0:18 hello and welcome to trust and Estates weekly I'm your host Kevin bemel and we're kicking off a new week here at 10:00 a.m. Pacific Time 1 p.m. eastern time to talk about all things related to trusts Estates probate whether it's from your own um personal estate planning or whether you're a professional Who's involved in that field or looking to get involved as a way to enhance your business so um today I I want to talk about one of I think the most common um
0:53 estate planning tools that you'll hear about and that's something called a living trust so these have been around for quite a long time I know um back when I started my real estate career which you know dates back to the mid 1980s they called them intervivos trusts which I think is uh um well I know it's Latin but intervivos is is essentially like living trust right vivos life um and and they become a um more accessible um uh State planning tool um
1:32 for more and more people as um the the cost to um have a living trust has declined and as they become you know better understood by attorneys and accountants and other uh people involved in Estate Planning and so I I think uh this is this is of course it's not going to be you know individual excuse me this is not going to be individual legal tax advice anything like that we're going to cover um just some Basics um about living trusts so that um you
2:09 can understand what they're all about and and um have a sense of whether this is something to talk to your advisors about um and by the way if you don't have you know an advisor you can always feel to re feel free to reach out to me I'll be happy to uh refer you to someone um in your uh you know in your jurisdiction um uh living trusts um are a um they're they're created under state law basically and so um you know someone in California you know a lawyer in California unless unless they're
2:45 admitted to practicing in in multiple States is is not going to be you know the person for you to use so if you're located in you know New York or Alabama or Florida or Texas or Idaho or whatever you know you you'll want someone there locally I'll be I'll be happy to um make make that referral um for you and if if that will help you out so um a as has been my practice um I have uh uh created a little uh PowerPoint and here we go okay right trusts and Estates weekly for those of
3:20 you who are familiar with the show this I'm sure this looks familiar to you um this is our our our regular um uh you know background and um as as always um I I take just a moment to mention the three mention the three pillars of attainment so um on trust and Estates weekly generally speaking we're dealing in the finances Realm of the Pursuits pillar um however um because it often times um I I should say estate planning almost always deals with relationships family
3:56 friends colleagues um you know these other issues come into it and you see we will we will touch on those today and I think too that our mindset our identity so the self- pillar um can work in in this as well um and and by the way if if you're you know new to the show and like what's this whole three pillars of attainment about um please feel free to um go to our our YouTube channel um youtube.com theeway to wow um there there is a show there um talking just about the three pillars of attainment and what it's all about okay so let's jump in here right now
4:33 with with living trusts okay so first of all they're known um by other names you see they AKA also known as revocable living trust or a revocable trust so um if you recall um last week or the week before we talked about special needs trusts which are typically set up to make sure that um a loved one or or or you know someone we care about um has um what they need in in order to be taken care of typically
5:08 because they have some kind of disability or something like that and those trusts were irrevocable typically okay living trusts are revocable so what that means is um during the life of the grandor or the trust St or the all of those terms mean the same thing it's it's the person or people who create the trust okay so a revocable trust is one that they can change or dissolve during their lifetime okay and
5:45 and so that's why it's you know it's probably more accurate to call it a revocable living trust um but keep in mind that once the gror dies the grantors die now the trust becomes irrevocable okay so um there is that that shift in status if you will for a living trust and so that's why I think these days they T just tend to be referred to as living trusts um but in any event um the good thing about them is
6:20 well yeah the good thing about them is you know the the the GRS can make changes while they're alive Okay so um the the key one of the key aspects about a living trust is that it allows the grant tours um typically to control their assets not only during their lifetime but after death okay so it's it's it's very common for the grantor or grantors to also be the trustee okay and
6:56 you see there in the third bullet that the the living trust is managed by a trustee or in some cases there can be co-trustees where there's more than one all right um it's again it's not unusual uh for the grantor to also be the trustee and then there's a successor trustee who takes over at at the point where the gr tour dies um now the trust becomes irrevocable and the successor trustees step STS into the trustees um uh job if you will and sees
