I correspond with my students all the time.  Here’s the exchange to a recent question on AB Trusts and Revocable Living Trust Documents.

Dear Lee,

I purchased your course last December and we have spent a lot of time studying your course and trying to determine applications for our situation. It has been very helpful to my husband and me. Thank you.

Question:

We already have a living revocable trust. As a result of your information, we have been updating and funding our trust. We do not think our trust has provided the A and B parts where each of us owns stuff in a her and his side, thus allowing the tax savings to our heirs.

Response:

You called it a double whack. The AB trust trick is for the estate taxes.  The trust trick of owning property for husband and wife in separate trusts for asset protection is different than the AB trust.  You probably don’t need the AB trust, at least not for the next 2 years with a total estate tax limit at $10 million for a couple, even without an AB trust. The AB trust is the double whack.  The his and her trust is a totally different concept.  If you are in a community property state the his and her trust won’t do you any good anyway.  So the his trust and her trust trick for asst protection depends on which state you live in.

Comment:

The attorney who set up our trust has not responded to our phone calls. Then I heard you say that one does not want to work with an attorney who will not return phone calls. .  (In fairness to this lawyer, the assistant did respond to us initially by sending us documents that allow us to fund the trust.)

Response:

Absolutely not.  They should have given you all that paperwork in the first place and taught you how to use it. (more…)

We often receive interesting questions from our students. We received permission to publish this one as a Blog since it might be of interest to many of you visiting our site.

Comment:

Thank you for your help. I hope learning all this is not “too little too late”.

Q. You said an LLC should be the manager of the rental properties. What exactly does that mean? Does it mean I establish an LLC and put my properties into it or do I establish an LLC and put my property manager (my son) into it?

A. Your son can act as an employee of the LLC and help manage.  He can or cannot own part of the LLC.  The tenant will contract with the LLC (Rental Agreement) and the LLC will “do all of the management” of the rental.  The LLC does not need to own the rental.  The owner should have a contract with the LLC, just like you would with one of the management companies you can hire for 7% of the rent to manage the place.  Your LLC is the management Company.

Q. My Living Revocable Trust says to put property into the Living Revocable Trust. Into which do I put my rentals: the trust or the LLC? (more…)

By Lee R. Phillips

It is on the news, in the papers and on the internet.  The whole world knows that Elizabeth Edwards, who died last month after a battle with breast cancer, made no mention of estranged husband John Edwards in her will.

I just read that, “the will names her 28-year-old daughter Catherine as executor and leaves everything to her three children. All of my furniture, furnishings, household goods, jewelry, china, silverware and personal effects and any automobiles … to be divided among them,” the will states, according to CNN.com.

I have a hard time believing that someone who went to law school passed her assets in a will.  A will is not private.  It must be probated and in the Court Proceeding everything becomes part of the public record.  That means we all know what happened.

Remember when Michael Jackson died?  The news media and tabloids were all drooling over how his multi-million dollar estate was going to be chopped up and the fights that might occur.  About two weeks after his death, it was disclosed that all of his estate was held in a living revocable trust. (more…)