Frequently Asked Member Questions
I have a will. Why would I want a living trust?
Contrary to what you've probably heard, a will may not be the best plan for you and your family. That's primarily because a will does not avoid probate when you die. A will must be validated by the probate court before it can be enforced.
Also, because a will can only go into effect after you die, it provides no protection if you become physically or mentally incapacitated. So the court could easily take control of your assets before you die -- a concern of millions of older Americans and their families.
Fortunately, there is a simple and proven alternative to a will -- the revocable living trust. It avoids probate, and lets you keep control of your assets while you are living -- even if you become incapacitated -- and after you die.
What is probate?
Probate is the legal process through which the court sees that, when you die, your debts are paid and your assets are distributed according to your will. If you don't have a valid will, your assets are distributed according to state law.
Do I need to list all my children in the estate planning guide booklet? What if I intend to disinherit one of them?
List all your children, even those who will not inherit from your estate.
Who should I name as Successor Trustee?
Name someone you trust who is capable of handling basic financial matters and dealing with various institutions and agencies, someone who follows through.
What is a Living Trust?
A Living Trust can keep your estate from going through the high costs and delays of probate, and unlike a will that becomes public after your passing, a Living Trust offers total confidentiality and complete control over your assets.
Upon your passing, whomever you named at the time you established your Trust would immediately take control over your assets and distribute them according to your directions. There are no required waiting periods. You can name a legal "Guardian" in your Trust to care for your minor children at the time of your passing. You can also name a "Conservator" for yourself, should you at any time become disabled.
Assets are easily placed in the Trust by changing the title on your stocks, real estate, bank accounts, etc. The property will now be titled in the name of your Living Trust, with yourself named as the Trustee. It is still your property and you may continue to enjoy it or sell it as you choose, as you are the owner of your assets, and Trustee of your Living Trust. And, a Revocable Living Trust may be revoked or amended by you at any time in your lifetime.
Is it necessary for me to attend the seminar?
Want to know which states will probate your estate when valued as little as $10,000? Which tax on your estate is 40%? Can you avoid your children being taxed when inheriting your home? Is it true that the amount my children inherit from me can become public information? What is the one and only way I can avoid my IRA or 401K being taxed?
FPM seminars provide a wealth of useable, practical and verifiable information, helping our members avoid unnecessary and sometimes devastating consequences with just some simple pre-planning. We will show you how to get it done. And because we do not sell anything, you can leave your checkbook at home.
If you’ve been invited to an FPM seminar at your church, we look forward to seeing you there.
I still have a mortgage on my home. Do I have the property deed?
Yes. Unlike a financed vehicle where the bank holds the certificate of title until the loan is satisfied, the real property (land) owner holds the title in the form of a deed, even when there is a mortgage.
Where do I find my property deed?
Typically, the property deed is mailed to the purchaser/new owner after closing on the sale. The most common types of ownership deeds are Warranty and Grant deeds.
If you are unable to locate a copy in your files, you may obtain one from the County Clerk/Recorder’s office in the county the property is located. A Certified Copy is NOT necessary.
I’ve signed my living trust. What’s the next step?
Once your living trust is signed and notarized, the trust is put into existence and can hold assets in its name. You may begin transferring your assets in the name of your trust so they avoid probate at your death.
John and Mary Smith signed and notarized their revocable living trust on January 15, 2019. John and Mary Smith will retitle their assets to “John Smith and Mary Smith, Trustees of the Smith Family Living Trust dated January 15, 2019.”
Specific information is provided in the Instruction Booklet in your packet.
Which assets should be transferred to the trust?
Generally, all assets should be transferred to the trust. Most want their real estate, checking, savings and investment accounts, stocks, bonds, and business interests re-titled.
What about retirement accounts and life insurance policies?
These types of assets must remain in the owner’s name. Most people list their spouse as the primary beneficiary and their trust as the alternate or contingent beneficiary.
Do I notify my mortgage company that I have established a revocable living trust?
No. You do not need to notify your mortgage lender or creditors about the living trust. Their right to collect is not affected by the trust.
Will my living trust protect my assets from creditors, lawsuits and judgments?
No. A revocable living trust does not protect your assets from your creditors.
Does my revocable living trust have a Tax Identification Number (EIN) or do I need to get one?
Obtaining a separate tax identification number for your revocable living trust will require you to file separate annual tax returns. Instead, most people use their social security number as the living trust’s identification number.
Your revocable trust uses one spouse’s social security number. Only irrevocable trusts need to obtain a separate tax identification number from the IRS.
Married couples should decide whose social security number will be used for joint assets being retitled to the living trust. For separately/individually owned assets, use the individual owner’s social security number.
Can my living trust be changed after it is signed?
Yes. While you and your spouse (if married) are living and competent, a revocable living trust can be amended. An amendment is a formal document that must be signed, notarized and kept with the original trust.
With the exception of certain changes to the Schedules in the back of your living trust, handwritten changes to the rest of the pages may invalidate your document. Please email Updates@fpm.org or call our office for guidance.
How often should my trust be reviewed and updated?
As often as you need when your people, plans or wishes change, but generally, every 5-10 years.
Which changes will require an Amendment to my living trust?
Below are the most common reasons to amend your living trust:
- Marital status change
- Birth of a child
- Move to another state
- Changing your successor trustees, executors, or guardians
- Changing your estate distribution instructions
What should I do with my documents after they have been signed and notarized?
The original signed documents should be kept in a safe place. Let your Successor Trustee know where to find them should something happen to you.