Pass It On
Marital status can shape provisions
By David Larsen
Q. Please tell me about the "care and feeding" of a living trust. After it is signed, what more do I have to do to make it work when I die?
A. Actually, you may not have to do a thing. It all depends on what you want your living trust to do for you.
For instance, some people deliberately do not put anything into their trust's name, even though they recognize it will be going through probate when they die. As an example, some married couples like to leave all their assets in their joint names, as "tenants by the entirety."
This description means that if either one of them were to be sued, the asset could not be taken, whereas if they had put an asset into their trust's name, it could be taken.
Now, when the first of the spouses dies, the survivor has to consider whether it would be a good idea to put the deceased's half of the assets into the deceased's trust. This will "lock in" the deceased's $675,000 inheritance tax exemption, but it also means going through probate.
But what if you're single and can't use "tenants by the entirety," which is only for married couples. Or what if you're married and want to put assets into your trusts' names to avoid probate. How do you go about this?
Well, after you sign your living trust, your lawyer will give you guidance on putting assets into the name of the living trust.
For example, your bank account might be changed so that it is in the name of the living trust. You'd still have control, since you are the trustee of your living trust. The same thing would be true for your stocks, your bonds, CDs, and your home.
What about life insurance and retirement plans? Don't reregister the name of those things into your living trust's name.
All you might want to do here is change the beneficiary on your life insurance and retirement plans over to your living trust.
But this can get tricky, so please be sure to speak to your lawyer about it.
David Larsen is a Honolulu lawyer and author of "Who Gets It When You Go" and "You Can't Take It With You." Questions to him are encouraged, but not all can be answered. He can be reached via e-mail at firstname.lastname@example.org, or by writing in care of The Honolulu Advertiser, P.O. Box 3110, Honolulu, HI 96802. This column is not intended to provide specific legal advice; you should consult your lawyer for advice on your own circumstances.