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Single Trust Revocation Form: Clicking this link will tale you to a downloadable (save-able) Adobe Acrobat PDF form for revoking a single trust along with some accompanying explanations, cautions, and instructions.
Mutual Married Trust Revocation Form: Clicking this link will tale you to a downloadable (save-able) Adobe Acrobat PDF form for jointly revoking a married trust along with some accompanying explanations, cautions, and instructions including some potential advantages of mutual joint revocation and cooperation over unilateral revocation by one spouse. Some of this discussion is particularly applicable to separating / divorcing couples.
Unilateral Married Trust Revocation Form: Clicking this link will tale you to a downloadable (save-able) Adobe Acrobat PDF form designed for unilaterally revoking one spouse’s interest in a married trust along with some accompanying explanations, cautions, and instructions including some potential advantages regarding mutual joint revocation and cooperation over unilateral revocation by one spouse. Some of this discussion is particularly applicable to separating / divorcing couples.
Instructions for Execution of "Pour-Over" Will:
Trust Estate - Master Transfer & Assignment of Assets to Trust:

Problems With Alternative Probate Avoidance & Joint Tenancy

It Isn’t Just The Advantage Of Living Trusts Over A Will And Probate -- It Is The Advantages Of A Living Trust Over Other Alternative Methodologies.

In a single minded quest to avoid probate, people often make the mistake of utilizing alternative probate avoidance methods (other than a Living Trust). If you are to understand how to best handle your assets and estate, then the discussion cannot be confined to the traditional presentation as to the advantages of Living Trusts over Wills and probate; it must include the advantage of Living Trusts over all other alternative techniques. The poor-form methods include the misguided use of Joint Tenancy, adding someone to title of an asset, gift deeds of real property to children (or anyone else), granting signature power, powers of attorney, and other inferior methodologies.

The truly dangerous and insidious aspect to alternative “Probate Avoidance” techniques is how they lull someone into believing what a great thing they are because such alternative methods do often avoid probate with ease. Yet, one of the biggest mistakes anyone can make is to consider only the probate avoidance aspect of a particular action or strategy while failing to consider other factors and “sleeper” consequences that almost always result. The pitfalls of these alternative techniques are less obvious and harder to understand because they cut across many complex and distinct areas of tax law, property law, creditor, and liability law -- of which layman and “part-time advisors” are generally unaware or unmindful of.

Hidden Problems & Costs of Alternative Probate Avoidance Techniques
Below is a short list and brief discussion of some of the many negative consequences of alternative techniques. (Subsequent chapters will expand on this more.) Think of them as “sleeper consequences” in that they often are not realized and do not impact or surface until years later when it is way too late and the damage done. Finally, remember that assets passed through a Living Trust do not suffer any of these grave problems.

• Lost Stepped-Up Basis: Failure to understand or factor the effect on “income tax basis” tops the list as the most typical and expensive blunder. By employing these “poor-form strategies” people are usually forfeiting one of the most generous and valuable tax benefits in all of the tax code -- the “stepped-up income tax basis”. If you do not fully understand IRS income tax basis regulations and their typically enormous impact, follow one simple rule: be sure you sit with a tax professional capable of analyzing and explaining this to you before gifting away any asset, adding anyone to title or using joint tenancy during life. Also, as a husband and wife, make sure you understand the generous double stepped-up basis for community property and how joint tenancy destroys this benefit.

• Gift Taxes: Put a child on as Joint Tenant to your property and you have just gifted half the value of the property. If the value of that or any gift exceeds $11,000 the IRS requires the filing of a Gift Tax Return. Failing to file a required return puts you in violation of gift tax law for which there is no statute of limitation.

• Irrevocable Loss of Ownership & Control: Add one child as a Joint Tenant and that child is now irrevocably the legal owner of ½ the property in every respect (add 2 children and you only own 1/3rd). There is no legal way to take the gift back and you permanently forfeit the ability to change your mind regarding your estate. (It’s theirs now.) You can’t sell, you can’t gift, you can’t move, you can’t obtain a loan without them. They can even force a sale and force you out (& collect their share). Too many times clients have come into our office trying to do something with what they perceive as their property and we have to inform them that nothing can be done without all the owners (joint tenants) signatures. They keep repeating that “they don’t understand because it is their property” and we have to keep telling them that legally, it is not.

• Cross Liability & Creditor Exposure: Since Joint Tenants are legal owners your property is now available for seizure by their creditors. The same can be true with bank accounts and other jointly held assets. If your child has credit problems, becomes entangled in a lawsuit, ends up in divorce court, owes child or spousal support – what was your property before is now all fair game for their debts. They can also give their portion away anytime, to anyone they want -- even lose it in a poker game. You could find yourself co-owners with their ex-spouse or other creditors who by the way want to boot you out, and force the sale, seizure, and collection of property and assets.

