AARP The Living Trust Advisor E-Book

Jeffrey L. Condon

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 477

Veröffentlichungsjahr: 2011

Beschreibung

AARP Digital Editions offer you practical tips, proven solutions, and expert guidance. Many of us spend a lifetime building wealth and accumulating assets, but fail to properly plan how all of this will be passed on once we are gone. And while dealing with complex financial issues such as inheritance and estate taxes forces us to face our own mortality, making these difficult decisions is something we all need to do. Living trust attorney and bestselling author Jeffrey Condon is extremely familiar with these types of situations and understands the importance of a living trust in an increasingly uncertain world. Now, with The Living Trust Advisor, he skillfully discusses the various aspects of this document and details how it can provide a seamless transfer of assets to your spouse, children, and other beneficiaries after you are gone. Written in a straightforward and accessible style--and peppered with Condon's trademark humor--The Living Trust Advisor puts the living trust in perspective and walks you through the four life phases associated with it. Page by page, this practical guide will help you: * Address the numerous issues that should be considered before first meeting with a living trust lawyer and other key players in this arena * Establish and manage your living trust over the course of your life as well as prepare it to carry out your financial wishes once you and your spouse have passed on * Identify potential inheritance problems now, so you can build solutions into your living trust before it's too late * Distribute living trust assets to future generations and protect those assets once the transfer is complete * And much more Throughout the book, Condon provides you with real-world examples that illustrate key points or clarify particular concepts. While many of these examples are drawn from Condon's professional relationship with clients, some anecdotes are associated with his personal experiences in this field. If you've picked up this book, then you're probably thinking about putting together a living trust. Or, perhaps you already have a living trust and you're looking to revisit it. Whatever your reasons, this reliable resource contains the straightforward advice and practical insights you need to create and maintain a living trust that will ensure your final financial wishes are carried out in full.

Leseprobe

MAKING YOUR MONEY WORK FOR YOU

Maybe you’re thinking it’s time to review your investment strategy and make the most of the money you have today. Maybe you’ve already built a financially successful retirement egg and want to protect what you’ve built. Or maybe you need to bulk up your earnings to ensure your family’s future.

Welcome to money for grown-ups. Where do you turn for credible information?

Dedicated to helping you protect your assets, stretch your dollars, and bolster your longterm security, AARP can offer you powerful solutions. Whatever your strategy for managing money, we’ve got suggestions that will help – from saving money on that next big purchase to planning your charitable giving. If you’re taking your job to the next level or building up a second career, we’ve got strategies that will help you make your mark.

You may think your money — or your financial advisor — should be working harder for you. You may be watching market trends and seeing new opportunities. And, of course, you want to protect yourself and your loved ones from scams and data breaches. We can give you the support you need.

And turn to us for fun, too. (Is it time for that car, that trip, that weekend home you’ve always wanted?) Because that, too, is what this time of your life is about.

AARP is a nonprofit, nonpartisan membership organization that helps people 50 and older improve their lives. For more than 50 years, AARP has been serving our members and society by creating positive social change. AARP’s mission is to enhance the quality of life for all as we age; lead positive social change; and deliver value to members through information, service and advocacy. This information in this book is for educational purposes and does not constitute financial advice.

Table of Contents

Title Page

Copyright Page

Dedication

Pregame Warm-Up OR READ THIS BEFORE YOU READ THIS BOOK

The Big Game—Living and Dying with Your Living Trust

A Few Things You Should Know about My Coaching Style

Your Final Locker Room Pep Talk Before Training Begins

Acknowledgments

THE FIRST QUARTER - ESTABLISHING YOUR LIVING TRUST

CHAPTER 1 - How You Established Your Living Trust Without a Clear Understanding ...

What Does It All Mean?

The Self-Drafted Living Trust—Don’t Do It!

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

CHAPTER 2 - What Does the Living Trust Do, and How Does It Do It? OR THE BEST ...

A Simple Explanation

It’s an After-Death Power of Attorney, but It’s Not

CHAPTER 3 - Do You Really Need a Living Trust? OR DON’T LET SOMEONE SELL YOU ...

The Reasons Why a Living Trust Is a No-Brainer

So, What’s Not to Like?

Putting Your House in Joint Tenancy with Your Child Is This Side of Insanity

In Summary

CHAPTER 4 - Establishing Your Living Trust OR NO BETTER WAY TO GET STARTED . . ...

Your First Homework Assignment: Selecting Your Living Trust Attorney

Your Second Homework Assignment: Making Sure Your Living Trust Document ...

