Signature Revocable Living Trust Made Easy

E signature revocable living trust

hey so in this video I'm going to explain the gradual trends that have occurred up until 2020 in the area of a revocable living trust so I'm Paul Rabelais I'm an estate planning attorney I've helped thousands of clients get them keep their legal affairs in order first thing I want to say is happy new year I'm creating this video on January 1st 2020 new year new year new decade a lot to look forward to will have to look forward to on this YouTube channel okay so in in really all areas of law and finance we see gradual you know trends and it's no different in the area of estate planning and revocable living trusts so before I get into the the specific trends that I see I got to give you the background and the introduction of start with really what is a revocable living trust let me give you some background because when you die with certain assets in your name assets like real estate like a home assets like investments stock and shares of mutual funds if those things are in your name when you pass away those assets are gonna be frozen because it was determined years ago that our government our judicial system would oversee the administration the transfer and the disposition and disbursement of assets in your name when you die so when you die with assets in your name whether you have a will or whether you don't have a will but if you die with assets in your name your assets are frozen and your survivors will see a an attorney like myself and it's likely that you know many court documents will be prepared inventory all of the assets and debts that you own all these court pleadings will be filed at the local courthouse a judge will be assigned to the proceeding and if all of the paperwork you know is submitted accurately and timely than the then the judges sign the appropriate court orders and those court orders get submitted to the financial institutions where you have accounts and those accounts are frozen so the financial institutions lawyers will review the court orders and if everything looks good those court orders will order the financial institution to release the funds to your executor or to your heirs whatever the case may be those court orders will be filed in the real estate records where you own real estate and that will transfer the title of the real estate that you own and then those court orders will be given to other third parties ordering them to retitle assets from the name of the person who died into the names of the heirs so this this whole process of when someone dies assets frozen survivors hire lawyers courts oversee the whole process this is what's called probate he didn't hear where I live in Louisiana we call it succession it's the same thing but too many and look realize this is done at what is for many families a very difficult time because they just they just lost a family member and they're grieving so this process is perceived to as being you know expensive several thousand dollars to tens of thousands style of dollars it's perceived as being time-consuming several months two years and it's perceived as just an all-around hassle and inconvenience so some people in an attempt to make their estate settlement simpler by avoiding all of the government involvement the court supervision the attorney involvement some people create what we call a revocable living trust and here's how that works so assets titled in the name of your revocable living trust when you die they don't get frozen and they it and third parties don't require court orders to release those assets things in a trust don't they they don't get involved in that so your trust in a sense will replace your will and and and so your trust then says who's going to handle your trust when you die called the trustee as opposed to the executor of your will your trust will dictate who gets your assets those people are called beneficiaries of your trust as opposed to heirs and a will and a real important step is you create your trust and then that important step is you know while you're alive and while you're setting this up you're retitling those assets that were in your name that would have to go through probate when you die you retitle them into the name of your trust that's an important step sometimes it gets overlooked but the trust instrument governs the handling and distribution of assets that are titled in the name of your trust when you die so when you die typically the trust becomes irrevocable and you will have named a trustee probably a family member or maybe Co trustees maybe multiple family members to handle your trust when you die you state who's entitled to receive the trust assets when you die they're called principle beneficiaries and then the trustee merely just disperses the trust assets from the trust to those beneficiaries or typically family members and no lawyer and court involvement is necessary to get that done all right so now let's go into some of the kind of gradual trends that we're seeing for this year for this decade what happened last decade as we move forward so that the trend that I see is that states are attempting to create legislations so that fewer assets get frozen when you die and require all of this court involvement to get that asset transferred to the people that you would want it transfer to so let me give you a few examples so forever longer than I've been around people who have had life insurance policies they named beneficiaries and so when a person died owning a life insurance policy the family didn't need lawyers and courts to get involved to get the life insurance money they would just need a death certificate to the to submit to the life insurance company and then the life insurance company would those beneficiaries directly same thing with IRAs although there's some tax consequences their IRAs have beneficiaries annuities have beneficiaries so those you know for many many decades have been around those assets avoid probate and in recent years or recent decades states have enacted new legislation for other types of accounts things like transfer on death TOD things like payable on death p OD i know in louisiana our banking statutes permit payable on death bank accounts some investment accounts in some states they permit you to title those joint tenants with rights of survivorship you see a lot of married couples title assets that way and when the state commits it then when one of those joint tenants dies ownership automatically goes to the survivor and then you see some bank accounts where and this is kind of the informal way people do it you see mom or dad taking their child to the bank and adding their child as having signature authority on mom or dad or mom and dad's bank account and in many cases when mom or dad or mom and dad pass away that child who has signature signature Authority has access to the bank account the bank account doesn't get frozen go inquire your banks with your banks as to whether that works don't rely on your lawyer's advice that's a question for the bank here in in Louisiana where we are there's a mechanism available for people to leave their vehicles in their name and if their estate planning paperwork is set up right then when they die the depart office of Motor Vehicles doesn't need court orders to retitle those vehicles so that's another avoid probate mechanism with the vehicles and then here also here in Louisiana and started maybe a decade ago and and gets revised every couple of years we have our small succession affidavit procedure where if somebody lived in Louisiana when they and they had no will and they had less than 125,000 dollars in assets then the survivors can can complete this affidavit procedure and get get access to assets without having to go through the formal court proceeding so we're starting to see some things and some trends change in the area of trying to get families to have access to assets quicker and without court and government involvement here for example in Louisiana this Tod which you see in other states transfer on death it's not recognized here in Louisiana so if you have