Living Trust or?

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jeb1000
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Living Trust or?

Post by jeb1000 »

Live in NC. 82 in June in reasonably good health. Almost lived in my car before declaring bankruptcy in 2002. Presently have over 80K in cash assets, nice home with total payments of less than $500.00/mo and some $100,000.00K in equity. (I refinanced and bought the interest rate down to 1.67% several months ago) Vehicle paid for. No life insurance, normal personal furnishings, etc.

Married son is oldest child - above average IQ but has don't virtually nothing with life. Income below bottom of middle class.

Married daughter - both she and husband make very good money and have substantial assets.

High functioning autistic grandson - VERY smart but not good social skills. Refuses to get drivers lic and with zero public transportation and his autism he does not work.

Goal - I would like to set something up that would provide for my son and grandson. They both live with my ex who has dementia. She lives payments free for her life in the home that a rock quarry she live near bought from her several years ago. When she dies, son/wife and grandson will have to vacate the home. At present, looking for son/wife and grandson to come live with me.

I am concerned that after I am gone, if my son loses his job or for whatever reason they are not able to make house payments that they would lose the home - then both son/wife AND grandson would be on the street.

My thinking is to set up a living trust with my daughter as trustee after I pass. 1/3 of the money/assets would go to each but remain in the trust to be used only IF NECESSARY. If my son/wife should not be able to make payments/expenses/normal maintenance, my daughter would then take whatever is needed our of my son's and grandson's trust funds. Although I don't foresee her ever needing to do so, 1/3 of the assets would be hers to use as she sees fit.

Suggestions? Tks, jb
HomeStretch
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Re: Living Trust or?

Post by HomeStretch »

Welcome to the forum!

Congratulations, you have made great financial progress since emerging from bankruptcy.

Sounds like you know how you want to bequeath your estate. A living trust set up now becomes (edit-typo) irrevocable at death. An alternative is to have your will specify a testamentary trust be set up at your death. There are also special trusts (such as an ABLE trust) that are used in certain circumstances. An experienced trust and estate attorney in your state should be able to help you carry out your estate wishes in the best manner possible.
Last edited by HomeStretch on Fri May 13, 2022 5:52 pm, edited 1 time in total.
bsteiner
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Re: Living Trust or?

Post by bsteiner »

You could do 2/3 in trust for the son and grandson and 1/3 to the daughter outright, as you propose. Whethe the daughter is an appropriate trustee would depend on her relationship with her brother and nephew.

If the amount involved were larger, you might leave the daughter's 1/3 in trust to keep it out of her estate and protect it from her creditors and spouses, but given the amount involved that may not be practical.

Is there some reason for a revocable trust? Probating a Will in North Carolina isn't difficult. The tradeoff is that the court fee is 0.4% of the value of the estate, with a maximum of $6,000. However, the cost of a revocable trust will be substantially more than that.
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jeb1000
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Re: Living Trust or?

Post by jeb1000 »

Tks to both of you for you replies - I am just a day or two into trying to understand trust vs wills and what can be done with each. I totally trust my daughter and her husband to do what is right for my grandson, which is the major thing - they have no children and they are going to be setting up to provide for him when they are gone.

Again, tks. - jb
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jeb1000
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Moving assets into living trust

Post by jeb1000 »

[Thread merged into here --admin LadyGeek]

If one sets up a living trust and has in it wording like - "this trust covers all of my assets." - or something like that, does one then need to individually transfer each asset into the trust?
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Lee_WSP
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Re: Moving assets into living trust

Post by Lee_WSP »

jeb1000 wrote: Sat May 14, 2022 12:19 pm If one sets up a living trust and has in it wording like - "this trust covers all of my assets." - or something like that, does one then need to individually transfer each asset into the trust?
Yes. You need to hold the legal title to the assets you hold in trust for the benefit of yourself and your remainder beneficiaries. Otherwise, the assets are not held in trust and are still owned outright by you.
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LadyGeek
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Re: Living Trust or?

Post by LadyGeek »

jeb1000 - In order to provide appropriate advice, it's best to keep all the information in one spot. I merged your update back into the original thread. If you have any questions, ask them here.

(Thanks to the member who reported the post and provided a link to this thread.)
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.
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Re: Living Trust or?

Post by Nowizard »

student
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Re: Moving assets into living trust

Post by student »

Lee_WSP wrote: Sat May 14, 2022 12:30 pm
jeb1000 wrote: Sat May 14, 2022 12:19 pm If one sets up a living trust and has in it wording like - "this trust covers all of my assets." - or something like that, does one then need to individually transfer each asset into the trust?
Yes. You need to hold the legal title to the assets you hold in trust for the benefit of yourself and your remainder beneficiaries. Otherwise, the assets are not held in trust and are still owned outright by you.
Yes. This is important. However, some online banks do not allow account to be opened with trust. I also feel strange having all my accounts in the trust. So I did the following: All my accounts are TOD/POD with the trust as my beneficiary on some of them. My lawyer told me that this is fine.
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jeb1000
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Re: Living Trust or?