After You Have Finished Your Homework

CHAPTER 5 - Who Should You Select as the Lifetime Agent of Your Living Trust? ...

Your Lifetime Agent’s Duty to Accomplish the Three Ps of Asset Management

The Not Very Scientific Method of Selecting the Lifetime Agent of Your Living Trust

Do You Trust Your Children to Watch Your Back (Financially Speaking)?

Can You Trust Your Friend to Protect You?

A Good Alternative

CHAPTER 6 - You Can Select Your Children as Your After-Death Agent, but Will ...

Selecting Your Children as Your After-Death Agent

“My Properties . . . My Pyramid”

“Your Money Is Family Money”

“That Was Our Parents’ Wish . . . Not Our Wish”

“I Got Robbed—and My Own Kid Is the Bandit”

The Indelible Conclusion: Money Changes Everything

THE SECOND QUARTER - LIVING WITH YOUR LIVING TRUST DURING THE LIFETIMES OF YOU ...

CHAPTER 7 - Functions of Your Living Trust While Both You and Your Spouse Are ...

Situation #1: Revoking Your Living Trust

Situation #2: Amending Your Living Trust

Situation #3: Either You or Your Spouse No Longer Acts as a Co-Trustee

The Low-Maintenance Living Trust

CHAPTER 8 - The Five Concerns about the Real Estate You Transferred to Your ...

First Concern: Owning Your Living Trust Real Estate

Second Concern: Transferring Real Estate to Your Living Trust without Risk of ...

Third Concern: Selling Living Trust Real Estate

Fourth Concern: Refinancing Living Trust Real Estate

Fifth Concern: Requiring the Signatures of Both You and Your Spouse to Sell ...

Concerning Yourself with the Five Concerns

CHAPTER 9 - Should You Tell Your Children about Your Living Trust? OR DON’T ...

Why You Don’t Want to Conduct a Family Inheritance Meeting . . .

And Why I Don’t Respect Your Reasons as to Why You Don’t Want to Conduct a ...

How to Conduct a Family Inheritance Meeting

Your Lawyer Should Not Charge for the Family Inheritance Meeting

THE THIRD QUARTER - LIVING WITH YOUR LIVING TRUST AFTER THE DEATH OF YOUR SPOUSE

CHAPTER 10 - Will You Divert Your Deceased Spouse’s Half of the Living Trust ...

The Three Goals of Living Trust Management after the Death of Your Spouse

Does Your Deceased Spouse Approve of Using Half of the Living Trust Assets to ...

Fretting and Hoping—by Your First Children

Preventing Your First Children from Fretting and Hoping So They Can Get Some Sleep

CHAPTER 11 - The Power to Change Your Deceased Spouse’s Inheritance ...

The Tyranny of Unjustified Lifetime Control

Periscope from the Grave

What If You Don’t Want to Change the Inheritance Instruction?

CHAPTER 12 - Dealing with Your Living Trust If You Remarry OR THE BATTLE ROYAL: ...

The Clash of the Inheritors

Divide and Conquer

CHAPTER 13 - Splitting the Living Trust Assets After Your Spouse Dies, ...

What Is the Estate Tax?

Preparing Your Spouse’s Death Inventory—the Federal Estate Tax Return

Allocating Your Spouse’s Half of the Living Trust Assets to a Separate Subtrust ...

The Real Name of the Smaller Bucket Is . . .

The Magic Trick

The Complete Picture

The Emergency Paragraph

Putting All of This Estate Tax Stuff Together

THE FOURTH QUARTER - DYING WITH YOUR LIVING TRUST

CHAPTER 14 - Distribution of Your Living Trust After Both You and Your Spouse ...

The Grim Reality

Beating the Odds

CHAPTER 15 - Don’t Intentionally Leave Your Children Unequal Inheritances OR SO ...

But It’s Not So Simple

Touchy-Feely Advice: Talk to Your Richer Child Before You Leave Him Less

CHAPTER 16 - The Accidental Unequal Inheritance OR IF YOU THINK YOU HAVE ...

The Family Scorecard

You Live, You Learn

An Easier Pill to Swallow

Separate but Unequal

CHAPTER 17 - Don’t Make a Child Who Owes You Money a Debtor to Your Other ...

What Else Can You Do to Get Your Money Back?

Consequences of the Unforgiven Loan

Resolving the Family Fallout over the “Forgiven” Loan That Wasn’t Really Forgiven

CHAPTER 18 - Do Not Leave Your Child an Outright Inheritance OR I’M NOT ...

