During the December holidays, my adult son and daughter, along with their spouses and my three grandchildren, visited me at my home for several days. My daughter, a big-time New York City lawyer, suggested I “consider” putting the title to my house and two investment properties into a living trust to avoid probate when I pass on. I am 86, in relatively good health, but death might not be too far away. When I explained I might want to sell or refinance my house, or perhaps get a reverse mortgage, she really didn’t have any good reason why I should consider a living trust.

I highly recommend revocable living trusts for everyone who owns a home or other major assets. A living trust has two primary benefits: (1) avoidance of Probate Court costs and delays after the trustor dies, and (2) management of the living-trust assets if the trustor becomes incapacitated before death. Perish the thought, but suppose you become incapacitated with Alzheimer’s disease or a severe stroke. If your major assets are in a living trust, and they need to be sold or refinanced to provide for your care, your successor trustee (probably your daughter or son) can handle that without Probate Court interference. However, if your major assets are not in a living trust, a conservator would have to be appointed by the Probate Court to manage your assets. However, if all goes well and you live to 120 and die of old age, you can continue managing your living-trust assets just as you do now, including buying and selling. When you die, your heirs will still get a new stepped-up basis to the market value on the date of your death (unless Congress changes the tax law). (more…)

search for : living trust, revocable living trusts