Post by jeb1000 »

What I would like is to have my assets - money, home, vehicle, personal property, etc., - left to support my son and my grandson if they need such support. Other than the home payment, I have no bills other than normal living expenses.

As I posted, my son, his wife and my high functioning autistic grandson are presently living with, and taking care of, my ex and it is planned that they will be moving in with me when my ex has to move our of her house. She has dementia and at some point in time she will have to move. At present, my son, his wife and my grandson live with and take care of her. The house she lives in was bought by a rock quarry several years ago and she can live in it free until she has to move our, at which time the property goes to the quarry company.

I don't foresee my grandson ever having the ability to live totally on his own or have any income to support himself so I want to set things up so there is a place for him to live and some funds to live on. We have tried to get him covered under SS but he was turned down - I understand that is normal the first time - and the attorney said him being covered would depend upon him not being able to hold a job.

I have refinanced my home and bought down the interest rate so that the total monthly payment is below $500.00/mo but I am concerned that if my son should lose his job and not be able to make the payments the home would be foreclosed upon.

My daughter and her husband have very high paying jobs, have no children and intend to also set up something for my grandson when they are gone. It was my intention to put everything in a trust with my daughter as trustee after I am gone and she could then use the funds I left to pay the house payment and any other emergencies that might come up as necessary.

I don't see any way to do this through a will but if anyone has a suggestion it would be greatly appreciated.

Tks, jb
bsteiner
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Re: Living Trust or?

Post by bsteiner »

jeb1000 wrote: Sat May 14, 2022 4:08 pm What I would like is to have my assets - money, home, vehicle, personal property, etc., - left to support my son and my grandson if they need such support. ...
My daughter and her husband have very high paying jobs, have no children and intend to also set up something for my grandson when they are gone. It was my intention to put everything in a trust with my daughter as trustee after I am gone and she could then use the funds I left to pay the house payment and any other emergencies that might come up as necessary.

I don't see any way to do this through a will but if anyone has a suggestion it would be greatly appreciated.
It should be a routine matter for a trusts and estates lawyer to draft a Will that leaves your estate in trust and gives the trustees discretion to distribute the income and principal to or for the benefit of your son and his issue (descendants), equally or unequally, or to accumulate the income, as they think best from time to time.
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jeb1000
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Re: Living Trust or?

Post by jeb1000 »

Bsteiner, if I understand what you are saying, I set up a trust and in the trust lay out what I would like much like what I have posted above. Then I have a will that says only that all my assets will pass to the trust?

If I do that, there would be nothing in the trust when I pass - how does the trustee I appoint get all the assets into the trust since they are all still in my name? Would the mortgage holder let this happen?

Oh, so much to learn and so little time. :) Well, hopefully there is a lot of time. :)

tks - jb
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Lee_WSP
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Re: Living Trust or?

Post by Lee_WSP »

jeb1000 wrote: Sun May 15, 2022 4:44 pm Bsteiner, if I understand what you are saying, I set up a trust and in the trust lay out what I would like much like what I have posted above. Then I have a will that says only that all my assets will pass to the trust?

If I do that, there would be nothing in the trust when I pass - how does the trustee I appoint get all the assets into the trust since they are all still in my name? Would the mortgage holder let this happen?

Oh, so much to learn and so little time. :) Well, hopefully there is a lot of time. :)

tks - jb
It's called a testamentary trust. The assets are transferred into trust as part of probate.
bsteiner
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Re: Living Trust or?

Post by bsteiner »

jeb1000 wrote: Sun May 15, 2022 4:44 pm Bsteiner, if I understand what you are saying, I set up a trust and in the trust lay out what I would like much like what I have posted above. Then I have a will that says only that all my assets will pass to the trust?

If I do that, there would be nothing in the trust when I pass - how does the trustee I appoint get all the assets into the trust since they are all still in my name? Would the mortgage holder let this happen?
...
Your executor (I assume your daughter) will collect your assets, and pay your debts, taxes and expenses. She'll then distribute the balance to the beneficiaries (individuals or trustees) in accordance with the terms of your Will.

Your daughter will open an account or accounts under the name "Son Trust u/w (under the Will of) Jeb1000, Daughter, Trustee" (or some variation of that) for whatever assets are payable to that trust. She'll get an employer identification number for the trust which she'll use on the trust's accounts and on its income tax returns.