Category One: The Protection Trust That Offers Only a Hope of Protection—the ...

Category Two: The Protection Trust That Is Just a Tad Less Liberal Than the ...

Category Three: The Protection Trust That Gives Control of Your Child’s ...

Category Four: The Neutron Bomb of Protection Trusts—the Discretionary Trust

CHAPTER 19 - Using Your Living Trust to Force Your Child into a Conventional ...

The Incentive Trust

The Incentive Trust That Creates a Real Incentive for Your Child to Find Employment

Striking a Balance between Competing Desires

CHAPTER 20 - The Success of the Third Party Irrevocable Protection Trust ...

Who Will You Appoint as the Trustee of Your Child’s PUPPET?

Your First Choice: The Private Individual

Your Second Choice: The Better Choice

CHAPTER 21 - Who Are Your Grandchildren? OR DO YOU REALLY WANT YOUR LIVING ...

Grandchildren 101

Two Certainties

The New and Protective Definition

CHAPTER 22 - The IRS Is Back! And This Time, It’s for Real! OR “SORRY ABOUT ...

The Federal Estate Tax Return—Your “Death Inventory”

The Not-So-Good News

The Estate Tax Return Process

Playing the Waiting Game After Your Estate Tax Return Is Filed

Seek Out Solutions to Reduce Your Estate Tax

CHAPTER 23 - Who Pays the Estate Tax? OR DON’T MAKE ONE PERSON PAY THE ESTATE ...

The Three Types of Estate Tax Allocation Provisions

Equal Estate Tax Allocation Provision

Proportional Estate Tax Allocation Provision

Specific Estate Tax Allocation Provision

Three Concepts You Must Know about Estate Tax Allocation

Forewarned Is Forearmed

CHAPTER 24 - Question and Answer Time! OR TAKE THE OPPORTUNITY TO ASK THIS ...

The Top Ten Questions

CHAPTER 25 - A Random Sampling of Cautionary Tales from the Inheritance Arena ...

Cautionary Tale 1: The Last One on the Scene Gets the Money

Cautionary Tale 2: A New Marriage Requires a New Living Trust

Cautionary Tale 3: Sometimes Having Too Much Money Can Be a Curse

Cautionary Tale 4: Keep Your Opinions to Yourself If You Want to Inherit from ...

Cautionary Tale 5: Don’t Let the Law Write Your Inheritance Instructions

Cautionary Tale 6: Joint Tenancy Gone Wrong

Cautionary Tale 7: When It Comes to Money, Family Loyalty Goes out the Window

About the Author

Index

Copyright © 2008 by Jeffrey L. Condon. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Condon, Jeffrey L.

The living trust advisor : everything you need to know about your living trust/Jeffrey L.

Condon.

p. cm.

Includes index.

ISBN 978-0-470-26118-7 (cloth)

1. Living trusts—United States. 2. Estate planning—United States. I. Title.

KF734.C66 2008

346.7305’2—dc22

2008018565

For my father, GeraldI miss you, Pop

Pregame Warm-Up OR READ THIS BEFORE YOU READ THIS BOOK

If this book is in your hands, you are probably thinking about putting together a Living Trust, which is the primary tool in the United States for the transfer of your assets after the deaths of both you and your spouse to your children, grandchildren, or other heirs. Or perhaps you already have your Living Trust, which has collected dust on your bookshelf or in your safe-deposit box, and you somehow have been prompted into revisiting it.

For a combined 62 years, my father, teacher, and mentor, Gerald Condon, and I set up thousands of Living Trusts for our clients. After all those years of advising clients on their inheritance instructions, I am left with this one conclusion: You really don’t know much about the Living Trust . . . or how it works . . . or what it should say or do . . . even if you have one!

Actually, perhaps that assessment is too broad to be of practical use. I do tend to speak in sweeping generalizations. Let me be more specific by lumping you into one of four categories of Living Trust clients.

1. You do not have a Living Trust, and you don’t really know much about the Living Trust other than it is some kind of inheritance document.

2. You already have a Living Trust, but you have no real or meaningful understanding of what it is or how it works beyond the basic function of transferring your assets to your children after your death without probate. In other words, you just signed it where your attorney told you to sign, threw it into your car, and have not thought about it since.

3. You have a Living Trust and you initially made a real and earnest effort to decipher its form and function. But many years have passed since you established it, and all you really recall is (1) you have a Living Trust and (2) it contains your inheritance instructions.

