Should I Have A Revocable Trust?
Click here for .pdf version
One of the most frequent questions that estate planners are asked is “Do I need a living or revocable trust?” There are some estate planners who routinely advise all their clients to create living trusts for probate avoidance purposes. Underlying this advice is the assumption that probate costs are prohibitively expensive, and the courts something to be feared. On the other hand, we believe that the answer to the question should involve a more extensive review of a client’s personal circumstances and a hard look at the actual probate costs and expenses in the state in which the client lives. Additionally, there may be other ways to avoid probate that will satisfy a client’s needs and that do not necessitate the costs inherent in creating and funding a trust. There are certainly circumstances in which a more complex estate plan is desirable; however, sometimes a complex estate plan is more trouble than it is worth. A good estate planner will contemplate the problem from many angles, knowing that a revocable trust can be a great tool in the right circumstances and an unnecessary burden in others.
Revocable trusts are excellent tools for managing assets in the event of your disability. Once the asset is titled in the trust, the Trustee can manage that asset pursuant to the terms of the trust. In the event of the Trustee’s disability, there is a mechanism for having a successor step right into the prior trustee’s place. A revocable trust may also be indicated when there is a need or desire to protect assets for a beneficiary who may be unable to manage assets on his or her own or who has creditor issues or substance abuse problems. A revocable trust can also be used as a financial training ground for a younger generation as well. By involving the next generation of Trustee in the affairs of your revocable trust while you are living, you can explain and demonstrate your financial skills and values to them in a meaningful way, so that they are prepared to succeed you when the time comes. However, in determining whether to recommend a revocable trust, estate planners must take into account whether there are other probate avoidance measures that are available to you.
For a client whose estate plan primarily involves outright bequests to competent adults, it may be possible to structure your assets to avoid probate using transfer on death account designations, beneficiary designations and transfer on death deeds for real property. For many, the legal fees to create such an estate plan can be considerably less than the upfront cost of creating a revocable trust because much of the work can be done by the clients themselves. Particularly in the situation where your assets are relatively modest, a general durable power of attorney and advanced medical directive may be all the asset management that is necessary.
However, if any of the your beneficiaries are minors, have creditor issues, substance abuse issues or other problems, a trust which can protect the beneficiary may be very desirable and outweigh the costs associated with creating and funding a revocable trust. In thinking about whether to recommend a revocable trust for a client, one important factor should be an understanding of what estate administration would actually entail for a client. In Virginia, executors and administrators of estates are required to account to the Commissioner of Accounts for the administration of the estate for each year that the estate is open until it is fully distributed. Such review of the administration of the estate adds additional costs, and it is this annual administrative cost that can become burdensome in a small estate that, for one reason or another, is not able to be closed in a timely manner. Further, testamentary trusts are equally subject to annual review by the Commissioner of Accounts until terminated. Thus an estate plan that contemplates continuing trusts or an estate with a problematic asset may be a good candidate for a revocable trust in order to avoid the annual accounting costs. Again, the driving factor in thinking about whether a revocable trust is appropriate for you is very individually focused on your circumstance, your assets and how they can be best managed.
If you would like to discuss whether a revocable trust would be a meaningful addition to your estate plan, please contact any of the attorneys at Hook Law Center. We would be happy to discuss the pros and cons of creating such trusts with you.
Hook Law Center: Kit Kat, tell us about the dogs who acted recently at the Sandler Center.
Kit Kat: Well, this is interesting. You may think it doesn’t take much to be a dog acting in live theater, but it’s harder than it first may appear. There was a production of “Legally Blonde: The Musical” at the Sandler Center in Virginia Beach from April 17-26, 2015. The show requires two dogs—a chihuahua and a bulldog. Did the company rely on some local pooches? No, they hired professional canines who are trained by Bill Berloni of upstate New York. Mr. Berloni is a former actor who decided he really enjoyed training animals for productions rather than acting. The dogs in this particular production have a companion and handler whose name is Rochelle Smith. Rochelle, commenting on the purpose of rehearsals with the actors said, “The rehearsals are more for the humans than for the dogs. Frankie (the chihuahua) has done the part at least a thousand times.
He’s comfortable with it.’ For example, Frankie has to bark on cue (responding to a set of questions).
How do they get consistent performances from these dogs night after night? Well, a lot has to do with the training and conditioning. The dogs eat dinner AFTER the show. They get snacks in between scenes, but they’re essentially performing a little bit hungry. Their last, full meal occurred 12 hours earlier. They’re not
Another interesting tidbit is that Berloni only uses shelter dogs. Their scrappy beginnings apparently lend themselves to the role of actor. In productions that last longer than the one at the Sandler Center, there are understudies or extras for the dogs. They are integral to the show, and if one of the dogs is feeling a bit off, there is a substitute.
This just goes to show—things are not as simple as they might appear at first glance!
(Mal Vincent, “Dogs have more fun,” The Virginian-Pilot (Pulse section), April 17, 2015, p. 11-13)
- May 21 & 22, 2015 –The HLC Monthly Seminar for May is My Mother Needs Long-Term Care Right Now…What Can I Do? The seminar is scheduled at 10 a.m. on Thursday, May 21, 2015 in Suffolk and at 10 a.m. on Friday, May 22, 2015 in Virginia Beach. To register and reserve your seat, please call 757-399-7506 and ask for Debbie or register online at hooklawcenter.com/seminars.
- June 25, 2015 – Andrew H. Hook will be speaking to a group at the Virginia Beach Psychiatric Center in Virginia Beach, Virginia.
- August 12, 2015 – Andrew Hook will be speaking to a group at Maryview Hospital in Portsmouth, Virginia.
- August 21, 2015 – Andrew Hook will be speaking to a group at DePaul Hospital in Norfolk, Virginia.
- August 27, 2015 – Andrew Hook will be speaking to a group at Mary Immaculate Hospital in Newport News, Virginia.
- September 9, 2015 – Andrew Hook will be speaking at a Virginia Continuing Legal Education seminar.
- October 26, 2015 – Shannon Laymon-Pecoraro will be speaking at the National Business Institute’s seminar on The Probate Process from Start to Finish in Virginia Beach, Virginia.
Distribution of This Newsletter
Hook Law Center encourages you to share this newsletter with anyone who is interested in issues pertaining to the elderly, the disabled and their advocates. The information in this newsletter may be copied and distributed, without charge and without permission, but with appropriate citation to Hook Law Center, P.C. If you are interested in a free subscription to the Hook Law Center News, then please telephone us at 757-399-7506, e-mail us at email@example.com or fax us at 757-397-1267.