• Watch Out For Amateur Advice To Add Someone To Title In Financing Transactions: It is bad enough that people on their own, or through “amateur night” advice, are engaging in these risky, tax-negligent, and ill-advised moves. What makes matters worse is that this dangerous practice is also being perpetuated by many in the lending business, including mortgage brokers and title companies. In order to complete some loans, these moves are subtly encouraged with no thought or regard to gift tax law or the many other cascading repercussions and negative consequences of adding someone to title.

• No Fiduciary Duty: The trustee of your trust is bound by a high fiduciary duty. On the other hand, none of the alternative techniques afford you the protection of any owed fiduciary duty, meaning if the person wipes you out, you have little or no legal recourse.

• Medi-Cal Disqualification: In misguided attempts to deplete their estates and qualify for state paid nursing home, people are often automatically disqualifying themselves from any chance of government assistance for 3 years (because of the 36 month “look back period”).

• No Protection from Conservatorships: Unlike a trust, alternative techniques afford you no protection from conservatorship. In fact they multiply the chances -- in that the incapacity of any one owner can trigger the urgent need for a conservatorship.

• End Up In Probate Anyway: If two sole joint tenants die in a common accident the property will be put through probate with the added complication of contests over who died first.

• Powers of Attorney Can Be Dangerous, Risky, & Cease To Be Valid At Death: A power of Attorney has no authority to pass an estate because they cease to be valid immediately upon your death. Further, during life, Powers of Attorney can be a potentially dangerous and risky method of asset management! The person you grant the power of attorney owes little or no fiduciary duty to you or others. You are simply granting them the power to act in your stead. If there is misuse, misrepresentation or misappropriation of the assets there is little recourse available in that it is just as if you did the act yourself. If it is abused or no longer desired, effectively revoking it is quite complex in that it also involves extensive notice to all possible parties where any attempt may be made to use the document.

Why Risk It?
You may think none of this will ever happen to you – except it happens all the time. The point is: Why risk it? Why leave yourself wide open if you don’t have to? It should further alarm you that you are not just risking it with your children; the risk potentially extends through to their spouses, their children, their creditors, their whims; and their lives potential disasters and unexpected problems. And risk or not, why would anyone want to destroy the major income tax advantage of stepped-up basis?

Assets Passed Through A Living Trust Do Not Suffer These Grave Problems
Any successful probate avoidance technique needs to also maintain maximum tax advantage as well as maximum protection for you and for those you wish to eventually receive your estate. It is there that alternative probate avoidance methods typically fail in such hidden, miserable and costly fashion. A Living Trust is the only method that will allow you to avoid probate while maintaining maximum tax advantage, flexibility and protection for yourself.

Strategically & Legally Planned Gifting Is Another Matter
There are cases where people consult with their lawyers and accountants to map out a gifting plan. This is usually part of a very carefully crafted advanced estate planning and gifting strategy that takes into account all the income tax, gift tax, as well as other effects and implications. This strategic approach to gifting is an altogether different matter than the non-strategic gifting and asset transfers that usually occur without knowledge or consideration of the numerous unseen consequences.

Methodology that involves extensive planning; experienced awareness and consideration of the issues; and full legal compliance is the only proper approach to any lifetime gifting. Whether it is for the purposes of advanced estate planning, long term care planning, Medi-cal planning, qualifying for government assistance, or simple benevolence; the only intelligent way to go about any lifetime gifting or transfer of assets is with the guidance and assistance of a qualified attorney and CPA. Otherwise you risk a likely host of undesirable, hidden, and costly consequences.

Life Estate Summary

Co-Ownership Split Over Time:
Owning a life estate differs from full outright ownership of a property by splitting use, enjoyment and ownership of the property over time between two owners (the life estate owner & the remainder interest owner).

Think of a life estate as co-ownership of property but not in the usual sense where all rights are equal at the same time (equal use, enjoyment and income being split 50% / 50%). Instead there is an alternating tradeoff of use between rights which are split over time -- a split over time wherein one owner has exclusive rights during one period of time and the other owner has exclusive rights during another period of time. If it is a fixed period of time this is referred to as an “Estate For Years” (expiring after the specified number of years rather than life). In the case of a life estate one co-owner has 100% exclusive right to use and enjoyment over the initial period of time (their lifetime) and the other owner automatically gains 100% exclusive ownership, use and enjoyment at the death of the “life estate holder”.

