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One of the most talked about areas of estate planning is the concept of individuals, couples and families using a revocable living trust program to avoid the court and attorney involved probate process that is necessary when someone dies with certain assets titled in their name.
While it can be a beautiful thing when the living trust program eases the estate settlement after the Settlor of the trust dies, mistakes can be made that make matters more difficult. And when mistakes are made, things may not work out as planned.
Mistakes made when taking advantage of a revocable living trust program include failing to fund the trust, having the trust instrument poorly written, thinking revocable living trust assets are protected from nursing homes and creditors, failing to understand the relationship between last wills, trusts, and beneficiary designation items, and failing to keep your trust updated when necessary.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais
Estate Planning Attorney…(read more)
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9 Revocable Living Trust Mistakes to Avoid
A revocable living trust is a great estate planning tool that offers many benefits. It allows an individual to have control over their assets during their lifetime while ensuring a smooth transition for their heirs upon their passing. However, there are certain mistakes that individuals commonly make when setting up and managing their revocable living trusts. In this article, we will discuss nine of these mistakes to help you avoid them.
1. Failure to Fund the Trust
One of the most common mistakes individuals make is failing to transfer assets into their living trust. The trust will only be effective if assets are properly funded into it. It is important to update the ownership of assets such as bank accounts, real estate, and investments to reflect the trust as the owner.
2. Not Updating the Trust
Another mistake is failing to update the trust as circumstances change. Life is unpredictable, and it is important to review and update your trust periodically. This includes adding or removing beneficiaries, changing trustees, or updating the distribution of assets.
3. Naming Inappropriate Successor Trustees
Choosing the wrong successor trustee can have negative consequences. It is essential to select someone who is responsible, trustworthy, and has the ability to manage the trust effectively. Consider the individual’s financial acumen and their willingness to take on this role.
4. Poorly Defined Beneficiary Instructions
Clear and precise instructions regarding the distribution of assets among beneficiaries is crucial. Vague instructions can lead to disputes and legal battles among family members. Seek legal advice to ensure that the instructions are specific and leave no room for interpretation.
5. Ignoring Tax Implications
Failing to consider tax implications can affect the intended distribution of assets. Strategies such as gifting or utilizing the annual gift tax exclusion should be considered to minimize tax liabilities. Consult with a tax professional to understand the tax implications of your trust.
6. Overlooking the Importance of a Pour-Over Will
A pour-over will is a companion document to a revocable living trust that helps ensure any assets not included in the trust are ultimately distributed according to your wishes. Failing to have a pour-over will can result in those assets being subject to probate.
7. Not Communicating with Beneficiaries
It is crucial to communicate with your beneficiaries about your estate plan and the reasons behind your decisions. Lack of communication can lead to surprises, confusion, and even litigation among family members. Openly discussing your intentions can prevent misunderstandings and foster family harmony.
8. Failure to Plan for Incapacity
A revocable living trust is not only useful for estate planning but also provides provisions for managing your finances and healthcare in case of incapacity. Failing to include clear instructions for such situations can lead to disputes and guardianship proceedings.
9. DIY Approach without Professional Guidance
Attempting to set up a complex legal document like a trust without professional guidance can lead to costly mistakes. Consulting with an experienced estate planning attorney ensures that your trust is properly drafted and avoids legal pitfalls.
Avoiding these nine common mistakes can help you create and manage a revocable living trust that best meets your goals and protects your assets. Proper planning and professional guidance are crucial to ensure the effectiveness and longevity of your trust. Take the necessary steps to secure your legacy and provide for your loved ones with a revocable living trust.
Great advice. I would only add that one needs to find an expert attorney who drafts up the documents. I lucked out and had a very experienced attorney who bounced things off of me that I hadn't thought about. An amazing guy. I am grateful for his work.
I have my IRA and bank accts. set up with POD. is that sufficient?
how about regular living mistakes? Like not cutting that fluff off your head or that forest of ear hair?
I read a lot about this in my book on page 188,189&-191.
I didn't make mistake # 9 !!!
The Louisiana state has a completely system down the California state you need to learn that contact ABA
Could you please market to the billionaire so they can help us get our families off the street and there are hundreds of mistakes that trustees make the ABA will have them
Waste of money. Of course you'll never know because after paying these attorneys thousands of dollars, maybe tens of thousands, you will die and your loved ones are left to deal with more exoenses.
I’m not a lawyer. How do I know if it is well written? Do I need to hire a lawyer to check my lawyer’s work?
OMG, get to the point. Took 2.5 minutes to get to the first point..THANK YOU, @opensourceror for WRITING the nine things down.