4. You have a Living Trust, and you refused to sign it until your lawyer explained every single paragraph and provision to your satisfaction. If you are such a person, I say to you: Your kind is so rare that you qualify as an urban legend.

Whether you are a Living Trust rookie or veteran, welcome to the Living Trust Advisor, and congratulations on dealing with the often unpleasant task of facing your mortality!

The Big Game—Living and Dying with Your Living Trust

The purpose of this book is quite simple. I want you to think of me as your Living Trust coach. Like any coach, I want to train you so you will be ready to play the Big Game, which, in this case, is living with your Living Trust with no financial, emotional, or practical upheaval in your life, and dying with a Living Trust that will adequately and effectively provide for your spouse, children, charities, and other heirs and beneficiaries with a minimum of conflict, diversion, tax, and expense.

Like any football or basketball game, this Big Game takes place in a special arena . . . the Inheritance Arena. The players are you, your spouse, your Living Trust lawyer, your assets, your children, your other beneficiaries, and, perhaps, the Internal Revenue Service (IRS). And like any game, there is a warm-up period (which is where you are right now)four quarters of play, and a cool-down period. Think of TheLiving Trust Advisor as your playbook that describes how to play the Big Game during those different periods, which are:

• The First Quarter: Establishing Your Living Trust.

• The Second Quarter: Living with Your Living Trust during the Lifetimes of You and Your Spouse.

• The Third Quarter: Living with Your Living Trust after the Death of Your Spouse.

• The Fourth Quarter: Dying with Your Living Trust.

• Postgame: Review and Lessons Learned.

The Big Game begins the moment the concept of doing your Living Trust pops in your mind. That is when the whistle blows to start play. It ends when both you and your spouse have died and your Living Trust assets are in the hands of your children or other beneficiaries.

Between the beginning and end of the Big Game, though, there is a lot that happens.

• There is the selection of the Living Trust lawyer.

• There is the understanding of the nuts and bolts of the Living Trust document.

• There is the allocation of the assets—real estate, stocks, bank accounts, brokerage assets, businesses, personal effects—to the Living Trust.

• There is the operation and management of the Living Trust during the lifetimes of both you and your spouse.

• There is dealing with your Living Trust real estate when you sell or refinance that property.

• There is the selection of key players—the managers, agents, and protectors—upon which depends the success or failure of your Living Trust and your inheritance instructions.

• There is the operation and management of the Living Trust when the first spouse dies (the deceased spouse).

• There is the protection of the surviving spouse’s ownership and control of the Living Trust assets during that spouse’s incapacity or incompetence.

• There is the operation and management of the Living Trust when the last spouse (the surviving spouse) dies.

• There is the filing of the last spouse’s estate tax return and payment of estate taxes.

• There is the distribution of the Living Trust assets to your children without creating conflict and chaos between them.

• And there is the protection of your children’s Living Trust inheritance from the winds of their fates: their addictions, divorces, remarriages, mental disabilities, financial immaturity, and creditors.

It does not matter whether you have played the Big Game before or whether you already have your Living Trust. After you read The Living Trust Advisor playbook, you will know how to play the Big Game the way it should be played. If you follow my training and listen to my advice, I believe you will walk away from the Big Game a winner. In my book, winning means:

• Having a clearer understanding of your Living Trust.

• Opening your eyes to the numerous problems and issues in the inheritance arena that you must consider before your first meeting with your Living Trust lawyer.

• Maintaining ownership and control of your Living Trust assets while you and your spouse are both alive, and then after the death of one spouse.

• Facilitating the smooth transfer of your Living Trust assets to your children, grandchildren, and other heirs after your death.

• Identifying potential inheritance problem areas now so you have the opportunity to build solutions into your Living Trust in order to prevent those problems from arising during your life and after your death.

A Few Things You Should Know about My Coaching Style

Before I say something trite right now like “Let the Big Game begin!” I must first convey a few things you should know about my style of coaching in order to help you follow the instructions in this playbook.

Bringing You into My Personal Life

Throughout this book, I will pepper you with numerous examples that illustrate a key point or demonstrate how you can do something. While many of these examples may be drawn from experiences with clients, others may provide you with an occasional glimpse into my personal life. Whether I allude to my business history, divorce, girlfriend, or likes and dislikes, I use these personal anecdotes as a device to support certain issues or emphasize particular concepts that arise in this book.

