My 84-year old mom is in good health and financially independent but not wealthy. (Her home is worth about $200,000 and this is about 2/3 of her assets.) She lives alone in Colorado, and her four children live on either coast or abroad. She has a will and has named my brother and my sister's husband as co-executors of her estate. My sister has heard horror stories of families who have spent a year or more in probate over estate issues because there had been no trust set up in advance. She fears complicated paper work, multiple trips to Colorado to maintain the house before it can be sold, and additional costs that may be avoided by setting up a trust in advance. She has been pressuring mom for over a year to get this done, and it is beginning to put a strain their relationship. Mom is not being proactive because she says she wants to educate herself about the issues before making any decisions, and even before meeting with a lawyer. Granted, she is a serious procrastinator, and she keeps putting off meeting with the lawyers, which is driving my sister crazy. I read one poll (of lawyers) that said only 18-24% of Americans have a trust. I always assumed these were for the wealthiest of Americans who had major assets to protect. I tend to think my sister is "catastrophizing" (imagining the worst and letting that make her miserable). I figure if it doesn't get done, we may lose 2% or 5% (or even 10%??) of the assets, and I can't believe it would be that difficult to manage (considering 80% of Americans don't do this). But then, I'm the who is living abroad, and my sister imagines she will have to take up the slack. So while setting up a trust might be the smart thing to do, I don't think it's worth arguing with mom and trying to control her. I'd like to hear personal stories from people who had to manage an estate without a trust. Is it really that bad? Should I side with my mom and tell my sister to back off? or should I side with my sister, and see what I can do to get mom on board? Or should I just stay out of it?
The MOST I might do would be to put the house in a trust naming her as the principle beneficiary and all three kids as the contingent. That'll cost about a few hundred bucks. Show the death certificate; ownership is shortly transferred directly to the three new owners and the house can be put up for sale lickety-split. I'd be party to THAT request.
I might approach my OWN mom with that scenario. "Mom, I know you want us all be able to take care of your home should you die. For a few hundred dollars, we can put it in a land trust so we can do that." (Call an attorney in her home town; get the cost; tell her what it is...it won't be much.)
Establishing a full-fledged trust is a costly and somewhat complicated procedure. Establishing a land trust? Not complicated or costly at all. And, it does what sis is concerned with sans any cash she has.
She COULD also hold her bank accounts as principle trustee. She has full and complete control and ownership of them . . . until she dies. And then, the contingent beneficiaries, again, simply show the death certificate and the funds are disbursed.
There are much MUCH simpler ways to do what your sister is trying to do with a complicated trust document.
Realistically mom really doesn't have $ if 100K needs to last 10 -15 years. Is the 100K invested to provide a income stream? Mom isn't working and putting additional $ into the 100K so it is doing something to generate income? If not she will spend it all in a few years, 100K isn't all that much realistically if they live to 95.
Does mom's income (like SS or a retirement) enough to pay for all her annual costs? Or is she needing to go into the 100K to pay for things (like she has to go to it to pay for a new roof or insurance payment). 100K is a lot of money but not a lot of money if it need to last 10 - 15 years. Home may or may not sell for 200K & also factor in the costs of maintaining it 10 -15 years. If mom keels over dead next week, then a trust is great. But if she lives a long life and has to pay for care, the house will probably be sold to pay for care.
Health care costs for the aged are horrendous. NH 5K - 15K a mo. AL half that.
(My mom's NH costs ran 130K for this last year) Your mom may be able to pay a few years of AL or a couple of years of NH at best. If she lives to the backside of 90, she will flat run out of $ & end up applying for Medicaid. The trust doesn’t solve this. She may need to revoke trust to qualify for Medicaid.
If you all are non-residents, that may be an issue for the trust. Management trustee will probably need to be an attorney in state. There will be fees for this. For a trust to work well, it needs an income stream. That is why they get associated with wealth as you have trust $ & other invested $ that feeds the trust. You don’t want trust defunding so property tax not paid & house goes to tax sale.
What about meeting with an estate attorney &/or elder law attorney to clearly go over mom’s situation to plan for the long view? Has anyone spoken about selling the house & mom moving into a CCRC (house $ will pay for the buy-in) OR downsize & move to an apt so she can visit without worry OR move to a CCRC/apt where a kid is. At some point in time, mom is going to need assistance. It will take time & $ to trek back & forth to advocate for mom if she stays there.
Situation is ripe for issues & resentment by the kid who does this. House placed in a trust tomorrow doesn't solve these issues. It could complicate matters.
I am glad that mom is healthy now. If she becomes seriously ill, say with dementia or cancer, she will probably go through the assets herself and then may need additional financial aid. It will be wonderful if she lives another ten years with her assets intact and ready to distribute, with or without probate.
I think what I would encourage Mom to do is spend some of her assets now, on herself. What if she takes a trip abroad and spends some time with you? How about a cruise with a good friend or some of her kids? Doing something she really wants to do now, while she has her health, makes more sense to me than worrying about how much trouble her executors might have handling what she leaves behind.
A living trust might be a good idea. Peace within the family is even a better idea, to my way of thinking.
Your involvement? Why don't you research the pros and cons of having a living trust, and send Mom the best articles you find, without advocating either way.