<p>Thanks to everyone for their thoughts–there is a more to think about since Congress made the $5M+ inflation estate & gift taxes exemption permanent. Our state follows the federal law on estate taxes. Will return to the question we originally asked the estate attorney about what would be improved by creating a trust rather than giving everything outright, so we can be better guided in the discussion.</p>
<p>HImom- a lot of our stipulations were the result of questions asked by our attorney. It would never have occurred to us to set up a specific monetary amount to be used for the grandmas, for instance. But when she asked, who would be most likely to care for them, and what are their circumstances, it became clear that we wanted more protection, and we didn’t want to leave the “burden” to one child due to proximity, for instance.
My only advice about having a revocable trust is to make sure that you are going with a very experienced estate attorney. You may pay a little more, but imo, but it can make a difference.</p>
<p>HIMom – so glad you started this thread. So much to think about and I do believe it’s time for DH and I to update our estate planning. </p>
<p>My parents have a trust and from what I’m reading here, it’s a good thing. My dad moved into assisted living a few months ago and my mother has just been hospitalized. She needs surgery and it is somewhat risky with her age. I am the executor of the trust, have POA for my dad, but my name is not on their checking account. If something should happen to my mother, will I be able to access her account to pay my dad’s rent?</p>
<p>If your dad is on the account, and you have power or attorney, you should be ok. Check it out with the bank. You can always add your name with your mom’s approval. The bank should be able to give you signature cards you can bring to the hospital, have her sign a and return.</p>
<p>If something happens to both, as executor, you should be ok if the checking account is in the trust’s name. If not, get your name on the account.</p>
<p>This thread reminds me that we need to update wills.</p>
<p>I don’t know if this has been mentioned but a crucial thing to have is a durable power of attorney. This you absolutely want - unless you don’t trust someone. Need to make medical decisions? Listed in the durable power. Need to get into a safe deposit box? Need to open or close or change financial accounts? All this stuff is covered. This can be a huge help to a spouse or to children. It takes away many of the hassles associated with trying to live life when a loved one is very ill or dies.</p>
<p>post #39
</p>
<p>It depends on the state you live in. I am median income, modest savings & assets, but I have a living trust. Just about every California lawyer I know recommends one. It’s not just a matter of taxes; it’s a matter of the various hoops needed to navigate through probate. (Keep in mind that court costs and attorney fees can be a factor as well - that is, it may be that the cost of probate is just steeper in some states than others).</p>
<p>On the other hand, none of my relatives in Texas have one. My father’s law practice was mostly probate before he retired, and he told me that Texas has a streamlined probate procedure, making it very easy to probate a will. </p>
<p>I personally never practiced in that area of law, so I really don’ know the details – the main point I think is that you will get different advice from attorneys in different states. </p>
<p>post #46
</p>
<p>This is generally part of the package that an estate lawyer will put together along with a revocable trust. There will be the trust, durable power of attorney, "living will’ (Advanced Health Care directive) , and a regular will as a backup for the trust (so if for any reason the trust is challenged, there is still a will to fall back on).</p>
<p>
</p>
<p>You might want to take your paperwork to their bank and have your name added to the signature card before the need arises. We were cautioned that banks can be difficult to work with when it comes to POA. You might also consider asking you parents to make you a co- trustee now, so you can take over management of their care without having to have a doctor declare them incompetent.</p>
<p>Agree that different institutions can require that you use THEIR forms and ignore all others. A friend who runs a nonprofit helping elders with their finances runs into this ALL the time. We did get power of attorney forms signed and notarized so we, our kids and the folks we named as executors can deal with H’s retirement fund with his employer. Also we updated beneficiaries on accts.</p>
<p>Do any of you have experience with quit claiming deeds? </p>
<p>We are refinancing my parents home which is in a trust in both parents names. The loan won’t go through with my dad on the deed as he has just moved to assisted living and his rent makes their debt ratio too high.</p>
<p>To get this loan through we need to take my dad’s name off of the house through a quit claim deed. I’ve been told that once the refi closes, my mom can quit claim him back on. This also means taking the house out of the trust. </p>
<p>Is this something that can be done in a matter of minutes? For instance the loan closes and then she quit claims him right back on? Or is there a delay?</p>
<p>We have irrevokable life insurance trusts that hold all our life insurance, including employers’ where the trust was named as beneficiary. (that threw HR for a loop - I must have been a first for them). There is no annual maintenance fee, as the trusts are set up with other spouse as trustee. </p>
<p>We found a local bank that has no fee, no interest checking accounts that we funnel all the annual payments through. There’s a technical ‘gift’ letter that needs to be completed each year in the event of an audit. Our attorney provided us a template that we just update whenever we pay premiums.</p>