Put another way it is similar to buying a piece of property together with an agreement that owner #1 gets to exclusively use, rent, and fully enjoy (& maintain) the property for the first years and after that the owner # 2 permanently and exclusively automatically takes over all ownership, use, and enjoyment thereafter. The only difference with a life estate is that owner #1 gets to exclusively use, rent, and fully enjoy (& maintain) the property for the rest of their life and after that owner #2 automatically and permanently takes over all ownership, use, and enjoyment thereafter.

When A Living Trust Specifies a Life Estate
When a living trust specifies someone is to receive a life estate the successor trustee is obligated to sign a deed over to the new owners which reflects the two ownership interests. The deed would read similar to the below example.

Wife’s Child, Succesor trustee of the Wife’s Trust

hereby grants the following real property to:

Wife’s Child, reserving a life estate to Wife’s Husband

Wife’s Children Automatically Become Full Owners at Husband’s Death:
A critical aspect of a life estate is that the life estate holder has no say as to who owns (inherits) the property when the life estate holder dies. That ownership is already decided and determined according to the deed. This fact is often important to those in second marriages -- whereas it allows the deceased spouse to gift the lifetime use, enjoyment, and ownership of property to the surviving spouse but designates that the deceased spouse’s children will become the full owners when the surviving spouse passes away (the surviving spouse cannot alter this outcome).

Stated again, gifting someone a life estate in property essentially splits/divides the ownership into two components and owners.

The Life Estate Owner (in the example the Wife’s Husband)
&
The Remainder Interest Owner(s) (in the example the Wife’s Child)

Helps Prevent Forced Relationships & Answerability to Step-Children
To continue with the previous example: While the husband is alive he has full use of the property, meaning he can live in the property and/or rent the property out and collect the income during his life. When the husband dies the wife’s children automatically become the full legal owners. The wife’s children cannot interfere with husband’s life estate, and the husband cannot interfere with the children’s remainder interest. Thus, the life estate has the arguable advantage of being rather mechanical and automatic. In the context of second marriages and blended families this is perhaps an advantage very important to many. It generally keeps the parties (spouse and step-children) from being forced into a fiduciary responsibility, answerability and ongoing relationship with each other for the remainder of the surviving spouse’s life. (Contrarily, a property held in trust does force a certain amount of fiduciary responsibility, answerability and ongoing relationship with each other for the remainder of the surviving spouse’s life in the case where either the spouse or step-child is the trustee).

Can the property be sold?
Generally, any sale of the property requires the signatures and agreement of both the life-estate holder and the remainder holder (all owners). You cannot sell the house acting alone.

Protecting Against Unwanted Sales:
It is possible to specify that the property cannot be sold without the consent of the surviving spouse life estate holder – or alternatively without the consent of the remainder party – or even to specify that all parties must agree to sell. These clauses are designed to stop an unwanted sale or to prevent one party from petitioning the court to force the sale and thus thwart the general intent of the life estate.

What if the property is sold?
Remember, a life estate is simply co-ownership split over time. As in any co-ownership it is only fair that the proceeds of any sale are split in a manner that justly reflects each co-owners interest accordingly. It is easier to understand this concept, and the appropriate values and the fair split of proceeds of a sale, by first putting yourself in the buying position instead of the selling position.

To illustrate, pretend two of you are buying the property together and owner #1 gets the use and income of the property for the first fifteen years and you (owner #2) only get to start using and enjoying the income after 15 years. Would you pay the full purchase price for a property you didn’t get to use for 15 years and have owner #1 pay nothing? Of course not. Logically, you would ask owner #1 to pay a portion of the purchase price for the first 15 years use and you pay another portion for the use thereafter – otherwise there is no reason to enter into the deal. Your portion must to be discounted enough to make it worthwhile to give up the first 15 years. You need only apply this concept to understand that the same amounts are a fair reflection of a just split of proceeds on a sale. The amount you would pay for the use of a property 15 years in the future is reflective of what the remainder interest is worth, and the amount you would ask owner #1 to pay for the first 15 years is reflective of what the remainder interest is worth.

Remember, the life estate owner is giving up their ownership interest and right to the property for their remaining term -- and there is some value to this. The younger the life estate holder is, the greater the value of the life estate; the older the life estate holder is, the lower the value of the life estate. A life estate owner that is 20 years old has a more valuable ownership interest; a life estate owner that is 95 years old barely has any interest at all. It is only fair and right that a life estate holder be compensated for what they are giving up. This also provides certain incentive for the survivor to agree to relinquish the life estate where otherwise there is absolutely no incentive or reason to give it up at all.

Determining The Split of Proceeds:
Of course the parties can always mutually agree on the split of proceeds. More commonly it is determined by sliding scale, actuarial tables published by the Internal Revenue Service that assign percentages based on the age of the life estate holder.

