Stewart Ogilby, Independent Advisor
Stewart Ogilby
All our trusts in Florida are prepared by an attorney who specializes in estate planning.
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Probate Estate Planning Trust Overview Henry W. Abts III The Estate Plan TM

The Revocable Living Trust (inter vivos trust)

I never cease to be amazed whenever intelligent people express their belief that the making of a Will (Last Will and Testament), or having been designated as an heir in someone's written Will, means that the estate of the deceased won't require PROBATE. The truth is precisely the opposite. Probate is a legal process referred to by our lawyer friends as "proving the Will" to the satisfaction of a court. It is required if the pertinent assets (left with or without a Will) exceed a relatively low dollar amount ($20,000 for example, in Florida).

Let me ask you: how much sense does it make to work and save and plan and then use a Will (Last Will and Testament) that requires one's heirs and, particularly, one's appointed Executor (Personal Representative) to go through "the agony of probate" and allow a sizeable chunk of a family's assets to be siphoned off by strangers — bureaucrats and lawyers — when subjected to the legal probate racket?

One's "gross estate", for probate purposes, is the sum total of the value of ones assets, PLUS liabilities! And this is the figure that fees are based upon. Percentage-wise, smaller estates ($400 thousand and less) are hit the hardest. When property is owned jointly, with "loving wills", eventually (following the second death) the heirs' inheritance will end up in probate court if the probatable assets are above the relatively low statuatory legal threshold (only $20,000, as we mentioned, in Florida). The unlucky Personal Representative (Executor) named in the Will (often someone loved) will wind up answerable to the court in the probate proceedings.

One of the most widely held misunderstandings about Living Trusts is the belief that they are of value only to the very wealthy. Nothing could be further from the truth. Although it is true a properly structured trust may eliminate or substantially reduce the amount of federal estate taxes required, its main advantage lies in avoiding what Mr. Henry W. Abts III, author of "The Living Trust", refers to as "the agony of probate."

Do you have any idea about the responsibilities probate court requires of the executor, or personal representative, named in a will? It is unfortunate that persons generally designate family members they love to undergo this ordeal.

A properly structured and properly funded Revocable Living Trust can save probate fees and simplify the inheritance process. There are other benefits of replacing wills with documents associated with a Living Trust. For one, should a person who has not executed pertinent documents ancillary to a living trust become incapacitated, it may be necessary to petition a court to choose the guardian to handle her financial matters. A court-appointed guardian is answerable to (guess what) the court. To have a guardian appointed under the new Florida laws, for example, is complex, expensive, time consuming and emotionally tiring. A properly prepared Living Trust and ancillary documents can make life a lot simpler for one's family.

A study by AARP concluded that probate can generate legal fees of 12%-20% of the estate for the attorney alone and the process can reduce the amount passing to one's heirs by 35% and even more! And it can take years for heirs to collect. Some people think that having a Will eliminates or speeds up the probate process significantly. The AARP study found that in some states the probate with a Will actually took LONGER than without a Will.

As far back as 1966 Mr. Norman Dacey wrote the first widely available book exposing the lucrative racket known as "probate", detailing the hazards (including huge fees) and how to avoid them. The New York County Lawyers' Association's lawyers did everything in their power to prevent its further publication. Mr. Dacey was sued, and sued, and sued yet again by lawyers trying to keep the information from the public. The lawyers fought it all the way to the New York Supreme Court. The lawyers lost.

For you to be able to get this information about a properly written Living Trust is due more to The First and Fourteenth Amendments to the Constitution of the United States than to members of the legal profession. Hordes of unsuspecting and trusting clients continue to seek advice and estate-transfer solutions from "professionals" whose own financial interests are better served after the death of their client. My own experience has been that, even if they agree to draft a Living Trust (of whatever quality), it is highly likely to be unfunded or only partially funded, thereby sending the estate into — guess what — Probate Court!

And how about this one? Persons of substantial wealth learn that their heirs can be saved a large amount of federal estate taxes by using a legally drawn Trust in place of "loving Wills". Their trusted advisor then proceeds to have them execute a "Testamentary Trust"to retain the estate tax exclusion and set up distribution, etc., for both husband and wife. Sure, there can be major estate-tax advantages, but this type of trust is not funded until AFTER their estate has gone through — guess what — Probate Court! It is funded only after the death of each spouse. For example, if the estate was at $2.8 million the estate would be probated on the first spouse's death in order to fund his/her trust and then probated AGAIN on the survivor's death...what a deal!! How in the world can this be justified other than from the attorney's perspective? This type of trust is facetiously referred to as the "lawyers' trust" since the trusted advisor gets fees for preparing it, fees for probating the estate, and fees for administering the Testamentary Trust. The Living Trust accomplishes all that a testamentary trust can and more in that it addresses the issue of incapacity, which a will does not unless a nomination of conservator is drafted, and IT AVOIDS PROBATE.