7:34 to it that the terms of the trust are executed um in accordance with the grantor's wishes as they are specified in the trust document okay now it's not required for um the grantor to be the trustee okay and I had I had a case um a few years ago where um there was a living trust a husband and a wife the husband passed away um leaving the wife um and one of her
8:12 children um as the uh trustees um and the wife decided she she just did not want to do this um she didn't want to have her daughter do it and so she asked me to be the trustee and so I was substituted in that's the that's the process by which a trustee is replaced okay and she was able to do that because since she was still alive it was still a revocable trust okay so um uh in in this case um I
8:48 managed the trust um she was the beneficiary of the trust and so I I managed it for her benefit that's the term you know benefit fishery right um and then um sadly she she passed away about a year later almost exactly year after her husband um and uh and then I U managed the Trust on behalf of um the the successor beneficiaries okay so that's that's sort of the a picture of of the life of a living trust if you will all right so um who who would use a
9:25 living trust well first of all people with complex Estates now um that word complex um may sound a little scary but um I I I have a a friend here in California who um is involved in the real estate business and and his he feels that you know anyone who owns a house in California needs to have a living trust um because once you own a house in California you already have a substantial asset okay I I'm not sure what the median home price is in
10:01 California um but it's it's it's higher than the national average national average is in the 400s I think so could be five six 700,000 median home price in California and and you know that's as we joke that's real money um and and and almost by definition um could make your estate uh complex now again this is not um this is not legal or or estate planning advice that I'm giving you um I'm I'm just passing along that complex can mean a lot of different assets a lot of um uh
10:40 difficult to deal with assets but can also just mean a significant dollar amount um especially in light of the second item there people who want to avoid probate so um you know if if if you own your house especially if you own it free and clear let's say it's worth you know $6 700,000 so you know do you really want to have to go through probate um and deal with that that whole legal I don't want to call it mess but that whole legal process um and and and probably not okay and there's no way that if you have a
11:15 house well I shouldn't say no way but it's extremely unlikely if you have a house worth that kind of money that you're going to be able to um avoid probate in the absence of some mechanism that's been created to do that okay so so that's another um aspect of of of um you know who who would use um a living trust see third one is people who want to maintain control of their assets so this goes back to what I was saying um in the previous slide so when you set up a
11:52 living trust you still are in control of your assets especially if you are your own trustee um excuse me so um you know just because it's transferred to a trust it does not mean that you have lost control of it indeed you maintain control of it and in fact because the trust is revocable during your lifetime you're not going to file a separate um excuse me so as because the trust is revocable
12:29 during your lifetime you're not going to file a separate tax return for the trust so although and and although the assets will be in the name of the trust any tax consequences of the trust's activities are going to pass through to you as an individual and you'll report them on your own tax return okay and then finally people who want to P plan for incapacity so you know let's say the there's I don't know a history of Alzheimer's in your family okay and you want to make sure that um you're not leaving your
13:07 family in a bind excuse me you don't want to leave your family in a bind so the living trust allows you to plan for for you know the um eventuality that you may not be able to um handle your own business Affairs okay and so while you may um you know you'll be the grantor and you may initially be the trustee there may be a mechanism there such that when you become
13:42 incapacitated um another trustee takes over and things can proceed in accordance with your wishes all right next so who might benefit then from a living trust well certainly parents of minor children um will will benefit because um it will allow them to um pass their wealth to their children even though they're minors and make sure that things are handled by the successor trustee in the way that they want as well people with Blended
14:18 families okay so a living trust that um sets out um what's to happen with which assets um you know related to which spouse and which spouse's children Etc all of that can be carefully worked out um in in the living trust so that um you can reduce if not eliminate a potential for family conflict and that can be a big benefit especially in Blended families where you might you know you might have uh both spouses might have