Stated again, if all parties agree that the house should be sold, the life estate holder is giving up something of value (the right to use the house) and should arguably be compensated for it. How much? Again, that depends on your age, the value of the house, and a chart supplied by the IRS. The older you are, the smaller the value of your life estate becomes (because the projected term is shorter and shorter).

A Life Estate Is A Simplifying, Satisfactory Solution for Many
There are many factors to consider in achieving your goals. Using a life estate may or may not be the solution for you. In the end you must weigh the pros and cons, and of course do what is comfortable and appropriate for you. It is however, a very simplifying, satisfactory solution for many.

Trust Estate - Master Transfer & Assignment of Assets to Trust

The Surviving Spouse / Step-Children Dilemma
Many married couples are in second marriages in which the husband has one set of children and the wife has a different set of children. While each spouse wants to eventually provide for their respective children they often also want to make sure their spouse is also adequately provided for. Further complicating the picture is the potential politics, conflicts, and competing interests that can occur between a surviving spouse and the children of the deceased spouse (step-children). Forcing a fiduciary responsibility, answerability and ongoing relationship with each other for the remainder of the surviving spouse’s life is just such an example of this – and that is exactly what occurs when you leave property or assets in trust (with either the spouse or step-children as trustee).

Every spouse faces this potential twin dilemma of trying to insure a dual outcome without forcing a fiduciary responsibility, answerability and ongoing relationship between a surviving spouse and stepchildren and achieving their other goals. Perfectly insuring all desired outcomes can often be nearly impossible because of the delicate balance of competing interests and desires. Sometimes there may be a perfect answer. Other times there are no perfect answers or solutions in this regards -- just different approaches with advantages and drawbacks for each. In the end you must weigh the pros and cons, and of course do what is comfortable and appropriate for you.

Residences & Real Estate
A common dilemma occurs when a married couple are living in a house they co-own together or which one spouse owns entirely – or there is other or rental income property that sustains their lifestyle. Forced liquidation of any property and/or forcing the surviving spouse to vacate the couples’ residence to satisfy gifts to children often is not a desired course of action.

Securing An Interest Without Forcing A Relationship
One alternative is to specify that the property is to be gifted to the surviving spouse but as a condition the surviving spouse must give a note to the deceased spouse’s children secured by the property (secured by a recorded deed of trust) for a fixed amount. Generally you specify that the note must be paid either upon the sale of the property or the death of the surviving spouse (there can be variations on this theme). You can also specify that the note can be transferred to another piece of property. This amount of the note can vary. It can be a fixed amount which the spouse is content that their children will eventually receive. It can also be an amount that is tied to the value of the house at the first spouse’s death. The note can specify the accumulation of interest or no interest due. Such depends on your desires. In every case this approach has the advantage of generally securing the step-children’s interest, being fairly mechanical and helps forestall the more formalized fiduciary responsibility, answerability and ongoing relationship between a surviving spouse and stepchildren that a trust involves.

Fixed amount (no interest):
Subject to the below mentioned conditions the real estate commonly known as 1234 Main St. in San Jose shall go to the surviving spouse subject to the condition that the surviving spouse give the deceased spouse’s children a $250,000.00 (two-hundred fifty thousand dollar) interest free note secured by a deed of trust on said property due and payable upon the sale of the property or at the surviving spouse’s death, whichever is earlier.

Fixed amount (with interest):
Subject to the below mentioned conditions the real estate commonly known as 1234 Main St. in San Jose shall go to the surviving spouse subject to the condition that the surviving spouse give the deceased spouse’s children a $250,000.00 (two-hundred fifty thousand dollar) interest at 2% annually note secured by a deed of trust on said property, interest and principal due and payable upon the sale of the property or at the surviving spouse’s death, whichever is earlier.

Amount dependent on value at death (no interest):
Subject to the below mentioned conditions the real estate commonly known as 1234 Main St. in San Jose shall go to the surviving spouse subject to the condition that the surviving spouse give the deceased spouse’s children an interest free note secured by a deed of trust on said property due and payable upon the sale of the property or at the surviving spouse’s death, whichever is earlier. The amount of the note shall be equal to the fair market value of the deceased spouse’s interest at death (less apportioned projected costs of sale).

Amount dependent on value at death (with interest):
Subject to the below mentioned conditions the real estate commonly known as 1234 Main St. in San Jose shall go to the surviving spouse subject to the condition that the surviving spouse give the deceased spouse’s children a note secured by a deed of trust on said property due and payable (interest and principal) upon the sale of the property or at the surviving spouse’s death, whichever is earlier. The amount of the note shall be equal to the fair market value of the deceased spouse’s interest at death (less apportioned projected costs of sale) with an annual interest rate of 2%.