<p>RE: Quit claim deeds</p>
<p>I don’t know about a matter of minutes, that likely depends on your local processing office, but she could certainly submit the quit claim deed to the recorders office within days of the loan closing. I don’t know if the lender would check that and have an issue with it, with all the new loan rules they could be checking things after the closing nowadays.</p>
<p>Also, is there any reason why it would be in Dad/Mom’s best interest to leave the house & loan in her name if she is the only one living there?</p>
<p>NJ- why the irrevocable trust if the spouse is the trustee? Usually the purpose of the irrevocable trust is to remove the asset from the estate value, but if you (spouse) still retain control over it, then it is still in the estate I believe. All the trusts like that which I have seen have a child or sibling as trustee, not one of the insured couple.</p>
<p>The spouse has no control over the trust. From my business law classes, I remember there are 3 parties to a trust: grantor, trustee & beneficiary. No one can be all three, but one person can be 2. I am the grantor, he is trustee and I can’t remember how the beneficiaries worked. </p>
<p>Regarding the large term policiies we contributed, they have been irrevokably contributed, such that I am no longer the owner of the policy, the trust is.</p>
<p>NJ- so when husband is the trustee and wife is the insured and the trust is the beneficiary, I do believe the value of that trust is still in your estate for estate taxes. What I have seen is that a business owner will buy a huge whole life policy (this was in the 80s & 90s, so the rules may have changed) pay an up front premium and then a son or daughter is the trustee with the purpose of the trust being to pay the estate taxes on the value of a family business to protect their liquidity in the event of the death. Neither spouse could have any auspices of control or it could be considered in their estate. They would gift the money to pay the premium to the trustee, but legally could not require it be done that way and legally that son or daughter could take the money and run, cash out the policy, etc.</p>
<p>
</p>
<p>Get legal advice!!!</p>
<p>Yes, this is something that can be done very quickly – the quitclaim simply needs to be notarized and recorded – but you could be creating a huge mess you will regret later on.</p>
<p>Some possible issues:</p>
<ul>
<li><p>it could be construed as a fraud on the bank. If your mom ever fell behind on her mortgage payments, that could make things extremely difficult.</p></li>
<li><p>down the line, it may not be in your dad’s best interest to have his name on the house, as he is in assisted living, for financial reasons. </p></li>
<li><p>if your dad is moving into assisted living because of deteriorating mental function, such Alzheimer’s disease, then his competency to execute the quitclaim could be in question. That would apply to signing anything else as well (such as a will) – just one more reason you need legal advice.</p></li>
</ul>
<p>I’m not sure that the transfer solves your refinance problems in any case, but it probably also depends on state laws. In my state there are laws that make spouses responsible for each other’s cost of maintenance – that is, if one spouse needs expensive medical care, the other spouse is legally obligated to pay – so a wife couldn’t take the cost of the husband’s assisted living facility off of her personal ledger by taking his name off the house. It is still a debt for which she is liable.</p>
<p>Thanks for the input, Somemom and Calmom. My sister and I have an appointment next week with an attorney who specializes in elder and trust law. My parents’ finances are a mess because my mother is a compulsive shopper who has gone through at least one HPYS education buying crap from QVC. </p>
<p>We are trying to save her from bankrupting herself and our dad. It’s a nightmare.</p>
<p>If you are trustee of the living trust and use your SS# for the living trust, you do not have to file a separate trust return. Income from the trust will be included in your personal tax returns. However, If the trustee is not the same or one of the spouse passed away, you should request a separate EIN number from IRS to split the trust, the residual trust should always have a separate EIN, while the revocable trust could have the living spouse SS# or have a separate EIN.</p>
<p>A trust with a separate EIN must file a trust return, if the income is more than 600$.</p>
<p>
However state exemptions might be much-much lower … they are in MA … it’s about $1M which with housing prices near Boston means tons of families are looking at least MA estate taxes … which can be avoided through trusts.</p>
<p>Agree it’s important to speak with an attorney who specializes in elder issues, especially if you have one parent going into assisted living and the other parent with a spending issue. If they’ve been practicing awhile, they have seen a lot and know what protections the law can and will NOT offer. Good luck–each of our states has specific laws, as does the federal government. General ideas can be gleaned from public sources like this thread and other sources, including books and the web but for specific info, you really need and deserve the advice of a good attorney specializing in elderly issues and estates so everyone understands the options with the pros and cons as they apply to YOUR situation.</p>
<p>The other thing about estates is that if you have a trust, you can avoid having things probated. In our state, if your estate is at least $100K, you have to go to probate unless it’s all in trust or avoids probate by how the assets are held. Probate generally is a fairly costly expense, on a % of the assets probated.</p>