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ANOTHER TRUST DEBACLE!


Last Monday I received a call from an attorney in Finley, Ohio. The decedent (e.g. dead guy) had written a will and a living trust, while living, of course. The plan had been to convey all of his assets into the living trust (with named successor beneficiaries, such as his wife and children) so that his heirs could avoid the costs of probating his will.


However, this decedent had owned mineral rights in Texas and a vacation home in Tennessee. Neither of these properties had been “conveyed” into the trust. Therefore, his will will need to be probated in Texas and in Tennessee. He had failed in his goal of preparing an estate plan that allowed his heirs to avoid future probates.


Is there a process to transfer the real estate into the heirs? Yes, of course. The process is called “probate.”


I get a call like this about once a month.


ALL MEANS ALL


To avoid the necessity of probate by creating a trust, it is necessary that ALL of your assets be conveyed (placed into the trust). ALL means, well, ALL. As in all of them. Not – ALL means MOST! MOST is NOT ALL!


TRANSFER MEANS TRANSFER


And the only way I can figure out that a living person can convey real estate is by the execution of a deed. Simplistically, the deed would say “from XXXX to the Trustee of the XXXX Living Trust.” I am familiar with no state where its laws provide that real estate can be transferred orally or by “simply wishing it so.”


Unfortunately, once you are dead, you cannot sign a deed, at least in Texas. Sorry about that.


OTHER REASONS FOR TRUSTS


Aside from avoiding the costs of probate, there are other very legitimate reasons for creating trusts, such as special needs heirs and estate tax avoidance planning. But those are separate reasons for a creating a trust; if the sole goal is to avoid the costs of probate, then TRANSFER means TRANSFER and ALL means ALL.


HOW HARD IS IT TO PROBATE A WILL?


Probating a will in Texas is not an extraordinarily difficult task, nor is it extraordinarily expensive, legal fee wise. So, instead of spending a couple of thousand dollars in legal fees, now, in setting up a trust, transferring your assets into the trust, and then managing the trust, consider investing that money is a high quality, high dividend paying stock and leaving that stock asset to your heirs as an asset for them so that they can pay the costs of probating your will from that asset.


Now, there are a few states where probate is time consuming and expensive. I understand California is one such state. But the probate process in Texas is efficient, straight forward, and of modest expense.


IN CONCLUSION


If a law firm is promoting a living trust as a vehicle to avoid the high costs of probate, find out the following:


1. Exactly what are these “high costs”?

2. Did the Lawyer say ALL assets must be in the Trust, even assets owned out of state?

If you do not get satisfaction on these two important matters – come and visit us!


by Jack M. Wilhelm


Edward Wilhelm and Jack Wilhelm provide tremendously high value legal assistance to a large number of very desirable clients.


THE WILHELM LAW FIRM, 5524 Bee Caves Road, Suite B5, Austin, TX 78746; (512) 236 8400 (phone); (512) 236 8404 (fax); www.wilhelmlaw.net


DISCLAIMER: The information on this site is not intended to and does not offer legal advice, legal recommendations, or legal representation on any matter. You need to consult an attorney in person for legal advice regarding your individual situation.

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Wilhelm Law Firm, 5524 Bee Caves Rd., Ste B-5, Austin, TX 78746 (512) 236-8400