A woman who attended one of my Living Trust workshops came to see me with two trusts that had been formed for her by an online form company. She paid approximately $500 for each of the trusts. This company claimed they could prepare Living Trusts and that you don’t need an estate planning attorney to help you. Nothing could be further from the truth. After attending my workshop, she wanted to get an amendment to protect her children from lawsuits and divorce. She was in for a big surprise.
She initially told me that there was only one trust and one amendment. She created the first trust in 2013 and in 2016 she wanted to change the beneficiaries. She called the company and told them what she wanted and they said it was over five years so they couldn’t do just a simple amendment. They had a plan that lasted for five years and their policy was not to do simple amendment to trusts purchased over five years ago. So they sent her new documents. She signed them and transferred her home to the trust.
As I looked through the documents, it was clear that instead of sending her an amendment in 2016, they sent her a new trust. She transferred her home to the new trust, but she had kept her other investment property in the new trust. Because, remember, she was told the new trust was an amendment to the old trust. If that was true, then she did the right thing in leaving her investment property in the old trust.
In reality, the home was going to the new beneficiaries, her children, and the investment property was going to her brother. That clearly was not was she intended, but that is what would have happened if she had died without fixing it.
In the end, we fixed the problem. I wanted to share this with you as an example of the many problems a person faces when they don’t hire a competent attorney to prepare the Living Trust. If you’re family is important enough to leave them some assets when you die, don’t let those assets go to probate, or in this case, to the wrong beneficiaries. Living Trusts done right will cost a little more than the online form companies, but in the end, it actually saves you and your family money, time and pain.