14:54 children from a previous marriage and then maybe they have children together and the children from the previous marriages may feel like you know the children they had together they they you know they get treated better and you know all that kind of stuff that that can go on with families so a trust can like I say minimize if not completely eliminate um a a lot of that family friction okay people with special needs beneficiaries so in this case the special needs beneficiaries may not even be minors they may be legally adults um and yet let's say you know you have a
15:30 child who's neurodiverse and that child needs some additional support so you may be able you can set up a living trust in a way that it will you know even after your death um see to it that um you that your you know your your child um has the resources um that that he needs to be taken care of and that there's someone there to help your child if he's not able to um handle all of his own Affairs himself okay business owners so um if you if you are business owners
16:06 who are not family members nonetheless you can set up a living trust so that um how what happens with the business after one or or you know all of the owners dies is specified and again it it prevents uh fighting among the remaining Partners or among the family members of the deceased part Partners right um there's there there's nothing like assets on the table um to to raise the likelihood that people will um get into disputes and so um business owners can
16:44 set up a living trust um that's you know specifically dealing with the business's assets and by the way you can you can have more than one living trust um there's nothing that that you know says you can only have one so depending on what your situation is and the complexity of it you may very well need need to have more than one okay finally people who own property in multiple States so um if if you own um uh real estate in let's say you know California and Nebraska and I don't know Michigan Right
17:21 H how is that all going to be handled so a living trust can specify um jurisdictionally how all that's going to be handled and it and again it it can make sure that um much of what much of the um uh uh um problems that can come from dealing cross jurisdictionally are handled within the trust and it's specified this is this is how I want this handled this is how I want this handled etc etc etc okay so
17:56 that can all be specified in worked out in advance um and and can actually save a tremendous amount of money in attorney's fees um you know if you if if all that's worked out up front and doesn't have to be um you know litigated a you know after your death or or you know um worse get the whole estate tied up in multiple jurisdictions and oh my gosh then it becomes just an absolute nightmare okay so these are some of the people this is not an exhaustive list but some of the more um common people
18:31 who um might benefit from having a trust oops I don't why I went backward okay so let's let's talk about now um some of the benefits of a living trust let just check the time here okay yeah we're doing well all right first of all and I mentioned this earlier probate avoidance now I'm not going to get into the specifics of probate I've talked about that in in a previous show and I invite you again to go to our um YouTube channel and check that out if you want to know more about probate but suffice it to say probate is a legal process it
19:09 requires the filing of um what amounts to a a a law suit not a contentious lawsuit but a a legal action is probably a better word it requires the filing of a legal action in court okay and the court will oversee the um Administration or the execu tion of the estate okay and and as a result there are costs there are legal costs there court costs um at times there may be a need for um experts to be brought in so there's costs associated with that and there's also time okay so
19:46 um probate does not necessarily move quickly okay um I like during coid for example probates moved very slowly because the courts were were initially shut down and they had to figure out how are they going to um hold hearings remotely and all of that so um some of that has been you know worked out now and more streamline and yet there are still backlogs um and so there's also the time Factor okay so many people want to avoid probate now there are other ways of avoiding probate besides a living trust and again i' I've T talked
20:22 about that in a previous show but if you have any kind of substantial assets it will probably it can be difficult to avoid probate in the absence of a living trust or or some mechanism like that okay so probate probate avoidance and the avoidance of the cost and time and aggravation um is is a big benefit of a living trust the next is privacy so unlike a probate which is a which um because it's a court um action
20:57 um is open to public scrutiny a living trust is is private you're not required to record the trust or file the trust with the court so no one needs to know about it Beyond those who you specifically want to know about okay so um that again for for people who you know just they don't they don't want to trot out their personal financial um you know Affairs in public so a living trust is a good way to avoid that okay and and
21:33 um um you know these days um I want to be careful how I say this um where you know with with so much stuff online with people trolling other people and doxing and all that kind of stuff um it's harder and harder to maintain our privacy and so although a living trust is not a simple uh document um it is one of the
