By: Atty. Robert L. Ferris
I recently got a call from a woman who said:
* I just need a ‘simple trust to give my house to my children when I die
* I see some attorneys who prepare trusts for just $699
Stop and think about that for a minute, and ask yourself, how much time will an attorney devote to the preparation of my trust for just $699. Most attorneys in the Bay Area charge more than $300 per hour. And even a “simple trust” that is properly prepared, requires the attorney to take the following steps:
STEP ONE: The attorney should help you determine what assets should go into your trust. For example, should you put your bank accounts, retirement accounts, vehicles, jewelry, etc. into the trust. The answer is not the same for every situation. Generally, it is not a good idea to put bank accounts into a trust because it adds an extra layer of complexity and serves no useful purpose. However, in certain situations it does make sense. If a retirement account or IRA is included as an asset of the trust there could be serious tax consequences. The attorney preparing your trust should take the time to discuss this with you, and help you determine which assets to put in your trust, and which assets can be better handled with other probate avoidance devices.
STEP TWO: You know who you want to give your property to when you die, but what if something happens to that person, who will the alternate beneficiary be. For example, you want your house to go equally to your two sons and daughter. Unfortunately, your daughter does not survive you, what happens to your daughter’s share? Should it go to her two children age 9 and 13? That could be a problem because the children cannot pay their share of the mortgage, property taxes, insurance or repairs to the house. Nor can children sell their share of the house because minors cannot enter into a binding contract. A court would need to appoint a guardian to sell the property on their behalf. If your son or daughter is receiving government benefits like MediCal, SSD, or SSI. , etc. and they receive property from your trust, they could lose those benefits. These are just two examples of issues that should be addressed in a properly prepared trust, but that is unlikely to happen if the attorney preparing your trust never takes the time to discuss them with you.
STEP THREE: Determine who the trustee will be. Do you want two trustees (“co-trustees”), if so, can they act independently or must they both agree? If the trustee does not survive you who should the alternate trustee be? What if the trustee you want lives far away or in another country, will that be ok? These issues should be discussed and addressed by the attorney preparing your trust.
STEP FOUR: Prepare the trust, prepare the pour-over will, get a copy of the deed to your property with the legal description from the county recorder’s office, prepare a new deed transferring the property into the trust, send a draft of the trust and will to the client for their review so they can check for errors or changes prior to signing the documents, after the final draft of the trust and the will are prepared meet with the client to sign the trust, witness the will and notarize the signatures on the new deed, record the new deed at the county recorder’s office, after the deed is recorded send the recorded deed to the client for their records, retain office copies of the trust, the will and deed in case the client’s copies get lost or destroyed.
Steps one through four are necessary to properly prepare even a “simple trust” . Is a competent attorney going to do all of that for just $699? Or are they just going to give you a questionnaire and put everything but the kitchen sink in your trust. And if you already have a $699 trust I suggest you take a look at it and see if you can understand what it says. If you don’t understand it, how are your children going to understand it when you’re gone. The trust is not for you, it’s for your family, and only after you are gone will your family find out if the trust was properly prepared.