Revocable Living Trusts

[Lori]

Good evening friends, 

 

I am in the midst of creating a revocable living trust for my daughter who lives with me.   The only assets I have is my bank account where my disability goes into plus some household items.  Nothing huge.    Anyways,  has anyone here ever created one on your own without a lawyer?  I can't afford one and I want to make sure that my daughter gets all of my assets/belongings when I pass away.     

 

 

[cme]

I believe you can just write your wishes and sign the note before a Notary Public.  No need to have a lawyer.  Your assets are small and simple.

[jdcarlson]

A revocable trust is a very flexible and valuable instrument to use in planning family finances.

 

One advantage is that to IRS (and most states that have income tax) a revocable trust is a "transparent entity." That is, just because there is a trust document covering ownership of property under local law, IRS still wants all income reported on the grantor's return. There is no need to file an income tax return for the trust.

 

If all property is titled to the trust, then there are no probate problems (at least in states I am familiar with). Since the trust owns the property, what changes at death is the beneficiary of the trust (which does not require probate). 

 

If there is any property in the trust that has income (i.e., interest on savings accounts, etc.) then when the grantor dies, the trust "flowers in existence" in the mind of the IRS. Thus, and income tax return will have to be filed for the trust income. If, however, the trust document says that at the death of the grantor all assets in the trust immediately pass to the beneficiary, then the trust will cease to exist at the death of the grantor (since there are no longer assets owned by the trust - they are immediately owned by the beneficiary) because there is no income to the trust.

 

I have set up two revocable trusts, one for myself, and one for my wife, with my son as co-trustee along with my wife and myself on both trusts. In my case I did this several years ago when I began to see my wife's memory start to fade. I set up the trusts while she was still lucid and qualified to sign the trust documents. Now she is in the Alzheimers'/memory care section of the retirement complex where we live (I have a separate "independent living" apartment) and without any memory she is not able to manage her own finances. Her trust, along with a "Durable Power of Attorney" allow my son and me to manage her finances. My father's dementia "kicked in" a few years before he died. I do not know if I will inherit that as well, but if I do, all assets are in the trust and can be controlled by my son (who is also a Certified Public Account, as am I) so he can manage my financial affairs if I cannot manage to do so.

 

Do a google search on "Revocable Trusts" and you will find several sites that have good information. Read as many of them as you can find. Some are best at explaining some things, and others explain other things better. Especially look for those in the State where you live because not all states have the same rules on Revocable Trusts.

 

Thanks,

 

Jim