DEAR BOB: In your articles you always seem to extol the virtues of revocable living trusts. However, living trusts are not for everyone. (1) You must fund the trust, and re-titling bank accounts and getting new property deeds can be onerous; (2) you still need a will if you have assets that are not part of the living trust; (3) if you hire a lawyer, you have to pay for his or her time; (4) in its simplest form, a living trust won’t reduce estate taxes; and (5) because of all the hype about living trusts, high-pressure sales seminars are hawking them to uninformed senior citizens with con artists selling living trusts for as much as $2,000 and gathering personal information to turn over to annuity and insurance salespeople who use it to sell additional financial products. –Wallace H.
DEAR WALLACE: I’m sorry you have such a negative attitude toward revocable living trusts. Do you have a better alternative for avoiding probate and allowing management of the living-trust assets if the trustor becomes incapacitated?
Purchase Bob Bruss reports online.
Your heirs will thank you if your major assets are in your living trust to avoid probate hassles. To answer your objections: (1) re-titling your bank accounts and real estate titles is relatively easy and should be handled by the attorney who creates your living trust; (2) a “pour-over will” distributes any assets you left out of a living trust; (3) hiring an attorney is usually far cheaper than paying probate costs; (4) the purpose of a living trust is not to reduce estate taxes; and (5) living-trust benefits far outweigh the modest cost (usually much less than $2,000).
Please let me know if you have a better method to avoid probate problems. More details are in my special report, “24 Key Questions: Living Trust Secrets Reveal How to Avoid Probate Costs and Delays,” available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 94010, or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com.
MORTGAGE CARRYBACK MAY BE THE BEST WAY TO SELL HOME
DEAR BOB: We own our free-and-clear condo and are trying to sell it. What is a seller carryback mortgage and how do you go about doing this? –Pat O.
DEAR PAT: When you carry back mortgage financing for your buyer, you are making a loan to the buyer just as if that buyer borrowed money at a bank. Your security for the promissory note will be a mortgage or deed of trust recorded against the title to the condo being sold.
To minimize chances of foreclosure, you should insist on at least a 5 percent to 10 percent cash down payment. If the buyer defaults, then you can foreclose and either get paid in full at the foreclosure auction or get the condo back to sell it again. For more details, please consult a local real estate attorney.
PROS AND CONS OF TENANCY IN COMMON
DEAR BOB: In a recent discussion of holding real estate title as joint tenants with right of survivorship, you mentioned tenants in common twice. Please expand on the pros and cons of tenants-in-common ownership. –Martin K.
DEAR MARTIN: Tenants in common (TIC) refers to two or more real estate co-owners. Each TIC can pass their share by will, but a joint tenant with right of survivorship cannot.
TICs can own unequal shares whereas joint tenants, by definition, always own equal shares. When one joint tenant dies, the surviving joint tenant(s) automatically own the property without probate. For more details, please consult a local real estate attorney.
The new Robert Bruss special report, “Pros and Cons of Investing in Rental Houses and Condominiums,” is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 94010, or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.
(For more information on Bob Bruss publications, visit his
Real Estate Center).