Persons with a "Testamentary Trust" should consider asking their trusted advisors (legal and tax advisors) why they felt that a Testamentary Trust and probate is better for their heirs than a Revocable Living Trust (Marital AB, or ABC) combined with other Trust instruments (ILIT, CRT, etc.), if appropriate. ASK FOR THEIR ANSWERS IN WRITING.

"Reader's Digest" (The Mess In Our Probate Courts) noted:

"Inflated fees, paralyzing delays, patronage — these are only some of the many ugly abuses fostered by our inefficient probate system. The high cost of dying is not the funeral. It's the legal and administrative costs of getting the deceased's estate and lifetime earnings through the probate courts. This legal institution, intended originally to help the average family, has become a means of exacting an onerous ransom from the bereaved...

One legal expert alleges that 35% of all wills are broken. The way the present system is set up almost invites abuse. Stories of estates being completely wiped out while going through probate are not uncommon. Robert Kennedy, while he was Attorney General of the United States, called probate 'a political toll booth exacting tribute from widows and orphans'."

Ralph Nader calls probate, "The screwing of the average corpse."

The answer to avoiding probate is proper estate planning. This is, perhaps, the best and kindest gift you can provide your loved ones.

In 1982 Henry W. Abts III founded The Estate PlanTM with two primary objectives: First, to educate the public about alternatives to probate; and second, to provide a single, convenient outlet where clients can go to put together their own estate preservation programs.

Mr. Abts went on to write, The Living Trust", which became a best-seller and is widely considered to be a definitive work, explaining in detail how Revocable Living Trusts are structured and used. The book was updated and re-published in January, 2003. Mr. Abts has also recorded a VCR taped presentation in which he explains these matters quite simply. To purchase online, click image at left

Here in Florida, a number of attorneys (members of the Florida Bar) have been selected and trained to function as ‘hub-attorneys’ with The Estate PlanTM documents. One appointed hub-attorney, authorized by The Estate PlanTM in Sarasota, Florida, writes:

"The single biggest mistake individuals make is getting ill or dying without any estate planning in place. People are surprised to learn, under Florida law, that if they have children their surviving spouse will not inherit their entire estate upon their death. The Florida intestate statutes provide that their children may be entitled to fifty percent (50%) of their estate at death...

"In my opinion, the revocable living trust, power of attorney, health care surrogate, living will and preneed guardian declaration are the most important documents that you can create. They are more important than your Will, because they affect you when you are living. Once you are dead, there is not much people can do to you."

A living trust provides for the continuing management of property upon the death or disability of the trustor and generally allows property to be more quickly distributed upon the trustor's death. This is because a successor trustee can act almost immediately without the necessity of notice or court approval. A living trust also protects against nonmanagement or mismanagement of assets during physical or mental incapacity. If you become incompetent, a successor trustee can take over management of the trust without a court proceeding and without interruption. A "durable power of attorney" may also be used to avoid a court proceeding for incompetency, but does not have the flexibility of a living trust for this purpose.

If you already have a Living Trust, guess where your estate will be 'handled' if your trust happens to be ineffective. Remember, you will no longer will be around to make the observation, "but I understood you to say. . . "  I strongly suggest that you buy Henry Abts’, The Living Trust and read the chapter entitled, "Separating the Good from the Bad."

If you reside in Florida at least several months of the year and want to have an Estate Plan Revocable Living Trust prepared by a top-notch Florida estate-planning attorney, together with my help, please phone or email me. Include your name, postal mailing-address and telephone number(s). Of course, you are under no obligation by virtue of our discussion.

Stewart Ogilby
Independent Advisor — The Estate PlanTM
All our Florida trusts are prepared by an attorney who specializes in estate planing.
Referrals nation-wide

Toll-free     1-800-998-2523

Probate Estate Planning Trust Overview Henry W. Abts III The Estate Plan TM

This material is not intended to be legal advice and should not be considered to be legal advice. It does not constitute the recommendation of any legal document for any specific client. It is educational material summarized from books that are widely available in public libraries and in books and other publications that are sold in every state through retail outlets.