With the Covid-19 pandemic upon us, the specter of a possibility any one of us could be dead in literally two weeks, gives rise of thoughts of legal preparation in case of that horrible prospect. Dorothee and I have had wills for years, but the recent experience of a nearby neighbor and cherished friend sounded the alarm for us. Her husband suffered an unexpected heart attack in December 2019 while out on a field trip, and passed away on the spot. Although title to their home was shared jointly, it turns out that real property, even if held jointly, is subject to the requirement and expense of a court probate.\
We wanted to avoid that for each of ourselves, and had heard about the somewhat-mysterious concept of “Revocable Living Trusts” for some time, but had taken no action on it. Conveniently, in the spring of 2020, we received an unsolicited invitation via mail from an attorney whose touted specialty is, yep, “wills and trusts”. I quickly contacted that office, and arranged a teleconference between the attorney and the two of us.
Before the conference, we were asked to provide lots of details of our financial situation, and answers to questions about our desired distribution of assets when the time comes.
I will say that the conference with the attorney, lasting well more than an hour, was very informative, and the attorney had clearly done his homework from our pre-interview worksheet. Honestly, he was quite impressive, and even though we had previously agreed that we would likely accomplish the legal work on our own, during the interview we both found ourselves thinking “gee if this is just a couple thousand dollars, maybe we should just go ahead and let this guy do it”!
As the interview drew to an end, our man moved into the used-car salesman phase of the meeting. He carefully spelled out all the steps that his office would be taking on behalf of our estate. Then came the crowning moment.. a request for a credit card from us to cover the cost of his expertise: $7,700! Yikes! We politely thanked him for his time hung up, and following his excellent guidelines, proceeded to accomplish our needs on our own.
Here are the steps we followed to accomplish our goals:
- Purchased a copy of Quicken Wills and Trusts from Amazon (about $80).. This software is pretty straight forward, and leads you through the completion process in an interview style. It automates the process of completing your “Living Revocable Trust”, Powers of Attorney, Medical Statements, etc. Everything needed to complete and print these documents
- Have all the above forms notarized
- Create a “Warranty Deed” for each of our properties, from which we purchased the blank form, specific to state of Texas, from www.Deeds.com (about $50). This deed, which transfers ownership of a property from our joint title to the named “Living Revocable Trust” has to be filed with the appropriate county clerk’s office. The Warranty Deed ALSO has to be notarized prior to submitting to the clerk’s office. A quick Google search will reveal the appropriate office, submission address, and fees. The cost amounted to about $32 for each deed filing, and can be accomplished by mail.In about two weeks, your submitted warranty deeds are returned from the clerk’s office via mail, to be filed at home with your other valuable documents.
- Contact your insurance agent and have the name of the Living Trust added as additional insured. If there is a mortgage, we are told no action is required to/from the lender for such change
That’s pretty much the whole deal in a nutshell. It couldn’t be any simpler.. the only effort required is mostly the scheduling with a Notary for the signatures. The total cost of accomplishing this, including clerk filing fees and software, was less than $300.
Advantages of holding your properties in a revocable trust:
- Absolutely no probate is required in the event of death of either or both of us (alternate trustees are also named). The trust remains intact and still “owns” the various property within. Each remaining trustee has the authority to manage, liquidate, transfer assets into and out of the trust (based on specific parameters.. i.e., an alternate trustee’s powers only kick in in case of the demise of Dorothee AND myself). For us, this includes complete, no hassle access to bank accounts, securities, automobiles, and our real property.
- The trust also functions as a will, since all owned properties are listed (some in a general sense, such as “all furniture and other items in the residence at ……….”), and desired distribution instructions on death are included in the trust. And, the recording process insures that the will is dutifully recorded, even if the original document should be lost or destroyed
One additional very valuable piece of information we received from our interview with the trust attorney:
Texas residents over 65 (either or both spouses), may choose to “defer” property taxes on their primary residence indefinitely, until the property is sold. This makes the revocable trust even more valuable, since death of one of the “trustees” (Dorothee or myself) doesn’t effect ownership of the home or upset the deferral. The deferred tax payment DOES accrue a 5% interest each year of the deferral, but since our home is paid for, it essentially amounts to setting aside those payments until the house is sold, only payable out of the proceeds of any sale in the future. We don’t plan to ever sell in our lifetime, but, if the situation should change, the homes value will appreciate significantly more than the 5% interest on the tax. The immediate positive benefit to us is a de facto increase in income (decrease in annual taxes payable) of almost $10,000! It is somewhat like a reverse mortgage without ANY gotcha up front fees or restrictions. Applying couldn’t be easier, and details can be found on each county’s website. it is just a matter of filling out a deferral request form and sending it in!