The Living Trust Advisor. Condon Jeffrey L.

If the answer is no, tell them that out of an abundance of caution, they should have it reviewed by an attorney. Expect the response to be of the “We did this on our own to avoid attorney fees” variety. To that you say, “No matter how much energy you poured into your self-drafted Living Trust, you just don’t know if you drafted it correctly. One mistake could lead your family into post-death chaos. One meeting with an attorney to review your Living Trust will give you the peace of mind that you didn’t miss anything.”

      The only true way to learn about the dos and don’ts of the Living Trust is the hard way – from on-the-job training. That is why my profession is called the “practice” of law. We get to practice this stuff until we get it right.

      For example, when I was a young attorney, I was innocent in my approach to drafting my clients’ inheritance instructions in the Living Trust. When my clients told me there would never be any inheritance conflicts between their children, I believed them. After all, who was I to dispute my clients’ conclusions about their children?

      Nothing, however, prepared me for the harsh reality of human conflict when my clients’ perfect children divided their inheritance. Lawyers are not taught to recognize inheritance conflicts in law school. There are no advice books or classes on this subject. The only way I learned about inheritance conflicts was from having a number of clients die and then dealing with their children when they divided the family money. Having observed what happens between children following their parents’ deaths, I have arrived at this indelible conclusion: Your children might seem perfect – but you really don’t know them until they divide your money.

      You Might Have Living Trust Training, but You Haven’t Been Trained My Way!

      These experiences with both lawyer-prepared and self-drafted Living Trusts caused me to arrive at the sweeping generalization about how little you know about the Living Trust, even if you have one. A ton of people have been to Living Trust seminars, read Living Trust books, downloaded Living Trust software, and attended complimentary Living Trust consultations. Another ton of people have Living Trusts. But, those same tons of people still possess a definite and palpable thirst for knowledge about Living Trust basics.

      In order to answer the questions of these many bewildered, misinformed, and mistaken people, I’m back with this, the revised edition of my second book, which is about living and dying with a Living Trust. I like to refer to it as “The Living Trust’s Greatest Hits.” In other words, this book presents everything you need to know about the establishment, maintenance, and management of a Living Trust at all stages of the game. Why should you pay thousands of dollars for a Living Trust just to have no meaningful and practical understanding of what may be the most important document of your life?

      If you think you know everything about your Living Trust because your lawyer explained it to you – or you read the guidebook that came with the software – you don’t!

      If you think you don’t need training on your Living Trust because you’ve already received that training – you do!

      You have not been trained in your Living Trust my way. My way is to show you what you need to know before your Living Trust is set in stone. It will follow the flow of your money and property in the Living Trust at all stages of the game: while both you and your spouse are alive, then after the first spouse dies, and then when the last spouse dies and distribution is made to your children and grandchildren. The chapters that lie ahead explore aspects about your Living Trust that your lawyer – or software – never or inadequately explained to you.

      So, just when you thought you were done with all matters Living Trust, I’ve pulled you back in. The Living Trust is back, baby! And I, your Living Trust advisor, will help you get through it.

      CHAPTER 2

      What Does the Living Trust Do, and How Does It Do It?

      Or, The Best Explanation of the Living Trust You Will Ever Get

      I have attended (snuck into?) some of the Living Trust seminars conducted by my colleagues. I have heard them take more than an hour to describe what the Living Trust is and how it works. Maybe you have been to one and wondered why you are sitting in a hot room for over an hour, listening to someone talk and talk about the purpose of a Living Trust. In this chapter, I will tell you – in three to five minutes – what a Living Trust is and what it does.

      As you listen to my advice, I would ask that you forget everything you have ever heard about the basic mechanics of the Living Trust, even if you have one. If you focus on my explanation of the Living Trust – that it is simply an after-death power of attorney – you will guide yourself out of the legal haze thrust upon you by the Living Trust’s multiple pages filled with legal words that we lawyers have to use so the document can qualify as a legally correct trust.

      A Simple Explanation

      The Living Trust is not a true trust arrangement. Oh, yes – it looks like a trust, reads like a trust, smells like a trust, and tastes like a trust. It has all the complex words and phrases that a trust is supposed to have. But still, it is not a true trust arrangement.

      A true trust arrangement takes place when you take your money and property to a money manager and say, “I want you to manage these assets. I want you to take care of all the transactions – the buying, selling, leasing, exchanging, investing, wheeling and dealing – and send me a check for the income on the first of each month. I also want you to dip into the assets and give me principal or send it to someone else when I so instruct.”

      But that’s not how it goes with a Living Trust. You don’t transfer your assets to a third-party money manager. You transfer it to yourself. When you set up a Living Trust, you are saying to yourself, “Self, I want you to manage these assets – all the buying, selling, leasing, exchanging, investing, wheeling and dealing. And, Self, I want you to send me a monthly check for the income. And furthermore, Self, I want you to give me the principal whenever I want it or pay it to whomever I want.”

      You may think, “What an absurd and silly proposition! Why would any sane person set this up?”

      Here is why:

      The main purpose of the Living Trust is to provide you with the power to appoint the person or persons of your choice to sign your name to the title-transferring documents after you die. In short, the Living Trust is your after-death power of attorney.

      In order to better understand this concept, there are some important questions that need to be answered.

      • Do you know what a power of attorney means? A power of attorney is a document that you sign in which you – as the principal – give someone else – as the agent – the power to sign your name to documents and bind you to legal transactions. For example, let’s say you are selling your house, but will be vacationing in Liechtenstein when the transaction will take place. Since you are unable to sign the legal documents yourself, you designate your sister to have power of attorney to sign your name to the deed and escrow documents. This is a quite common arrangement, and perfectly valid and legal.

      That example is identical to your Living Trust, with an additional caveat. It is a power of attorney that you sign in which you – as the principal – give someone else – as the agent – the power to sign your name after your death to documents that transfer your lifetime of accumulations to your designated beneficiaries, such as your spouse, children, charities, and so forth. Documents that may be signed by the agent include the deed to your house, bank account forms, brokerage account forms, partnership and limited liability company assignments, and automobile transfer forms provided by the Department of Motor Vehicles.

      • What are the assets that are to be transferred? Your after-death agent has the power to sign the title-transferring documents for any assets that you transferred to your Living Trust during your lifetime and that are still in your Living Trust at the time of your death – your house and other real estate, bank accounts, brokerage accounts, insurance policies, partnerships, corporations, cars, silverware, fancy dogs and cats – pretty much everything you own.

      • How did your assets get into your Living Trust in the first place? You