22:08 simplest ways or and one of the most effective ways of maintaining uh privacy okay and then next is um incapacitation protection so we we spoke about that um in a previous slide um you know even if you don't have a history of of some kind of um debilitating disease or or or sort of a a gradual um loss of ability to function and even if that's not there's not a history of that in your family nonetheless um we are you know people are living a lot longer now in fact um I
22:45 think the they I saw a billboard this is now I guess a few months ago like the average child who is born today I think is going to live to you know at least 100 years old or something like that right so with longevity comes a greater likelihood of incapacitation at Le even just partial incapacitation and for a longer period of time and so that being the case it can be prudent um to plan for it and and in the end if it doesn't happen so okay no big deal um yes you may have spent
23:22 some time and money planning for it but better to be prepared um than than not okay and it can make things much easier not only on yourself um but on on um your children or or your spouse or those who you know are going to have to step up and and um make sure that you're properly cared for okay and then finally flexibility so um because a living trust is revocable it can be changed and it allows you um over time to you know make
23:57 Chang to your estate plan so um you know let's say that um you know you you you're you're married and um and your you know your spouse passes away now you're unmarried um and and let's say you know a few years later you decide to get married again so you know you're what you've got in your current living trust is not set in stone you can change it okay or maybe unfortunately you become estranged um from one of your children okay so that allows you to make
24:34 changes or maybe better maybe you become reunited with an estranged child um and you want to you know bring them back into your estate plan so all of that can be accomplished through a living trust um which which makes it uh you know again a very good estate planning tool okay and I think this is going to be our our last slide we're probably coming up in time here yes we are okay so what are some of the limitations of a living trust well first of all cost there is a cost to creating a living
25:10 trust this is not a document that you know you want to write on your own um you want to make sure that you have uh you know competent representation um that that knows the laws in the jurisdiction or jurisdictions in which um your estate plan um needs to be built okay and and so there are costs to that now as I mentioned the the the the cost today I remember when I was a law clerk okay the cost of doing a trust back then and this
25:45 is going back you know close to 40 years now um was the same as it is today which is another way of saying you know because there's been inflation it was probably at least you know double or maybe even triple the cost 40 years ago of what they are today okay and in some cases the cost today is lower in in just dollars than it was um when I was a law clerk um and so you know the costs have come down okay now obviously if you have a very um complex estate
26:20 multi-jurisdictional and that kind of thing so then that is going to um add to uh the cost um but nonetheless um you know it is a limitation um but but something that is I think well worth examining the cost benefit if you will um you know before you just out of hand reject a living trust okay the next is complexity um while while a living trust can help you avoid complexity or well help you help help your you know
26:56 your erors avoid complex is probably a better a better way of putting it right after you die um the the you know putting together the drafting of the trust and making sure that it conforms with you or you and your C- trustor's wishes um there's some complexity there there is other complexity that comes from um needing assets uh to be transferred to the trust in order for the trust to be useful the asset your assets have to be in the name of the trust but not every asset necessarily should be transferred to your trust okay
27:33 so should life insurance be transferred to your trust maybe maybe not it depends on on your specific situation should your car be transferred to your trust maybe maybe not so in a lot of jurisdictions um when one spouse dies the car automatically transfers to their spouse so it doesn't need to be in a trust okay um but but maybe if you've got you know a very expensive car or something like that and you you want to make sure there's no hiccups or maybe you want your car to go some to someone besides your spouse so then maybe it does need to be in your
28:08 trust so all of these individual um issues do need to be dealt with so that your the the the living trust can function um most efficiently uh for what you want to have happen Okay so that's that's another limitation is it's complex it third is it requires ongoing maintenance in the sense that um uh this is not something that you do once and you file it away and you never look at it again you do need to periodically review it um you know as