If you were to leave your home outright to a relative upon your death, the lender would not be able to call in the loan. Garn St.-Germain Act, 26 U.S.C. § 1701j-3(d)(5): https://www.law.cornell.edu/uscode/text/12/1701j-3. It's not clear whether that protection is available if you were to leave your home in trust rather than outright. I've discussed this with several other lawyers, as well as a law professor who's written on mortgage law, and none of them were aware of any cases on this.
If that uncertainty is a concern, you could leave your home to one or more of your daughter, son, or grandson outright, and your other assets in trust for your son and his issue. Your daughter seems like the most likely candidate, though that would throw it into her estate for estate tax purposes and subject it to her creditors and spouses.
NYCaviator
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Re: Living Trust or?

Post by NYCaviator »

jeb1000 wrote: Sun May 15, 2022 4:44 pm Bsteiner, if I understand what you are saying, I set up a trust and in the trust lay out what I would like much like what I have posted above. Then I have a will that says only that all my assets will pass to the trust?

If I do that, there would be nothing in the trust when I pass - how does the trustee I appoint get all the assets into the trust since they are all still in my name? Would the mortgage holder let this happen?

Oh, so much to learn and so little time. :) Well, hopefully there is a lot of time. :)

tks - jb
Are you using the $80,000 you have in the bank to pay for living expenses and your mortgage right now?

How much is still owed on your house and do you have any other debt?

What is your TOTAL house payment, including insurance and taxes?

Is your ex-wife financially supporting your son/grandson (aside from giving them a place to live)?

Does she have any assets that will pass to them?

If your son was working, and had a free place to live, would he be able to support both himself and your grandson on his income?

If the home still has a mortgage on it when you pass away, is your son going to be able to assume that mortgage, even if he doesn't have a job?



First, I would find out what happens to your mortgage if there is money still owed on the house ant its put into a trust. That would be my biggest concern right now, before you start thinking about trusts and things of that nature.

Second, $80,000 split 3 ways (before you spend any down over time) isn't going to go very far in the long term. It seems like your grandson is in need of the most assistance. If your daughter is well off, have you considered giving her share to your son/grandson, or maybe just set it all aside for your grandson and instruct that it be used to help him get into some programs that will help him live independently?

Third, does your daughter want the responsibility of being a trustee? Does she get along with your son/grandson? I'd have a discussion with her (and really everyone) about these concerns before you do anything. It would be unfair to put her in a position that she doesn't want to be in.

I'd sit down with a couple estate planning attorneys and see what your options are before you set up some kind of complicated trust. It may be difficult to think about, but selling your house could be the best option, and then putting ALL of the cash you have left into a trust. You don't want your son/grandson to end up in a situation where they aren't able to pay the insurance/taxes/maintenance and the house gets foreclosed on and all of your efforts were for naught.
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Re: Living Trust or?

Post by mrsbetsy »

jeb1000 wrote: Sat May 14, 2022 4:08 pm
I don't foresee my grandson ever having the ability to live totally on his own or have any income to support himself so I want to set things up so there is a place for him to live and some funds to live on. We have tried to get him covered under SS but he was turned down - I understand that is normal the first time - and the attorney said him being covered would depend upon him not being able to hold a job.


Tks, jb
Tread carefully here because as your grandson grows older and the discrepancy between his age and his abilities grows wider, this could change.

We have a 25 year old son with autism and he does receive SS and works a part time job. He is supported by the Department of Rehabilitation and is provided a job coach. He will never support himself, but he is capable of building lamps, chairs, and furniture at the local home improvement center. He also probably could drive, but...yikes...the fluid reasoning, reaction times and confusion when things aren't scripted means it would be dangerous. We do not live in a town that has good public transportation, but we got him an e-scooter and he can use it to get him the few miles he needs to get back and forth to work.



We set up an ABLE account and it might just be the answer in your situation.

1) It is not counted as assets, so no deduction in any potential SSI would be impacted unless the account grows over 100K.
2) It grows tax-free.
3) It can be used for housing and many other things that are required for life - including transportation. So this would provide housing security for him and his provider. You wouldn't need to worry about someone taking the money and gambling it away because the funds are supposed to be spent for specific things - like living.

Check in to - the nuances are state specific. Some states have a Medicaid benefit clawback after the recipient passes, but others have eliminated it.
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celia
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Re: Living Trust or?

Post by celia »

Another option is to find a Special Needs lawyer or agency who can help sign the grandson up for benefits. Applying for SSDI or SSI on your own is rarely approved since the application needs to be written a special way and by someone who has been trained in the process.

Part of it is probably meeting the definition of “special needs” in your state. If he qualifies, maybe a special needs trust to hold all your assets after you die would be better. This assumes the grandson would eventually live in some kind of group home with activities for similarly disabled people.

I am thinking long term here as after your son and his wife dies, what will happen to the grandson? Instead of entering a program for the autistic when he is in his 60s (and son was probably in his 90s), why can’t he enter a program earlier when he is a still able to learn and do some kind of work (I assume). Living rural probably isn’t the best for him as far as resources go and everyone will have to move eventually anyways.