I lost your email to finish my living trust please email to get ahold of u
really simple , informative , and practical THANKS
Trusts can be confusing and unfortunately there isn’t a place to get answers for your specific scenario . Everyone should make death simple.
Just get to the point. Never mind I didn’t pass 45 seconds
Very informative video thank you for these tips and advice.
Given the current state of the economy, I've noticed that my portfolio has been stagnant this year despite having invested in good companies. I have a reserve of approximately $700k that I'd like to see grow. Does anyone have any suggestions for how I can adjust my investment strategy in light of the recession to improve my portfolio's performance? I appreciate any insights or advice you can share.
If you truly own something, you don't need anybody else to give it away for you. It's just another money grabbing scheme concoction to line their pockets. Just like the marriage / divorce scam and funeral scam.
Do i need to go rhrough a lawyer to update my revocable trust or can i fill the form out myself and get it notorized?
Sounds like you are better off with a will especially if you are not a wealthy person & only have one heir.
great video. i love your commitment to educating our friends and family…doing all you can to help people and save families from aggravation, expensive costs, and time.
I think if your IRAs all have beneficiaries nwd you dont need a power of attorney.
Omg get out
Things start getting Real interesting about three minutes in- and he goes over some Key issues a bit too quickly for this brain.
Sir I am on Medicare/ Medicaid can you educate me about what this entails and can I leave my home to my kids if I put them on there at the 5-year marks in other words they're on there for 5 Years thank
This was super helpful. Thank you for the concise information
In Australia if you go to a nursing home the premium paid is refunded when you leave (die). The residents pay ongoing fees for their care. That's for private nursing homes. You can go to a government nursing home but it's best avoided unless you're broke. I'm not sure why I'm watching this on Xmas morning .
lost me on mistake no nine
I'd never allow my estate to go to a nursing home. I'd make it clear to let me die before they get $3000 a month of my money. When I get to the point of where I can't take care of myself, it's time to give it up.
Awesome info. I am about to setup a living trust and this info is exactly what I needed to know. Thank you.
We get taxed to die… they are buzzards……why should we worry about doing things right… when the doj doesn’t do things right……
I hear what ur saying But let me give u the biggest thing u don't mention about irevocable trust is no matter how perfect and how care u are to make sure it's done right cause my grandfather was on it he made sure that. My grandmother couldn't even change it they made a Covent giving him the controling % of the propety and yes he kept his IRA in my name since I was four yrs old now im going on 55 and being. The sole. Benefiary still have recieved a dime Why cause of Greedy family members who were stealing before my grandparents passed. A way they had there minds set on every thing they just cloned him and me like we each were twins with different or multi DOB. AND AS FAR AS I KNEW THERE WAS ONLY PENSION IRA 401K THAT I WAS TO RECIEVE BUT MY AUNTS AND THERE HUSBANDS HAD IT ALL FIGURED OUT. THEY TOOK ADVANTAGE OF MY GRANDPARENTS WELL. AND EVEN TILL THIS DAY THEY CANT REMOVE MY NAME FROM THIS. TRUST YET THEY STOLE MY IDENTITY THE ASSESSOR S OFFICE IS GETTING PAID OF CAUSE THEY GOT CAUGHT WHEN MY GRANDFATHER WAS ALIVE WHEN THEY QUIT CLAIMED ME AND PUT THERE NAME ON TITLE WITH ONE OF THE FOUR QUIT CLAIMS THEY HAD TO GIVE