28:45 your overall estate plan should be periodically reviewed so if you have a living trust that's something that you're going to need to to um uh include in your periodic review now uh does it need to be reviewed every 3 months or every six months probably not every year maybe I mean it depends how much change is going on in your life um certainly uh you know if if if you have a living trust with your spouse and your spouse passes away that's probably a time for you know you to um you know review your living trust um if one of your children
29:20 gets married that may be another you know triggering event to reviewing it aside from whatever the regular review schedule is that you set up with your advisers but but again it's this is not something that you do once and you you know you just put it in a folder and don't worry about it now people do treat their Wills that way that's probably not wise either um but certainly if you've gone to the trouble and expense of creating a living trust you want to make sure that you're taking care of ongoing maintenance
29:55 finally a living trust may not give you creditor protection okay so um this is a a complex issue um it it can vary from state to state okay so um whereas in a in an irrevocable trust um it's more likely that the assets of the trust will be um protected from a creditor who's coming after you as an IND individual a living trust may not do that now again
30:31 this is something that you'll want if if if it's a concern um you'll want to discuss this with your advisors so they can tell you more specifically how things work in your jurisdiction um and and how things may work with respect to specific assets etc etc okay but just realize that um one one of the reasons for setting up trusts in general is is creditor protection um but there are limitations to that with a living trust and that's that is something you want to take a look at okay and I think that is
31:08 it yes so if you have any questions or like to get some help or need a referral as I mentioned earlier by all means please feel free to reach out to me you see the show's email there on the screen this will also be in the show notes um you see some of our social media um links there um all of our social media will be linked in the show notes you can always post a comment or if it's something personal um maybe don't post a comment maybe you know send a direct message something like that okay um and and you know if we're not connected if
31:43 if you um uh you know want to direct message me and need to connect so just you know that that you can post on social media say Hey Kevin um have a personal question I want to DM you would you connect with me happy to do it um and that way we can you know communicate uh privately um and uh there was something else I was going to say about that oh and if you have if you have a a question or a comment that's kind of more General and that other people um you know would benefit from hearing the answer then by all means you know feel free to post that as a comment and either I will respond or if it's
32:19 something you know out of my um area of expertise so then I'll I'll reach out to um a colleague and and say hey you know I I had a a viewer of my show ask about this you know what do you think and and and and they'll respond and that way you can be reasonably assured you're getting a competent response okay and I think we just have the legal stuff right there we go copyright we're going to stop the share okay we're we're a few minutes over but that's okay um so that is the show for today and um hope you found it informative and useful um this is you
32:56 know a a great tool um and I know I I have a living trust and um um am glad that I did it um I I I forgot who recommended it to me or maybe I decided on my own that I needed to set one up I don't remember now it's been a while um but in any event um I I I do encourage you don't leave these things for the last minute um it takes time to um you know figure out how the trust should be drafted to get it drafted to you know go over it get it properly executed and
33:32 then transfer State uh transfer property to it so all of that is a lengthy process you're you're you're probably not going to accomplish it in even a month or two you're probably looking at you know minimum of a 3 to six month um uh time period and and um if you have you know a lot of property then then you know easily could be even longer than that so um you know and and you don't want to be doing this under time pressure you want to be able to um you know proceed with with uh caution and make sure that everything's being handled the way you wanted to be handled so I thank you very much for joining me
34:09 today and just just to mention tomorrow at 11:00 am Pacific time is my show business lessons from the military we're talking about um intelligence and how we can apply the idea of military intelligence um to the business world and then on Wednesday at 12:30 p.m. my guest is desama Gordon she's an author filmmaker teacher yoga instructor um has has had a fascinating uh professional life and I think you will very much
34:44 enjoy hearing des's thoughts on on uh professional success and and how to uh live a life worth living so again that's 12 that's people making money 1230 on Wednesday and then a week from today we will be back for the next edition of trust and Estates weekly so I thank you again for joining me I wishing you a wonderful rest of the day and signing off as always Marie you are my bell all the best folks