Living Trusts as an Estate Planning tool

A living trust is a trust that is funded with assets which can be amended and/or revoked by the settlor (creator).  A living trust can be used to handle financial affairs while alive and dispose of property after death.  As an attorney, many clients have shown an interest in living trusts because of the fact that they are an alternative to probate court.

Many financial planners and insurance agents (and even some attorneys) have cashed in on the phrase "avoiding probate court" by offering a trust to every client that walks through the door to discuss estate planning.  There is a lot of confusion about what "avoiding probate court" means and many people believe that it means "avoiding estate taxes."  This is incorrect.  Avoiding probate does not mean avoiding taxes, but rather avoiding the process of probate.

The advantages to creating a living trust are that a living trust provides the settlor with greater privacy, lower court costs for the beneficiaries, lower attorney fees for the beneficiaries, lower appraisal fees, lower executor fees (as compared with trustee fees), living trusts often reduce the probability of litigation, and living trusts also offer almost immediate access to the assets after death.

The disadvantages to a living trust are that it is more expensive to create a living trust than a will, living trusts have higher annual expenses than a will, and living trusts require a lifetime of effort to manage and maintain until death.  In addition, living trusts do not protect assets from medicaid rules.

Credit Repair

If you have ever made a large purchase with a boyfriend or girlfriend, you probably know what a nightmare it can turn out to be.  It is an even bigger hassle if the big purchase is a house and the other party doesn't contribute to the payments after the breakup.  If you would like to get married some day, I would not recommend making any large purchases with someone you are not related to or married to; however, just like a lot of advice coming from an attorney: this may be too little too late.

If you purchased a home with someone who is no longer contributing to the payments, there are a few options.  Do not consider foreclosure just because you want closure with the person (believe it or not, clients have suggested this option).  Do not panic.  It is understandable that you want this person to be removed from the loan and title; however, it is not imperative that you act (irrationally) today.  You should not be too concerned about getting them removed from the loan (since this is an obligation and not necessarily a right) unless the person is insisting that they be removed from the loan in exchange for being removed from the title.  You may be able to get the person removed from the loan by refinancing.  If you are unable to refinance due to a low credit score, you should call Credit Smart Solutions owned and operated by Joe Frey, a credit specialilst.  Joe can evaluate your situation in a free consultation and tell you whether he can help and by how much.  Once your credit score has improved and reached the goal score, Joe can put you in contact with a mortgage company that he does business with that should be able to help you refinance.

If you are unable to refinance, you should not panic.  If you sell the home, or otherwise pay off the home, an attorney should be able to prepare a quit claim deed for around $100-$150 to send to your significant other.  If the other party refuses too sign the quit claim deed, the attorney can explain your other options.