A Better Way to Plan...(start now)

There are many ways to plan an "estate" (disposition of your property after you are gone).  Some people have no plan at all - the government has a plan for their families.  Others simply give property away during life.  Others may draw up a stand-alone will, which must be probated.  Others use probate avoidance techniques such as joint tenancy or beneficiary contracts.  These methods may be combined, and each has disadvantages.

All but the smallest estates usually benefit from a trust-based plan.  A revocable living trust (RLT) brings many advantages, chiefly avoidance of probate and better handling of incapacity (due to illness or disease, for example).

The only significant "drawback" of the RLT is that in order to obtain maximum benefit from the arrangement, you need to undergo the time and expense of properly "funding" the trust during your lifetime.  However, this is no actual drawback in a properly constructed estate plan (including pour-over will and power of attorney, as well as trust etc.), because property outside trust will make it into trust after death via the pour-over will.  Probate would be required for such property, of course, just as it would for the stand-alone will.

In other words, an RLT-based plan is at least as good as a standalone will, and potentially much better if proper funding is maintained.  ("Funding" simply means holding title as trustee instead of individually - that is how probate is avoided.)

So, for most people, the RLT would be recommended as the cornerstone for their plan.

Photos (this column and below) by Oleg Volk.  Please support his important work at http://olegvolk.net

What is the best way of implementing the RLT-based plan?

Option One (start now):

Option One is to start working right away on a detailed plan.  A flat fee can be quoted, but usually it is better to use a multi-tiered hourly structure, where the total planning fees for a married couple end up being in the range of $1200 to $1800. 

(Hopefully, the clients will also sign up for the annual trust maintenance program which assists clients with funding and also covers two "minor" amendments (less than one hour; simple amendment not requiring restatement) per year at no charge.  A plan that is not kept up to date can be worthless or worse, as many are finding out in 2010.)

Option Two (start now):

$286 upgradeable "starter" plan, with purchase of first-year trust maintenance for $395; offer expires 2/14/2010:

A successful plan requires more than just a stack of documents from an online paralegal or lawyer-in-a-box software.  There is no way around the fact that a good bit of client education is required before documents can really be tailored to a client's true intent with the assistance of counsel.  The other requirement for implementation is proper funding.

What is the key for good training, funding, and up-to-date documents?  Participation in the annual trust maintenance program, described above.

For clients who sign up for the first year of trust maintenance, a basic "starter" no-frills trust-based plan can be executed quickly (traditional planning, on the other hand, sometimes takes months to complete).  The Starter Plan is then updated and revised as the client completes successive client education modules.  The revisions can be done at a discounted hourly rate of $95, and there is no charge for two free amendments each year under the annual maintenance program, described above. 

This option is not only a less expensive way to start--this multi-stage approach of revision after completion of education modules may actually result in better overall planning.  However, it is obviously not appropriate for those facing serious imminent health issues or advanced age.

The ultimate fee after upgrades may be greater or less than what would obtain under the first option, though probably less since you are viewing the education modules on your own time.