an investment account and you live in Louisiana and you own some shares of stock or investments in your name I'm not talking about your IRA that has beneficiaries but non IRA accounts then that's gonna have to go through probate if it's in your name when you die and here in Louisiana you can't title real estate or really any asset joint tenants with rights of survivorship it's not a form of ownership that's recognized here in Louisiana so if you own a home or own any real estate in your name when you die it's got to go through the probate or succession procedure even if you're married when the first spouse dies and that married couple bought a home together the surviving spouse is not going to be able to sell the home until that surviving spouse completes the probate of the first spouse to die so we still have some obstacles to cross to make it easy to avoid probate in Louisiana so so still that even with you know with all those you know gradual trends and those those kind of attempts at some probate avoidance mechanism you're likely to need a revocable living trust if your goal is to enable your survivors to avoid probate because there's likely some assets that you own that still would require a probate if they're in your name and even if you have assets that you know will avoid probate when you die even without you may still need a trust if you're leaving assets to miners who can't inherit as a miner if you're leaving assets to a special need heir who would get kicked off of government assistance if they were to inherit from you you'll want to have a trust in place to hold those assets correctly after you pass away or you'll need a trust if you just don't want to dump a chunk of money into one of your survivors laps maybe if maybe you feel like it would be better if it would be managed and doled out to that survivor of yours over a period of years to keep them from blowing it or you know handling it inappropriately all right so where we're at so far is 2020 and beyond if you own assets in your name there's likely to be a probate when you die which means your survivors got to go through court and attorney involvement many people set up their revocable living trust they title assets in their trust when they die they name the trustee who will handle things when they die and they name the beneficiaries of their trust who will receive assets when they die and when they die that trustee will be able to immediately immediately disperse the assets out of the trust to those beneficiaries without court and attorney involvement because things in a trust don't get frozen when you die okay so the next thing I want to go over is the the tax aspect to all of this and really the trend here in 2020 is for the next five years most families are going to avoid estate tax they don't even have to have the how do we avoid estate tax discussion but in 2026 and beyond our estate tax exclusion amount gets cut in half and so some families will be affected by the estate tax in the deal is many people who are getting their legal affairs in order this year in 2020 many of them are not going to die until after 2025 so of course the law the tax law in effect when they die is what applies in in this scenario so 2020 the estate tax exclusion or exempt amount is eleven point five eight million but in 2026 that that 10-year law sunsets and it comes back to five million dollars adjusted for inflation it'll probably be about six million dollars or so in 2026 so one of the questions is particularly for married couples is and and we have to answer this question while we're setting things up now so the question is you know when the first spouse dies does does that spouses share of the assets need to be kept out of or excluded from or not be lumped into the surviving spouses estate or do we want the assets of the you know and if the the first question was we don't want the surviving spouse perhaps to have an unusually large estate because the assets of the first spouse today got dumped into the estate of the surviving spouse maybe triggering that as that surviving spouse is a state to be more than the five million or the 11 million triggering 40% estate tax when the surviving spouse dies so we look at that or do we want the assets of the first spouse to die to be included in the surviving spouses estate in order to get what's called the double step-up in basis for capital gains tax purposes so I'm not going to get too much into all the intricate intricacies of that tax discussion but be aware that there are some some tax decisions that impact your family that need to be addressed when you're setting things up because it may be too late to fix it after the first spouse dies for married couples so just realize there's some there's some tax questions there all right so here's a couple of other things that I see that I think are important what I've found over the years doing this for some 28 29 years now that revocable living trust program that people put together when they do put it together and set everything up correctly it really forces you to inventory what you own kind of pull it all together go get the records because when you set up your revocable living trust plan correctly you're gonna be retitling certain assets that you own and so it's gonna force you to you know to go double-check get the records on what you own and have a good inventory of that and since it forces you to do that well that may be an easier scenario than just not inventory your assets having a will to dictate where whatever your own goes when you die and then when you die then your family is forced to inventory what you own and go seek out those records and it may be easier for you to do it than for them to do it so me personally my my wife Amy and I we've been married for 64 years between the two of us that's that's 32 each I thought you might like that one but and we have we have five kids who are all now young adults and just meet personally if something were to happen to me I don't want my wife to have to go hire other lawyers I'm a lawyer I don't want her to have to go hire other lawyers and and you know spend the effort and the resources that we built in an attempt for her to get access to be able to sell our house if that's necessary or access our investments and I certainly don't want our five kids having to go through that if something happens to me and my wife so that's that's one of the reasons that we you know set up our you know revocable living trust is we just you know I've specifically don't want my survivors to have to go through that so that's just that's just me personally excuse me so states are gradually trying to implement legislation that enables some assets to avoid this government supervision and attorney involvement but in no means has what they've done enabled most people to completely avoid the probate and since in general you know dealing with courts seems to be getting more complicated our government seems to be more complicated less efficient attorneys fees never go down from year to year you know attorneys and I'm an attorney and I'm just I've seen just you know this gradual kind of steep incline of the cost of probate over the years and so how most people feel is if you can do some things now to make it easier on your survivors then most people feel like you know they'd like to do that and kind of in my instance that's it'll be the the one final you know parental or fatherly gift that I provide for my kids to make it easier for them to get things settled one day I hope many decades from now so that should give you an idea on what's happening in this area of revocable living trusts in 2020 and beyond I'm gonna keep you informed make sure you hit the subscribe button in the notification bell so you don't miss anything make sure you give it a thumbs up if you found this was helpful and then share it there's a share arrow on your screen share it with other friends colleagues relatives of yours who may have an interest in wanting to try to make their estate settlement simpler for their families and their survivors I'm Paul Riley have a happy new year we'll see you next time