Option to transfer the deed of trust to another property:
As an alternative to requiring that a note be paid on sale you can specify that the surviving spouse has the option to transfer the deed of trust to another parcel of property on the condition that the transferred deed of trust provides more than adequate security for the note (i.e sufficient equity exists to pay off all notes in the event of default). Of course the note still becomes due and payable upon the surviving spouse’s death.

Other Variations & Certain Advantages of Simplicity:
Obviously, the variations on this theme are infinite. However, don’t ignore the advantages of a straightforward and simple approach.

Don’t Confuse Estate Tax Levels With What Triggers Probate

As will be discussed below, there are certain threshold levels that trigger full probate -- but what many people have trouble differentiating is the fact that probate and what triggers probate has nothing at all to do with taxes or how much you can pass tax free. Again, probate (what you are trying to avoid) and what triggers probate has zero to do with Federal Estate Tax Exemption amounts (how much you can pass tax free). It is fundamental to understand that these are two completely separate issues that have no relation to each other.

For example when the estate tax exemption was $600,000 we always knew someone was making the mistake of confusing the two when we heard the statement that “you only needed a trust if you are worth over $600,000”. Such a statement was incorrect then just as it is incorrect now. As the estate tax exemption rises, the magnitude of the mistake only grows with the erroneous substitution of the higher exemption amount. So when the exemption rose to $1,000,000 people mistakenly began believing that “you only need a trust if you were worth over a million dollars” (wrong). Similar echoes of this costly mistake repeated when the exemption rose to $1,500,000 and unfortunately the magnitude of the mistake will only continue to expand as the exemption increases.

Stated again for emphasis, it is a very important point to understand that probate, what triggers probate, and probate fees bear no relation to Federal Estate Tax Exemption amounts.

The Value Levels That Do Trigger Probate

The real crux of the matter and the appropriate point to understand is what levels of asset value trigger the separate issue of probate. In California for example, any estate worth over $100,000 (one-hundred thousand) or over $20,000 (twenty-thousand) in real estate property triggers formal and full probate. Virtually all states follow a similar rule (many with even lower threshold values that trigger probate). A good rule of thumb to follow is that if you own a house or any real estate property, count on the fact that your estate will be subject to probate unless you take steps to prevent it.

It is important to note that even those under the probate threshold often find other subtle and valid reasons for establishing a trust (i.e. protected incapacity & asset management, etc. – discussed later).

Filling Out Forms When Titling Your Assets in the Name of the Trust

Proof Pages
To assist you in titling bank, brokerage, savings and other assets into the name of your trust we provide you with copies of what we call the “proof pages” of your trust. “Proof pages” are simply a copy of the first and last page (Declaration page & Signature page) of your trust stapled together. The proper wording for titling assets in the name of your trust is set forth in large bold underlined letters on the first page of your trust. For your convenience we provide you with five sets of proof pages. As you go to each institution to title your assets/accounts in the name of your trust it is a good idea to start by handing them a set of “proof pages”. Sometimes this is all they will need. Other times they may need you to fill out a form (which is discussed below).

Filling Out Bank / Brokerage Forms
Many banks, brokerages and other institutions require you to complete a form when titling an account in the name of your trust. It will be helpful if you remember one rule of thumb when filling out any form: the answer to any question is usually your name (or the name of you and your spouse if married). That is because while you are alive you are everything and everybody to your trust! The form may ask you to fill in the name of the “Settlor”, the ‘Trustor”, the “Beneficiaries”, the “Grantors” or the “Trustees” etc. In each and every case the answer to the question is your name (s). The rest of the needed information is on the first page of your trust (trust name, trust date, Social Security Number which functions as the trust EIN or tax ID number while you are alive, etc.)

Trustee Powers
You may also encounter questions as to whether you have certain powers (or does the trust grant you the power to do this or that). Your trust grants you broad powers to act with your assets and money as you always have. Remember, this is your trust and your property -- you can do anything you want! Just check yes to any action or power you wish to take or have (if not already authorized checking yes can be considered your statement and modification to your trust that such is allowed).

Institutions Should Not Ask for a Copy of Your Trust
Any institution (bank, broker, etc.) that demands a copy of your trust is out of line. Legally, they simply do not need it. First, it is none of their business. Second, it actually increases their liability exposure to have a copy of your trust. Instead, ask to fill out the above discussed “trustee certification” form (which almost all institutions have but often fail to mention). In fact, having you fill out a trustee certification form is the standard practice of at many institutions. In filling out the form simply follow the guidelines discussed above.

