Oliver Wendell Holmes
in The Autocrat of the Breakfast-Table (1858)

Holmes knew over 145 years ago something that most Americans are just learning. Trusts are a valuable estate planning tool. If you don't plan your estate the government will do it for you. Do you think that the bureaucracy will do it the way you would have done it if you had not procrastinated. It makes no difference how young or how old you are; you can always find a reason to put off estate planning. A major reason is that you are uncomfortable thinking about your own death. Another is the expense and yet another is dealing with lawyers and their jargon.

None of these excuses justify the cost in both money and frustration that your survivors will pay if you do not put your affairs in order. Probate costs are as much, or even more, as 10 percent. And that 10 percent is of your gross estate - which does not deduct what is owed by the estate such as the mortgage on your house.

If you don't plan your estate the government will do it for you! Do you think that the bureaucracy will do it the way you way you would have done it if you had not procrastinated?

"There are a number of ways to leave property to those you want to have it after your death. The peculiarities of our system of inheritance mean that substantial amounts of money and time can often be saved if property is labeled and transferred by certain legal means other than others. For example, if you leave your affairs to be handled by lawyers, a considerable sum of your money will almost certainly end up in their pockets as fees for the time-consuming and unnecessary legal game called probate. Fortunately, there are safe and understandable methods you can use yourself that will save time and money when your property is passed on." Denis Clifford, Attorney, "Plan Your Estate" Nolo Press, 1990.

A well drawn trust can spare your family expense and anguish. Your estate will pass to your heirs with a minimum of red tape. Estate tax can be avoided to a large extent. The family turmoil that frequently occurs when a widowed spouse decides to remarry can be avoided if there is a family trust in place.

Jane Glenn Haas, the author and financial columnist, in a recent column in the Scottsdale Tribune (Page C2, Monday, February 7, 2005) tells of overhearing, in a restaurant, a widower who was about to be remarried and his son arguing over inheritance. The son and the other children felt that they should have at least the half of the estate belonging to their deceased mother, and they are convinced that the new wife will somehow get it all. Jane said that she wanted to rope off the area around their booth and sell tickets. She wanted to shout to the other people in the restaurant, "See what happens when you don't plan ahead?" The children were threatening to take legal action to place their father under a conservatorship, but Kim Hubbard, an attorney who heads the Financial Abuse Specialist Team for the Council on Aging of Orange County, California, is quoted in the article as saying, "There's no question there are people who will marry a widowed person for the money, and that is a legitimate concern. But if a conservatorship is filed and the courts find the parent competent, that can really destroy the family relationship." Ms. Haas closed her column with these words; "I wondered if the dad was going to ask why his son thought he was entitled to anything - at least, anything now. And I wondered why the dad and mom didn't set up a plan to avoid this conflict. And I know it's too late to lock this barn door".

Adult children may not approach the "inheritance table" with thoughts of equality of inheritance. Often the aggressive child ends up with a bigger slice of the pie. Remember the story of Cain and Abel in the first book of the Bible; it seems that sibling fights over their parent's money have gone on forever.

The primary vehicle for accomplishing the transfer of your estate with a minimum of time, expense and anguish is THE REVOCABLE LIVING TRUST.

A Revocable Living Trust is an Intra-Family Legal Agreement that forms a legal entity which has a life of its' own. For this purpose a single person is a family, you make a contract with yourself. You create the trust as the Trustor; you manage the trust as the Trustee; and you are the beneficiary of the trust until you die. You control the management and disposition of your assets during your lifetime and after your death.

It will avoid probate, of which it has been said that probate is a tax levied by the legal profession on the rest of us. Probate is, as you know if you have ever been involved in it, a time consuming, expensive process. One survey showed an average cost of 8.6 percent and an average time of sixteen months to probate a $50,000 estate.

Estate tax is due on estates over $1,500,000. Rates start at 18% on the first $10,000 and rise to 49% at $2,000,000. An appropriate trust created by a married couple can double the amount to $3,000,000 saving $345,840 in taxes at the second death.

Estate tax laws have been changing and will probably continue to do so. In 2003 the exclusion was $1,000,000. It will be $1,500,000 in 2004 and 2005; $2,000,000 in 2006, 2007 and 2008; $3,500,000 in 2009; and there will be estate tax in 2010. However, under current law it will go back to $1,000,000 in 2011. The probability that this schedule will change is high; however, we must plan on what is now the law and adjust as necessary. Our trusts will handle the current situation and we anticipate that if the estate tax is done away with, as some seem to think, the trusts should not need to be changed.

Good estate planning needs more than THE REVOCABLE LIVING TRUST. Our Estate Planning Portfolio contains not only the living trust but Powers of Attorney for both financial and health care, living wills, and a pourover will to make sure that anything that you forgot to put in the trust goes in the trust. It also contains the documents that you will need to transfer you property to the trust and the documents that you and your successor trustees will need to manage the trust.

For more information, click on the "CONTACT US" button or call 1-800-354-PLAN.