure your plan around the KISS principle — (Keep It Simple Stupid — a principle which many an engineer can attest to the value of.) Another way to put it is that “complexity invites chaos”. To make it more complex is to invite some of the very things you were trying to avoid.

Resist The Temptation to Rule from the Grave:

Most of you have worked very hard for your assets and gained much wisdom and insight just as a result of living. This often gives rise to a natural temptation and inclination to “rule from the grave”. That is, some ask for trusts and other provisions which keep the assets tied up with restrictions for years – and thus to try to manage, direct, and control the use and consumption of assets, and to whatever degree, people’s lives and destinies – long after their dear departed souls have left this world. In some cases there is a genuine need and good reasoning for this but many times it is simply about trying to continue “ruling from the grave”. Lawyers, clients, and others differ in their opinions about this. There is no right or wrong in these regards, there is only a philosophy about it. We find attempts to manage and control things past death often causes more problems than they will solve. Further, you will eventually lose control no matter what you do – and any amount of time you are able to exercise it, usually a generation at best, will not even amount to a blink in the cosmic sense of things. These are just some of the reasons that we espouse a philosophy of resisting the temptation to rule from the grave.

Problems With Complicated and Overreaching Provisions

Oftentimes, when clients engage on a course of complicated directives and divisions that they see as wise, they unknowingly invite unforeseen consequences. You can never devise something that covers all angles. Any so-called “protective strategies” are always complex and act as a two-edged sword. While the clients are wholly focused on their narrow objective, they are blind to the unforeseen consequences of such complication. Again, lawyers, clients, and others differ in their opinions about this. There is no right or wrong in these regards, there is only a philosophy about it. What we find however is that often, what many believe will accomplish their objectives doesn’t, and it further leaves behind a messy and less than desirable legacy. For instance, excluding a child (or discriminating in other ways) may not harm an already unsalvageable relationship with the parents, but the possible resentment it may cause among the siblings may prove a hindrance or kill the prospect of good relationship between them. Requiring a house to be sold at your death may look like a great idea now but when the time arrives, it may come in the midst of the worst real estate depression in 50 years.

Shy Away From Trying To Divide An Estate With Specific Gifting

Specific gifts cause huge problems in many estate plans. Specific gifts often change in value. Some go up. Some go down. Accounts change. You use them up. An asset that was supposed to go to someone had been disposed of before your death.  Now what? The examples are endless but the concept remains the same. Attempting to equitably divide your estate by earmarking specific gifts right now may seem fine until later down the line it produces very inequitable results. The idea that you will constantly adjust your estate plan as your assets change is not grounded in reality and it is an invitation to a bad situation. Workable, straightforward, fair, understandable distribution and other provisions which have the ability to automatically adjust to your ever changing circumstances as well as circumstances as they exist at your death form the basis of a very workable estate plan. The best way to accomplish this is to state things in terms of percentages or equal divisions among a specified group.

Stay Away From Joint Tenancy & Other “Alternative” Techniques

The existence of alternative probate avoidance methods (besides a Living Trust) often diverts attention and misleads folks down the unwise path of choosing these poor alternatives.Any successful probate avoidance technique needs to also maintain maximum tax advantage and protection. It is there that Joint Tenancy and alternative probate avoidance techniques typically fail in such hidden, miserable and costly fashion. To a novice these “poor form techniques” can look very enticing from the outside, but with the right kind of knowledge you discover that it is a mask over something very ugly. Stay away from these insidious and poor techniques – they are a “fool’s errand” and ultimately costly. This includes Joint Tenancy, adding someone to title of an asset, gift deeds of real property to children (or anyone else). Assets passed through a Living Trust do not suffer these grave problems and it generally is the only method that will allow you to avoid probate while maintaining maximum tax advantage, flexibility and protection You can learn more about the numerous  problems with these methodologies by clicking here.

The Misinformation Grapevine & Being Careful Who You Listen To

We hear it every day. My neighbor told me this, my friend told me that, my banker, my broker, my golf buddy, my spouse, my son, my nephew, my real estate agent, my title company, some seminar, some book, some radio show, some financial advisor, sometimes even a (non-estate) lawyer — all said this or that — who heard it from Tom, who heard it from Mary, who heard it from John. As estate lawyers, every day we roll our eyes and shake our heads in disbelief that someone could have said something so unbelievably misleading, inaccurate, or wrong — or how the advice otherwise failed to address the other consequences or dangers of some course of action. It would be laughable except for the tragic and expensive consequence that people accept such misinformation as “gospel” truth and advice.

Odds Are The Person Handing Out The Advice Is No Expert & Following It Is A Mistake

No matter what the reason is, the results and the moral of the story are the same. You need to be very, very careful who you listen to and take advice from. We have all heard the saying that a little bit of knowledge can be dangerous – and it is a saying that is especially applicable here. Don’t follow misguided advice handed out by those with a very poor, limited, or one-dimensional grasp of the subject matter. And if you want to do things right and avoid becoming the victim of an ill-advised move, sometimes this also means being careful of yourself. It takes a great deal of full-time experience, as well as extensive education in multiple disciplines and areas of the law to understand the all around picture and become truly qualified to hand out advice. Odds are that’s not your neighbor, nephew, or real estate agent.