Safekeeping Your Trust & Safety Deposit Boxes: Every trust client leaves our office with a package consisting of a three ring binder and a plastic envelope. The plastic envelope contains all of your trust originals – that is, the actual trust and related documents that you signed. It is your responsibility to safeguard your originals (contained in the plastic envelope). The three ring binder contains a complete copy of your trust and related documents. Our suggestion is to put the originals in a safe place (safety deposit box, safe, etc.) and let the copy contained in your binder function as your home copy. Remember – if you store your important papers in a safety deposit box or safe you should alert someone as to its existence and whereabouts -- as well as provide for access. (With a safety deposit box that means they must be on the signature card and have access to a key! Titling the safety-box in the trust solves the signature problem but they still have to know where to find a key.)

Furnishing Copies To Relatives or Others: As to the issue of whether or not to provide copies of your trust to others, we believe it is more appropriate to simply inform the relevant people (children, successor trustees, etc.) where to find your documents and other important papers if something happens. Otherwise the choice is yours. We also suggest leaving an outline of your finances, accounts, and other data you deem relevant with your important papers (so your successor trustee has a “road map” of what you own and where to go).

Granting Signature Power on Assets

The general idea behind a living trust is to provide for uninterrupted proper management of your assets. If you become incapacitated that means management of the trust assets (paying bills, etc.) for your benefit during your incapacity. If you die, this means winding up your affairs and transitioning your assets to your named beneficiaries.

Signature Power through Trusteeship Is Accompanied by High Fiduciary Duty
In essence you are granting signature power to your named successor trustee – a power that is generally triggered only by your death or incapacity. When someone gains signature power on assets through being a trustee, that person is automatically bound by law to the highest fiduciary duty requiring them to properly manage and use the assets. The trustee therefore owes you and your future beneficiaries the highest degree of honesty and fair dealing. Thus, the trustee is accountable to the beneficiaries and would be held liable by any court for misuse, mismanagement, or misappropriation of any assets. Therefore, a high degree of legal protection accompanies granting signature power through trusteeship. That said, if a wrong acting trustee has fled to Brazil or spent all the money, there may be a certain difficulty in collecting – which is why you should still choose your trustees and successor trustees carefully. Point is, there is always some degree of risk associated with granting anyone signature power. The idea is to minimize it.

A Reminder: Management of your trust assets is already addressed should you become incapacitated.
One of the advantages of a trust is that it provides for management of your trust assets in the event that you become incapacitated. That is, with a note from two licensed physicians (stating your incapacity) your designated successor trustee (owing you the highest fiduciary duty) will be able to step in, be given signature power, and manage the trust assets during your incapacity. This avoids the need for seeking a conservatorship for managing those assets (a costly, time consuming, bureaucratic process). For many clients, knowing that their successor trustees will be given signature power on assets if they become incapacitated eliminates any perceived need to risk granting present signature status on trust assets to anyone else.

Granting Present Signature Power on Some or All Assets
Nonetheless some clients wish to grant another individual (typically a child) present signature power either on some selected assets (accounts) or maybe even on all assets. This is often true for clients who find themselves in a declining state of health or ability -- and who need the help of others in maintaining their financial affairs and paying bills. Still other clients just wish to grant someone the present ability to sign (typically to a child) just because they want to (as an emergency measure or what not). The reasons are without end but the end goal is the same: to elevate someone to sign on assets right here and now even while you are alive and technically able to do it yourself.

Potential Dangers of Granting Someone Present Signature Power
Before laying out the means to this end it is important to discuss the potential dangers of giving someone signature power. Many people are trustworthy but unfortunately some are not. We have all heard a story of someone being wiped out or stolen from by a child (or someone else) they granted signature power to. It happens all the time. Be very aware of this danger – it could happen to you. When you grant someone signature power, no matter how much legal protection you have, you are still handing them the “keys to the safe”. Fiduciary duty or not, if they misappropriate the money, it still has to be recovered.

Signature Power through Present Co-Trusteeship vs. Power of Attorney
Two general (but not exhaustive) methods for granting signature power to someone will be discussed. One method is through appointing someone as a present acting co-trustee, the other method is though granting someone a power of attorney. Appointing someone as co-trustee is the only proper way to give signature power to someone for assets titled in the name of your trust. Thus it is important to remember that a power of attorney will not work to grant signature power for assets titled in your trust. A power of attorney will only function on assets outside of the trust (and generally you don’t want assets to exist outside your trust except qualified retirement plans). At present your paperwork reflects only you as the trustee of your trust – and because of that, no institution is going to properly allow anyone else to sign -- unless you elevate that person to the status of a present acting trustee. Repeated: If you have a child or other person on an account as a present signer they will not be allowed to stay on the account when you title it in your trust unless you appoint them as a present acting co-trustee.

