$tarrBuck Report for October 15, 2006: Fund that Trust

October 15, 2006

$tarrBuck Report for October 15, 2006: Fund that Trust

Stacey: Hi Mom! Happy Weekend! How are you and Dad?

Marcia: We’re fine dear. Your father’s watching football on TV. He’s yelling himself hoarse. He seems to think if he yells loud enough at the TV, the players will hear him on the field. What have you and Richard been up to?

Stacey: That first year of med school is impossible. He’s never home except to sleep. He even studies in bed. No wonder doctors get divorced once they graduate; their wives haven’t seen them in years.

Marcia: Oh, darling! Does that mean you two really are getting married?

Stacey: No, it doesn’t mean that. But yes, definitely, we’re getting married. Didn’t I tell you? Before the end of the year. To qualify for filing income tax jointly. The tax savings are impressive!

Marcia: Dear, I don’t think taxes are really a good reason for getting married. I may be old-fashioned. I think of love, companionship, stability, family, children.

Stacey: Of course you’re right, Mom. It may not show, but Richard and I really are devoted to each other. Or we were before we each started putting in fifteen-hour days. And we would be again we had any time for each other. Junior associates at Dewey, Cheatham and Howe, LLP, have to haul a lot of water.

Marcia: So how are things in the law? Will you be appearing at the Supreme Court?

Stacey: Not soon, Mom. They’ve got me working on estates and trusts right now. Not usually Supreme Court material —- except for Anna Nicole Smith! Even if she lost, it took really good lawyers to get her case all the way to the Supremes. But the partners have promised to slot me in to mergers and acquisitions in January. That’s where the real money and big egos are.

Marcia: So what have you learned in estates and trusts?

Stacey: There’s a lot of clean-up to do on property and who gets what when somebody dies. Everyone knows that the right thing to do is to set up a living trust. You’d be surprised how many people set it up — signing the papers in our office and paying a big fee — and then never actually fund the trust. Once they die, it’s too late. The whole mess has to go through probate. It takes time, money; it’s annoying. You and Dad did the right thing, setting up your living trust almost ten years ago.

Marcia: Yes indeed. And we funded it too. Right away, we set up a bank account for the trust and deposited $1000.

Stacey: $1000! Mom, you didn’t just say “$1000,” did you?

Marcia: Yes, dear. It was the right thing to do.

Stacey: Mom. What about the house, and your investments at Charles Shaw Brokerage?

Marcia: They’re fine dear. The house is always going up in value. Maybe not so much right now. And your father does love to buy and sell at Shaw. It’s a discount broker you know.

Stacey: Don’t change the subject. Yes I know Shaw is a discount broker. But you’ve got the house and the brokerage account in your own names.

Marcia: Well yes, dear. They’re ours after all. Someday of course they’ll be yours and Junior’s.

Stacey: Mom, please, let’s go over that once again. The whole point of the living trust is that you’re supposed to put the house and your investments in the trust’s name. You and Dad are the trustees and beneficiaries. But the living trust has to be the owner. That’s what simplifies things and saves money when one of you dies.

Marcia: But that seems so morbid. Your father doesn’t really like to think about things like that. And the paperwork — it really is discouraging.

Stacey: Mom. Trust me. It’s worth it. Phone up your broker at Charles Shaw. They’ll just send you a form to sign. Who drew up the trust? It was Norman Weiss, wasn’t it, your old family lawyer? Ask his office to put the house in the trust’s name. They should have done that to start with. I can’t imagine why they left that to you.

Marcia: I’m sure you’re right dear. OK. I’ll remind your father. No, on second thought I’ll phone Charles Shaw and Norman. I’ll just let Daddy sign when the paperwork comes in.

Stacey: Bye Mom. Say ‘hi’ to Daddy for me when the game is done.

A living trust is a good idea. It saves time. Probate fees. Maintains continuous control of the family assets. But it only works if you fund it. It’s a very common mistake. Setting up the trust, but forgetting to put the family assets into the trust, by changing the title. There are a lot of different pieces of property and there’s a mess of routine paperwork. Don’t make that mistake. By the time you die, it’s too late to correct it. Then your heirs have to go through the expense and delay of probating your assets.

(c) Copyright 2006 by R. M. Starr


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