There is nothing more frustrating for us, as humans, to not be able to grasp a concept or understand what we’re reading. When it comes to legal terminology, as estate planning attorneys, we usually don’t hear from a client until they’re ready to hurl the paperwork out of a fast moving train. And that’s OK – that’s what we’re here for and it’s our job, as legal professionals, to eliminate the confusion.
That said, one of the most frustrating aspects of the law sector as a whole is the end of life and planning for the future dynamics. And let’s face it, millions go through their lives without the need of a lawyer – until they’re ready to create their wills, estate planning or if they need help with various trusts so that they can leave their loved ones their assets. You may never need a criminal lawyer, but you’re going to need the types of services our firm offers – and the sooner, the better.
It’s important, then, that our clients feel comfortable during the process. Here are a few of the most often scenarios we see play out every day. Of course, every situation is different, but the problems and concerns never waver.
Confusion About Assets and Trusts
One of the biggest misconceptions about trusts is that the assets are cash. That’s just not true. If a trustor leaves a $150,000 trust, many think it’s cash money sitting around collecting interest. In fact, about 5 times a year, we see a family on the brink of destruction because they believe the trustee has hidden that cash, out of the reach of the other beneficiaries. The trustee feels overwhelmed because they often have more than a few people demanding answers, especially if there are several siblings. They can’t explain where the $150,000 is nor can they produce any kind of ledger that tells them how it was spent. What they don’t know is that $150,000 might be the value the deceased’s home. Assets don’t equate to cash when it comes to estate planning and setting up trusts.
On the flip side, we love seeing families come back together once they understand the legal dynamics of what a trust is and isn’t. This further highlights the importance of setting up an accurate and detailed record of your assets – and more importantly – providing them to your estate planning attorney to be included in your will or trust.
Funding the Trust
Ah, this is one of those scenarios that make us wonder if the deceased has a sense of humor and is watching the drama unfold from a pillowy cloud. Let’s stick with the $150,000 trust that defines the totality of it using only the home’s value.
There is nothing in the trust, from a legal perspective, until and unless the trustor retitles the deed. On that deed must be the name of the actual trust as the owner. The deed memorializes the transfer, but it’s important then to also ensure the Trust has a record of that deed. Otherwise, our hands are tied as well since we have no record of the deed transfer.
As estate planning lawyers, we pick up the ball after the deed has been changed. We then “fund” your trust with the home because it’s now been titled over to it. But make no mistake: without the funding, the value of the asset is not included in the trust.
Let’s take it a step further: if the trustee opts to sell the home and meets with the deceased person’s attorney to put the wheels in motion, only to realize the deceased did not direct the lawyer to fund the trust with the re-deeded house, selling it will be impossible at that point. That opens a massive new set of problems.
So what’s the solution? Meet with an experienced New York estate planning attorney to cover those bases today so that it’s not a disaster tomorrow.
Latest posts by Saul Kobrick (see all)
- 529 Plans: Planning for Education with a Tax and Asset Protection Bonus - September 10, 2019
- The Importance of Communicating Your Plans - September 5, 2019
- Planning for the Unexpected - September 3, 2019