The main problem I see is if the grandson isn’t able to make his own decisions, who is currently doing it and why haven’t they done something for him before this? It sounds like your goal is to mainly help the grandson long term, while the rest can fend for themselves.

If you split your assets up 3 ways, each beneficiary will get a modest inheritance (and is very thoughtful of you). But to have the impact I think you are looking for, giving everything to a special needs trust has the best chance of meeting long term needs. (My extended family had a similar, but different, dynamics and this is what we ended up doing. Now I am a trustee of the Special Needs Trust.)
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jeb1000
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Re: Living Trust or?

Post by jeb1000 »

NYCaviator-

Are you using the $80,000 you have in the bank to pay for living expenses and your mortgage right now?
No, I am, in fact, putting a little more into that amount each month.

How much is still owed on your house and do you have any other debt?
$117,000.00 owed - no other debts, just normal monthly expenses.

What is your TOTAL house payment, including insurance and taxes?
Less that $500.00/mo, which is less that half what the rent would be on the home.

Is your ex-wife financially supporting your son/grandson (aside from giving them a place to live)?
Partly - she has the monthly income to support them. Other than monthly expenses, she has no debt. My son does also pay for some thing.

Does she have any assets that will pass to them?
A vehicle and normal personal/home items.

If your son was working, and had a free place to live, would he be able to support both himself and your grandson on his income?
I am trying to set this up so that he would be able to do so. As mentioned, the house payments would be less than half what he could rent for.

If the home still has a mortgage on it when you pass away, is your son going to be able to assume that mortgage, even if he doesn't have a job?
That is what I am trying to set up - to cover that. My grandson will be living with my son and if I set this up properly all should be good until at least when my son dies. Unless at some time in the future we can get him on some kind of SSI I don't know what will happen to him.

Tks for the reply and questions - jb
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jeb1000
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Re: Living Trust or?

Post by jeb1000 »

For Mrsbetsy and Cilia - My grandson is 25 and until I moved back into the state of NC in 2014 I was not aware of what all the problems were here. Virtually nothing had been done for Gage until I got involved. I had him tested and state certified that he was autistic, got him into a state jobs program and, working with Goodwill, they got him a job as basically a janitor at one of the large food markets in the area. Besides Gage hating the job, when Covid came around we - myself, my son and daughter and Gage - all decided that it would be best if Gage quit so as to not risk bring Covid home to his grandmother, who has dementia. She is progressively getting worse and can't be left alone any more so Gage stays with her until my son gets home from work. We pay him a small amount to do so.

I also took Gage to our local community collage to get his GED - the teacher said he was the smartest student she had ever had come through the program. There are four parts to the final exam - Gage made 100 on two of the four. Leading up to the day he was suppose to take the Social Studies part, he had been saying he didn't know anything about Social Studies. The day he was suppose to take the exam he was "sick". The next week he took the exam and it was one of the ones he made 100 on.

We have an attorney that specializes in SSI and working with kids like Gage and we applied for SSI. As she had told us would be the outcome, the first time we were denied. She said that if we could show that Gage couldn't hold a job that he could probably qualify. We also tried to get him food stamps but that was turned down.

The problem we have now is that with my ex's condition and the very high cost to have someone come in and take care of her, Gage staying with her is overwhelmingly the best option. When she gets to the point to where he can not take care of her, she will go live with my daughter. This option, of course, limits Gage's ability to get a job and when the time comes for her to leave the house it is going to be a very traumatic time for everyone as she absolutely does not want to leave her home. IO live by myself so I can understand that. Several years back, a nearby rock quarry bought her house but she can live there rent free until she leaves the home. At that time, my son and his wife and my grandson would move in with me.

The other limiting factor is that although Gage drives - he got his learners permit and does drive his grandmother around and is a good driver - he refused to get his drivers lics. He says he is afraid he might hurt someone. There is virtually no public transportation in the area and I can't find a taxi that will pick him up and bring him home at the times he needs to be at work. There is also no state living arrangement for someone like Gage - either live on his own or with someone. The state doesn't provide anything like that in this area and, of course, he would have to be under SSI.

I had a Vespa scooter when going through collage - loved it. I even drove it almost 800 miles from Miami to Asheville, NC one summer. But two big reasons why it won't work with Gage - 1- he won't get his drivers lic and can't get a lic for the scooter without one, and 2- the way people drive in this part of NC it would be dangerous for him to be riding one.

The above is all the background and the bad part - the good part is that my daughter and her husband - who are well off - will be setting up take care of Gage with they are gone as well. What I need to do is set up what I have that will help carry Gage and my son forward after I am gone. My thinking has been a trust with my daughter as trustee after I am gone - she could then make any house/other payments if/when needed to keep a roof over everyone's head.

Again, tks for all the suggestions - I am learning a lot - jb
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