November 14

Why Would An Executor Be Required For A Trust?

“My dad just died and had a trust, but I’m being told that I need an executor. What does that mean?”

 

If a parent dies and has estate planning documents, like a trust that they created during their lifetime, the goal is to fund that trust.

If the person that was named as trustee of that trust is being told by, for example, a financial institution, that they need to have an executor appointed to manage the asset, it means that financial asset never got retitled into the trust during the person’s lifetime. This means that there is an asset sitting outside of the trust.

The only person who can retitle an asset is the owner, an agent under a power of attorney, or after their death, the executor. That’s why the financial institution is telling the trustee of a trust, after someone has passed away, that they need an executor appointed – because the trust wasn’t funded during their lifetime.

They may have had a beautiful trust written up, but it’s not doing its job [of avoiding probate] because it didn’t receive assets while the person was alive.

 

 

Why Would a Financial Firm Require an Executor for a Trust?

If your father passed away, for instance, and his company is telling you that you need to be appointed as executor to manage an asset and he has a trust, the reason is because your father didn’t either title the account into his trust during his lifetime, or assign a beneficiary to the account so it passed to his heirs when he died.

For that reason, the child who is named as the trustee of the trust, can’t manage the asset because you simply don’t own it. An executor has to be appointed in order to transfer that asset to the trust so you can follow your father’s wishes after he’s gone.

 

September 7

Should You Put Your House Into An Irrevocable Trust?

house in irrevocable trust“My mom went into a nursing home and lost everything. I want to put my house in an irrevocable trust. Can you help? Is that advisable?”

Should you put your house into an Irrevocable Trust?

Many clients come to our office saying that they want to create an irrevocable trust now and they want to put their house in this irrevocable trust now and perhaps other accounts. When you create an irrevocable trust and then you put something into it, you retitle your house into that trust or a bank account, the idea is that you’re giving it away, it’s no longer yours. It’s going to be in and owned by this trust and you should not be the trustee of this trust and you cannot be the beneficiary of the assets. So those assets could never be used for your benefit again.

There are circumstances where an irrevocable trust is a good idea but you have to go into it with your eyes wide open as to what the ramifications are for this. Are you sure that you don’t need that asset to live on? Are you sure that you’re not going to want to sell that house and move into an assisted living facility or a continuing care retirement community? How do you know how long you’re going to live and that you might want to have a reverse mortgage on your house? All you have left is the value of your home, why not borrow from the value of your home in order to keep you at home if that’s what you want to do? So if you’re giving an asset away, you are going to limit your options later. And it still may be a good idea, in your circumstance, but you have to look at your particular circumstance. And it’s simply not for everybody.