Reasons to have your living trust reviewed by an attorney
Attorney Tom Olsen: Holley, what have you been up to this week?
Attorney Holley Knapik: This week was actually a wonderful week of meeting new clients who already had estate planning documents, but would listen to you or Chrissy or myself on the radio and they came in and said, "Hey, yes, review our documents so that we know we are actually doing good, we're covered, or maybe we need to update something." I've probably looked at about six to seven trusts. I have to say this week is good news because typically, Tom will meet a couple or will meet a client with a living trust, but that living trust owns nothing.
That living trust has not been named the beneficiary of any asset. In essence, if they were to pass away, their kids would go through probate. Luckily, the clients I met this week, the trust owns the home. The trust is the beneficiary of that bank account. Everything was done correctly and recently, so there's nothing for me to do other than reassure the client that they were in the right position.
Tom: Good for you. Folks, what we're saying is that a trust is a tool to avoid probate. In order to avoid probate with a trust, it requires two things. Number one, you've got the trust, number two, that your trust owns your assets. What Holley is saying is so typical, is we meet people, they've got this long, complicated, expensive trust they paid a lot of money for it, but their trust doesn't own their assets and so they've wasted their time and money.
When you sign a trust it is, oh, you've built an empty vault or an empty safe and you must then fill it up with your assets. If you got properties, you do a deed where you deed the properties out of your individual names and into the name of your trust. For bank accounts, you make your trust to the owner of those bank accounts and for IRAs, retirement accounts, life insurance, you name the trust as a beneficiary. Good for you, Holley.
Holley: Yes. That was good to know that there are those who are using that tool correctly.
Tom: Well, Holley, part of what we're saying is most of the clients that we meet, of course, we're all about helping them to avoid probate here at the Olsen Law Group, but we realized that they don't need a trust to avoid probate. We use simple tools to avoid probate, but we meet a lot of people that back in the day, they met with other law firms and they got into a trust and well, if they got a trust, let's just keep on, let's go ahead and use it. What we're going to do is make sure that their trust owns their assets.
Holley: Right. Every now and then we may have to address their home, which may not be in the name of the trust. That's where we can also use the ladybird deed. Even if you have a trust, you keep the home in your individual name, but the trust is named the beneficiary of the home upon your passing. That's also an option that we've used for some of the clients who already have trust documents.
Tom: Those clients that you met with last week, were they generally using trust because they've got minor children or because they've got spendthrift children or they're just ordinary situations?
Holley: Some, it's they created the trust way back in the day when the kids were minors, but the trust still owns properties so we continued. Spendthrift children, definitely had a couple of those where they just know that the child is never going to be able to handle that money and so they created that trust. Typically, it's because the kids were minors at the time when they created the trust.
Tom: Well, just so we know that if the kids were minors when they created those trust, when you do a trust, you have to name a successor trustee who will become trustee when you pass away or when you and your spouse pass away. If your kids are minors, typically you're naming your brother or your sister or maybe your parents to be successor trustees. If when they did this trust their kids were minors and now their kids are adults, did they consider now amending their trust to make their adult children as successor trustees?
Holley: It's interesting, especially one case they had a relative, brothers and sisters, as successors and they actually want that to continue.
Tom: Okay.
Holley: They may not have admitted to me that there was a spendthrift issue, but just knowing that they did want to update that, there's something else. [laughs]
Tom: Well, folks, what we're saying in here at the Olsen Law Group, we are happy to review your existing estate planning documents for free. Whether you've got a will or whether you've got a trust, we're happy to take a look at it for you, make sure it's still serving you as it should be. You can either drop those off or fax them or email them or make an appointment to come see us and we'll review them for you while you're here. We're happy to do that service for you. Just out of curiosity, Holley, what was the status of their financial powers of attorney?
Holley: I think I only advised one couple in need of updating. One, it was done a while ago, probably early 2000s. They had not tried to present it to their bank yet and out of an abundance of caution, I mentioned an update would be necessary. Plus the laws have changed a little bit in regards to powers of attorney documents since then. Again, in Florida there's no law that says you must update, but we know dealing with financial institutions, they don't like old powers of attorney. That's the reason to update those.
Tom: Holley, I was doing a trust for our clients last week and they looked at me and said, "Tom, after you do this work for us, what will be your role ongoing?" I think what they expected was, Olsen Law Group, we don't, but is Olsen Law Group on some kind of subscription basis. [laughter] "We're going to pay you an annual fee to update our trust for us if you need to," and the answer is no. I told them, "Look, throughout these trust documents, you have made a determination who gets your wealth when you pass away, who's going to take care of business for you if you're not able to, who's going to make healthcare decisions for you if you're not able to.
As long as you don't change your mind about those things, you may not ever have to come back and see me."
Holley: Exactly. Exactly.
Tom: "If you change who gets your wealth, who takes care of business, who makes healthcare decisions for you, then yes, you'll need to come back and see me at that point in time. We need to amend and redo your documents."
Holley: Yes. It's funny that you mentioned they feel as though they're on this subscription service because I have gotten that question. "Will we have to come back and meet with you in two years or one year?" Well, no. I like to say, "If there's a change in your life, death, birth, marriage, divorce, those are reasons to reach out. Let's have a conversation."
Tom: Yes, that's great advice, Holley. Then as well, we know that people, when they get their estate planning documents done, they go home and they stick them in a drawer, they never think about them again.
Holley: True.
Tom: If people did their estate planning with us and two years later they're just, "I know I did something with Olsen Law Group. We put them all on a binder. Here's my binder of documents. I've forgotten exactly what we did or why we did it." They could still come back and see us and we could just remind them about, "This is what we did and this is why we did it."
Holley: Absolutely. Absolutely. We're always happy to answer those questions and walk through it again and make sure they're doing what they need to do.
Tom: Yes, exactly. Folks, we do offer a free initial consultation to talk about your estate planning. We can do that free consult in person, over the phone, and we do Saturday appointments here at the Olsen Law Group. We serve clients throughout the state of Florida. Wherever you live in Florida, we'd be pleased to assist you. Just call the Olsen Law Group in main number 407-423-5561 to schedule your appointment.
Speaker 1: One minute.
Tom: Or you can always contact us through our website, and that is olsenlawgroup.com.
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