Will your Trust actually work as intended? A harsh lesson that lost the family home.

So you have a Trust. Good move. But when the time comes, will your Trust actually perform as intended?

A poorly written Trust will only give you a false sense of security, and even if your Trust is well-written, neglecting to fund or follow the provisions of your Trust will render the document worth little more than the paper on which it was printed.

From the annals of "you don't have what you thought you did" comes the instructional story of a Newport Beach homeowner, who thought he had protected his multi-million dollar home with a "QPRT" (Qualified Personal Residence Trust), only to find out at the worst possible time that his Trust failed miserably.

As an attorney with high-net-worth clients who turn to me to protect their assets, I understand well the importance of meticulously drafted Trusts that can withstand all challenges. As a litigator, all too often I see rusts that do not perform as intended.

I encourage you to read this article, published in Forbes by Jay Adkisson, and linked below, but the principal lessons are:

1. Laws and circumstances change. Your Trust is a living document that must be kept up to date.
2. A QPRT can be an excellent tool to mitigate future estate tax liability, but only if drafted effectively, which brings us to the next lesson:
3. Irrevocable means irrevocable. Even if your Trust is supposed to be irrevocable, if provisions therein allow you to revoke it, then you may be at risk.
4. Finally, filing for bankruptcy must be approached with extreme caution.

http://www.forbes.com/sites/jayadkisson/2015/09/30/qprt-deemed-revocable-and-fails-to-protect-home-in-ferrante/

Call me at 888-814-5552 or contact me by email for all of your asset protection, estate planning, and litigation needs. 

How Well-Written is Your Estate Plan?

Even if you have an estate plan, how well-written is it, and have you kept it up to date? The heirs of Robin Williams have commenced an expensive court battle due to conflicting provisions in his trust. Read more here.

Essentially, Robin Williams' estate plan included a trust that granted his children his memorabilia and awards in the entertainment industry and some other specific personal items, but also called for the creation of provisions to benefit his wife, which included the couple's home and "the contents thereof,” according to his will.

Pitfalls and conflicts such as this are all too common in many trusts I have reviewed. Simply put, not all estate plans are created equal.

We can review your estate plan today to ensure that your heirs don't fall victim to the same unfortunate errors that plague Robin Williams' heirs.

Call me at 888-814-5552 or contact me by email for a free consultation.

Protect Your Home With A Trust

Trusts are important for any homeowner, not just the wealthy.

FIRST, WHAT IS A TRUST?

A trust is a fiduciary arrangement in which a grantor transfers their own property to a third party, or trustee(s), to hold for the benefit of another, the beneficiaries.

Trusts may be revocable or irrevocable, and may be in effect during life or testamentary, to take effect when the grantor is deceased.

WHY PUT REAL ESTATE INTO A TRUST?

1. Avoid probate. This is a big one. When a California property owner dies, most assets not held in Trust must be administered and distributed under court supervision as designated in the decedent's Last Will and Testament. If no will exists, State law governs the administration and distribution. Unfortunately, this process causes delays and can eat up a large portion of the estate.

The costs associated with probate are based on the total value of the asset, not the net value after liabilities. For example, if you own a home worth $1,000,000 but owe $950,000 on your mortgage, the value for probate costs is still $1,000,000. In that case, probate would cost $21,000 in statutory fees, plus court costs and fees. As you can see, probate can be very expensive.

Probate will take between six months and two years to complete. During that time, the asset is held up and has not been distributed to your heirs.

2. Avoid reassessment for tax purposes. Usually, a change in ownership causes the property to be reassessed for property taxes, unless a parent/child or other exclusion applies. Transferring the home to a beneficiary through a revocable trust does not cause reassessment. This means that your beneficiary won’t get stuck with higher property tax payments, even if the home has appreciated in value over the years.

3. Ensure your wishes are honored. With a trust, you have full control over exactly what happens to your property when you pass.

4. Protect your property if you are incapacitated. With a trust, you are able to designate someone to handle your financial affairs, allowing you protection should you become incapacitated.

5. Possible savings on estate taxes. Finally, a trust can help you to save, or avoid, Estate Taxes. For more details on how, contact Elizabeth A. Tresp, Attorney at Law today.

ARE THERE DISADVANTAGES?

The only possible disadvantage is the potential inconvenience imposed by some financial institutions. If you ever need to refinance or sell your home, your financial institution may require the additional step of having you transfer the property out of trust and back to you personally in order to sell it. If you are refinancing, some banks may require you to transfer the property back to you personally for the refinance, and then you can transfer it back into the trust. But doing so is very simple and quick.

NEXT STEPS

Call Elizabeth A. Tresp, Attorney at Law today at 888-814-5552 or email us. We have offices in Solana Beach and Pacific Beach. Protect your home and family with a trust today. 

PRACTICE AREAS

• Estate Planning
• Estate & Trust Litigation
• Probate
• Tax Law, including Tax Controversy
• Trust Administration
• Litigation Services