Appointing Someone As a Co-Trustee:
Your choices in giving someone signature power by appointing them as a present acting co-trustee is to 1) elevate them to the level of a present acting co-trustee on selected accounts only (appointment of limited co-trustee) or 2) elevate them to the level of present acting co-trustee on all accounts and trust assets (appointment of full co-trustee). Remember, if you presently have a child who can sign on an account, in order to allow them to stay on as a signature you will need to appoint them as a present acting co-trustee (limited or full). For your convenience we supply several forms which you can utilize towards these ends. Because the law automatically binds any trustee with the highest fiduciary duty, granting present signature power though appointment of co-trustee provides more protection than a power of attorney. Yet it is important to emphasize that even with appointment of a co-trustee, you should still be prudent and cautious whom you grant signature power to – in that you are still handing them the “keys to the safe.”

Appointment of Limited Co-Trustee Form:
Appointing someone only on selected accounts is sometimes perceived as a middle ground approach because you limit the “signature power risk” to one or a few selected accounts only (vs. granting power on all trust assets). If you wish to grant someone signature power on only limited trust assets or selected accounts you may utilize the form entitled “Appointment of Limited Co-Trustee” (wherein you detail and list the person and the accounts/assets that you are authorizing their signature on).

Appointment of Full Co-Trustee Form
If you wish to grant someone signature power on all trust assets or accounts utilize the form entitled “Appointment of Full Co-Trustee” (wherein you detail the person authorized to sign on any trust asset).

Signature Power through Power of Attorney
As an alternative, some folks turn to utilizing financial durable powers of attorney to address potential incapacity and management of assets on your behalf. A financial durable power of attorney generally grants someone broad power to act on your behalf as an individual (file tax returns, buy and sell assets, sign on accounts and other assets, etc.). The danger with powers of attorney are that the person you grant the financial durable power of attorney owes little or no fiduciary duty to you or others. You are simply granting them the power to act in your stead. If there is misuse, misrepresentation or misappropriation of the assets there is little recourse available in that it is just as if you did the act yourself. It is for this reason that we do not automatically draw up financial powers of attorney during your trust process. (We do however provide a form, broad based power of attorney, if you wish to utilize it – discussed below).

Why Would You Need a Power of Attorney if You Have A Trust?
Again it is important to emphasize that a power of attorney grants signature power only on assets that you own as an individual. A financial durable power of attorney does not and will not grant the power for someone to sign or act on assets titled in your trust (or allow them to modify your trust in any way). Given the fact that your goal is to title most all of your assets in the name of your trust you might ask if there is any need for a power of attorney. The first answer to this question can be found in the fact that there are certain assets that cannot be titled in your trust – mainly Qualified Retirement Plans such as IRA’s, 401k’s, PERS, etc. If you have large amounts tied up in such plans (or other assets you may leave outside the trust) you may want to consider a contingency plan for getting at those assets in case you become incapacitated. (We have seen situations wherein a well spouse is unable to access the incapacitated spouse’s retirement accounts.) There is also the possibility you may wish to allow other actions on your behalf such as filing tax returns, etc.

Fact is, there are an unending variety of powers of attorney (i.e. “springing” which only become effective on incapacity, “limited” to specific acts., etc.). Whole books are devoted to the subject. – which is why hours and hours could be spent on the topic alone. If you want to properly address this subject you should seek competent legal advise from a qualified attorney who can help you carefully tailor a document to your specific needs, objectives, and situation (we do not counsel on this subject).

For your convenience however, we provide you with two types of financial power of attorney 1) a broad based power of attorney and 2) a more limited power of attorney.

Broad Based Financial Durable Power of Attorney Form
This broad based power of attorney pretty much grants whomever you appoint the power to sign and act in your stead on anything and everything – no restrictions (although they cannot modify your trust or act on trust assets). Some clients are perfectly comfortable granting such broad powers to certain individuals (spouses, children, confidants, etc.). Having this completed form would certainly allow for access to your non-trust assets (incapacitated or not) and does amount to a strategy for dealing with such assets as IRA’s, 401k’s etc.. If correctly filled out, the provided broad based power of attorney form should work at allowing access by your appointed individuals to these accounts as well as allowing them to act in your stead on any matter. A strategy some clients use is to just complete and execute the form and leave it with their important papers where it can be found and used if needed (instead of handing it to the person right now). Give careful consideration before granting anyone such sweeping powers.

