Save Heirs Trouble With a Living Trust

Attorney Denis Clifford, in the fourth edition of “Make Your Own Living Trust,” has updated his authoritative explanation of living trust pros and cons for homeowners and realty investors. This well-organized book highlights the benefits of living trusts and why they are an inexpensive alternative to costly probate procedures, even for small estates.

The emphasis is on why most property owners should have a living trust so their heirs can avoid probate costs and delays. On page 5, Clifford grabs the reader’s attention by reporting expensive probate pitfalls, such as the true story of Marilyn Monroe’s $1,600,000 estate, which took 18 years to probate and, after her lawyers depleted the estate with their fees, left $101,000 for the heirs.

The special feature of this unique book is that author Clifford not only explains the living trust benefits but shows readers how, if they wish, to prepare their own living trusts using either the fill-in forms provided or the CD-ROM. Readers who prefer to have an estate planning attorney prepare their more complicated living trusts will know the right questions to ask after reading this excellent new book.

But the author doesn’t overlook the possible drawbacks of living trusts. These include the cost of hiring a lawyer (unless you use the forms in the book), recording fees, possible real estate refinance hassles caused by unenlightened lenders and the lack of cutoff of creditor claims (sometimes probate proceedings are good).

The book anticipates and answers virtually every question readers might have about living trusts. For example, Clifford discusses the issues of unequal inheritances for children, second marriages, disinheriting a child, no-contest clauses to prevent litigation and special concerns of unmarried couples.

Real estate owners will be glad to learn living trusts don’t cause loss of current realty tax assessments, mortgage and property tax deductions, homestead rights, the $250,000 and $500,000 home-sale tax exemption and stepped-up basis for heirs.

The author even lists limited situations when living trusts aren’t needed to avoid probate, such as when all major real estate assets are held in joint tenancy with right of survivorship and when all accounts have a “pay on death” provision.

Heavy emphasis is placed on the living trust’s second major advantage, which occurs if the property owner becomes incapacitated and unable to manage his or her affairs. For example, if a living trust is created before a person has a debilitating stroke or develops Alzheimer’s disease, the successor trustee can manage that individual’s affairs without expensive court appointment of a conservator . Clifford recommends individuals also give their successor trustees durable power of attorney for financial management; a blank copy of the form is included.

For wealthy couples who have estates exceeding $1,350,000, Clifford recommends an A-B trust so the assets of the first spouse to die are held in trust for the surviving spouse’s benefit. After the second spouse dies, the assets in both the A and B trusts go to the ultimate heirs, such as children or grandchildren. A-B trust forms are included.

This book covers virtually every aspect of how to avoid probate costs and delays by use of a revocable living trust.

It includes complete checklists, charts and diagrams to jog the reader’s mind about assets to include--or exclude--from a living trust. There is even a list of the few states that require registration of living trusts, although there is no penalty for failing to do so. The author also explains trusts for minor children and how to prevent heirs from receiving their inheritances from a living trust until a specific age, such as 35.

Finally, Clifford suggests that everyone who has a living trust should also have a “pour-over will” to dispose of assets that were omitted from the living trust, such as a personal checking account. There’s even a simple will form included, which is valid in common law and community property states. Rarely does a book come along that cannot be recommended too highly. This is one of those outstanding authoritative books that is so complete, it leaves virtually nothing on the topic out. On my scale of 1 to 10, this great book rates an off-the-chart 12.