While I understand the viewpoint that divulging one’s personal anecdotes and professional experiences may be unprofessional, I have always disagreed with it. I believe that providing examples and sharing details that have arisen in my personal life and law practice bring this nonfiction book about estate planning alive and make the advice offered applicable to your life, too.

Therefore, you are not getting a technical lecture filled with charts, graphs, and PowerPoint slides within this book. Instead, you are receiving the advice and opinions of one attorney based on his observations and experiences—both professional and personal. With such a subjective approach, it is near impossible to convey effective lessons by keeping the private life out of the process.

Making Sweeping Generalizations

I am fond of broad and superlative statements that appear to be intended to apply universally to every reader of this book. Of course, I know that for every person who embodies such an absolute, there is another person for whom that absolute does not apply. Nonetheless, in order to help convey information and emphasize a particular point, a statement must come across as somewhat dogmatic without reference to exceptions. Therefore, the sweeping generalization is a literary device I often employ in The Living Trust Advisor.

Using Everyday Language to Explain Technical Ideas

The Living Trust, family inheritance planning, and estate taxes involve complex personal and financial issues. But discussing these issues in a legal manner would ensure this book’s quick demise and bargain basement status, as it would render the book a somewhat lackluster and uninteresting read. Moreover, if I used fancy legal jargon, I fear that many readers might not understand what I was saying. Therefore, I use nontechnical language to explain many technical concepts throughout this book. For example, the person whom you appoint to carry out your instructions after your death is called the “successor trustee.” In this book, I refer to that person as the “after-death agent.” Since your attorney may wonder what you are talking about if you mention appointing your after-death agent, I also supply the technical term.

Getting My Sense of Humor

At my seminars, there are two compliments that I can never get enough of. The first: “Gee, Mr. Condon, are you sure you’re a lawyer? I understood every word you said.” The second: “Mr. Condon, I never thought I would find myself laughing at seminar on death and taxes. I was really entertained.”

I’m not using these comments to wow you into buying this book or attending my seminars. I’m just trying to show you that I have found success in using humor as the medicine to help folks digest this material more easily, and that this book follows suit with my usual comedic approach.

I have an absurd sense of humor, and this book is riddled with it. With a title like The Living Trust Advisor, you probably would not expect to find such a quality in this inheritance planning book. I am aware that some readers may not find it appropriate to address death-and-taxes type matters with a comedic approach. However, I could not restrain myself, for two reasons. First, I just gotta be me. Second, approaching such a tedious subject as the Living Trust with humor simply makes that matter less tedious and, if I have my way, even entertaining.

Consulting Your Own Living Trust Lawyer

This book is designed to identify situations, problems, and conflicts that arise in the establishment, maintenance, and distribution of your Living Trust. However, because your set of circumstances may differ from the scenarios I describe, it is critical that you do not include any of my suggestions in your own Living Trust without first consulting your own Living Trust attorney.

Your Final Locker Room Pep Talk Before Training Begins

I was on water polo and swim teams throughout high school and college. I remember some amazing locker room pep talks made by my coaches that took us from lackadaisical (“What are we doing here?”) to motivated and focused on the mission (“Let’s go get’em!”). Inspired by those sessions in those days of yore, I now want to give you my pep talk to motivate you throughout your training.

You are about to embark on a process that is more than just dollars and cents. Your Living Trust is the last great lesson you will give to your spouse, children, and other beneficiaries. It is the vehicle by which you transfer your lifetime of accumulations to them. If your Living Trust lesson goes sour—by leaving your beneficiaries in conflict, or by causing your assets to be depleted by taxes and expenses, or by requiring that your beneficiaries go through probate to obtain ownership of your Living Trust assets, or by causing your Living Trust assets to become depleted once they are in the hands of your beneficiaries—so too will the memory of you be impaired.

But it does not have to be that way. That’s what I—your Living Trust coach—am here for. That’s why you have this Living Trust Advisor playbook in your hands. With this book, you will learn all you ever need to know about how to play the Living Trust game—from the time the concept of the Living Trust enters your head to the time its inheritance instructions are carried out after you and your spouse are gone.

Here it comes: Let the Big Game begin!

Acknowledgments

Wiring can be a very rewarding experience. But, when the writing involves trying to turn a subject as complex and tedious as the Living Trust into (one hopes) a lighthearted and entertaining romp, it can also be exasperating. No one thinks of the estate planning attorney as a tortured artist; but, after multiple occasions of spending hours on a single paragraph attempting to be informative witty, I felt I was Van Gogh.