Limited Power of Attorney Form
If properly completed, this form allows the appointed person to make a transfer of assets you own as an individual to your living trust. This should, for example, allow a withdrawal from a Qualified Retirement Plan account (IRA, PERS, 401k, 403b, etc.) as long as it is to be put in an account in the living trust. This helps solve the problem of access to the one major asset (for many) that can’t be put in the trust. Any money which ends up in the trust legally binds your trustee to the fiduciary duty to only use such assets for your benefit.

Helpful Hints Regarding Safekeeping Your Trust and Providing Copies To Others

Safekeeping Your Trust & Safety Deposit Boxes
Every trust client leaves our office with a package consisting of a three ring binder and a plastic envelope. The plastic envelope contains all of your trust originals – that is, the actual trust and related documents that you signed. It is your responsibility to safeguard your originals (contained in the plastic envelope). The three ring binder contains a complete copy of your trust and related documents. Our suggestion is to put the originals in a safe place (safety deposit box, safe, etc.) and let the copy contained in your binder function as your home copy. Remember – if you store your important papers in a safety deposit box or safe you should alert someone as to its existence and whereabouts -- as well as provide for access. (With a safety deposit box that means they must be on the signature card and have access to a key! Titling the safety-box in the trust solves the signature problem but they still have to know where to find a key.)

Furnishing Copies To Relatives or Others
As to the issue of whether or not to provide copies of your trust to others, we believe it is more appropriate to simply inform the relevant people (children, successor trustees, etc.) where to find your documents and other important papers if something happens. Otherwise the choice is yours. We also suggest leaving an outline of your finances, accounts, and other data you deem relevant with your important papers (so your successor trustee has a “road map” of what you own and where to go).

Institutions Should Not Ask for a Copy of Your Trust
Any institution (bank, broker, etc.) that demands a copy of your trust is out of line. Legally, they simply do not need it. First, it is none of their business. Second, it actually increases their liability exposure to have a copy of your trust. Instead, ask to fill out the above discussed “trustee certification” form (which almost all institutions have but often fail to mention). In fact, having you fill out a trustee certification form is the standard practice of at many institutions. In filling out any such form simply follow the guidelines discussed under “Filling Out Forms When Titling Your Assets in the Name of the Trust.”

Instructions for Execution of "Pour-Over" Will

Included in your binder is a "Pour-Over" Will for each settlor (one for an individual trust, one for each spouse for a married trust.) The "Pour-Over" Will is a regular Will that simply says you leave everything to your trust. It functions as an emergency backup to "pour" any assets that may exist outside of the trust at your death into your trust. Anything which goes through a Will must go through probate (subject to any applicable exemption), so your goal is to make sure this Will is of little or no use.

These wills need to be executed in the presence of two witnesses. Because there is typically only one staff member present in the office when we have you sign your trust documents, we need to have you execute the wills outside the office. The following are the steps you need to take to properly execute these documents:

Find two disinterested witnesses who are 18 years of age or older at the time of execution of the wills.

a) A disinterested witness is someone who is neither named directly in the will or trust, nor who could ever potentially benefit from the execution of the document. To be safe, do not have anyone who has been named as a trustee, guardian, beneficiary, or any other member of your family (spouse, children, grandchildren, parents, siblings, nieces, nephews, etc.) be a witness.

Sign your will in the presence of both witnesses.
Above your Signature write in the city where you signed the will and the date on which you signed it.
Have each witness sign the wills beneath your signature.
Have each witness print their name and address below their signature.
Place the executed “pour-over” wills in the plastic envelopes with your other originals and keep the entire packet in a secure place, such as a safe-deposit box or a media safe in your home. Make certain that your trustees know where to access these documents in the event something should happen to you.

I understand the importance of the execution of the “pour-over” will. I also understand the formalities required to execute the “pour-over” will properly and hereby agree to execute the wills as detailed above.

Dated & Signed:

Trust Estate - Master Transfer & Assignment of Assets to Trust

This document serves as a statement that you now consider all of your assets as part of and governed by your trust. In short, it assigns all your household and personal effects to your trust and it also states that you hereby assign any and all other assets that you presently own to your trust (including, but not limited to, any and all real estate, bank accounts, stocks, bonds, partnerships, sole proprietorships, patents, etc., and all assets and property of every kind – except Qualified Retirement Plans).

The purpose of this document is to serve only as an emergency backup between now and when you make it to the various institutions. If something were to happen to you on the way to the bank, for example, this document could be used to argue such accounts and assets were part of your trust. However, persuading a given institution to recognize this “Master Assignment” is always a drawn out, uphill battle which may even require court proceedings. These are the very hassles you are trying to avoid. That is why this document should not be seen as a substitute for, or invitation to delay, immediately approaching each institution and entity and formally titling each of your assets in the trust, so such is appropriately reflected on their records (a strategy that insures the “smoothest sailing”).