BACK TO MY GRANDFATHER ON 3/13/89 ON THAT SAME DATE MY 3 AUNTS AND MY MOM SIGNED THERE QUIT CLAIMS BACK IS THE SAME DAY THAT MY AUNT & HER HUSBAND MADE THE QUIT CLAIM THAT MY MOTHER SIGNED INTO A SALES DEED THAT SHOWS LIKE THEY WERE BUYING THE PROPETY FROM HER EVEN THOUGH .MY AUNT JUST SIGND HER QUIET CLAIM BACK TO MY GRANDFATHER AND HER QUIET CLAIM STATED THAT THIS WAS ALREADY UNDER A BONDIFIED GIFT R&T 11911 BEING ONE IN THE SUCCESSOR GRANTOR .YET THEY CONTINUED WITH THERE FRAUD BUY THROUGH MY GRADFATHERS PASSING AND TAKING LOANS THROUGHOUT THAT TIME AND THEY CHANGED MY LAST NAME BY ADDING GONZALEZ TO MY LAST NAME THAN MY AUNTSHUSBAND WENT AND SIGND HIS LAST NAME TO MY CORPORATION TRUST R&T 11911 AND MY ASSIGNMENTS OF RENT AND MINERAL RIGHTS AND ROYALTIES AND NEVER ONCE TOLD ME THAT EVERY THING WAS LET IN MY NAME AND I DIDNT QUESTION ANY THING TILL AFTER MY GRANDMOTHER PASSED CAUSE THATS WHAT I WAS TOLD THAT MY GRANDMOTHER WOULD CONTINUE TO RECIEVE MY GRRANDFATHER INSTREREST FROM HHIS PENSION THAN IT WOULD BE HANDED DOWN TO ME BUT 13YRS PASSED BEFORE THAT HAPPENED BUT WHEN IT I CONTACTED LOCKHEED MARTIN COPORATION JUST FOR THEM TO HAVE ME WRITE THEM SEND MY GRANDMOTHER DEATH CERTIFICATE WITH A LETTER AND A COPY OF MY ID AND SSI CARD NUMBER JUST FOR THEM TO TELL ME THAT THERE WAS NO BENEFITES. IN. TITLEEMENTS IN MY NAME AND THAT AFTER 25 YRS OF WORK AND RETIERMENT THAT ALL BENEFITS WERE PAID OUT. TO MY GRANDMOTHER AND THAT WAS IN 2005 WELL I WENT TO COURT THIS YEAR AND THE COURTS HAD MY NAME STATED AS SUCCESSOR LITTLE DID I KNOW MY AUNT AND UNCLE WERE USING MY NAME THIS HOLE TIME AND I DIDNT HAVE AN ATTORNEY NOR DID I KNOW THEY HAD A REFFEREE HEARING IN 2006 WITH ME BEING THE FIRST PETITION FILED 12/26/2006. AND THEY ALL GOT 27,413.37 FOR THE 371/2% OF THE PROPETY THAT MY GRANDMOTHER. HAD SIND A CONVENET WITH MY GRANDFATHER. WITH. AND PLACING IT. IN A TRUST AS A BONDEFIED GIFT WITH SUCCESSOR R& T 11911 SUCCESSOR & GRANTOR BEING ONE IN THE SAME .I SHOWED THE JUDGE THE TWO DEATH CERTIFICATE S IN MY NAME AS WELL AS THE TWO THEY HAAD IN MY GRAND FATHER NAME AS WELL AS MY AUNT & UNCLE PUTTING THEM SELF ON TITILE TWICE. BEFORE .BUT BECAUSE THEY HAVE ALL MY ASSESETS AND THEY HACK MY PHONE AND PAID SOMEONE. IN THE ASSESSOR S OFFICE AND THEY DONT EVEN VISIT MY GRANDPARENTSAT THE CEMETERY I NEED HELP IM ON LOW INCOME EVEN WITH WORK. I SEND MOST OM MONEY ON DOCUMENT PLUS I TAKE CARE OF MY DAUGHTER WHO ONLY GETS GR CAUSE THE SSI DEDIED HER SSI. WITH HER MS SHE HAS SO IM THE ONLY ONE WHO TAKES CARE OF HER .IF U HELP. PAUL I WILL GIVE HALF OF MY TRUST I HAVE THE ASSESSORS PRINT OUTAND IT SHOWS THEY HAVE 371/2 % AFTER THE REFFEREE PROBATE HEARING PLUS I GOT THE THE ADMINISTRATOR DOCUMENT THAT THEY USE IN COURT AND HOW THEY ALTERED IT AND ADD THEM SELFS AS EXECUTORS. AND USED THAT WITH A NOTERY. FOR THE ASSESSOR S OFFICE TO GIVE THEM TITLE AGAIN FOR THE THIRD TIME AND THAT WAS AFTER THE REFFEEREE PROBATE ENDED LIKE SIX MOUNTHS. IN THE FOLLING YEAR. AND I HAVE DOCUMENTS WITH THEM USISING MY SOCAL SECURITY NUMBER.
Your intro is far too lengthy
Thanks so much for this video!! A living trust does not necessitate any probate procedures. When the Trust Deed's events, such as death occur, the Trustee is instantly empowered to administer the deceased's assets.i am Currently living smart and frugal with my money. Saving and investing lifestyle in the financial market made it possible for me this early even till now earn monthly through passive income.
The problem I'm having is I don't know what to do my mom put my home in a revocable living trust but herself as the beneficiary then when she died she left the house to me and her will but her birthday is over and my daughter that was appointed the representative has done nothing and I don't know what to do