By Lee R. Phillips

We receive lots of queries from people who are struggling with the important issues of asset protection and estate planning. Periodically, we answer some of those questions for everyone to learn from, or at least help you see options that you need to discuss with your own trusted advisors.

Best Way to Pass Your Home

Q.  My girlfriend’s mother is in her early 60’s and has placed her house and another piece of property in her three daughters’ names. Her fear is that she may become ill and have to go in a nursing home and have to sell these. Their current value is approximately $600K. She wants the girls to inherit the properties. I am wondering if a Revocable Trust would accomplish this as well and protect the mother if one of the daughters were to get in trouble financially prior to her death so that the mother could always remain in the home. This situation is in Virginia. Chris (more…)

The question often arises as to whether the family company, a corporation, LLC, or limited partnership, should be owned by the parent’s living trust. Owned by the trust probably isn’t a good way of phrasing the statement. The company is owned by whoever owns the stock. (In an LLC there are “membership interests” and in a partnership, there are “partnership interests” – both general partners and limited partners.) The parent’s interests should be owned by their living trust.

The stock or membership interests are an asset that requires a signature to transfer it. Therefore, it will be subject to probate, if it is held in the name of a deceased person. To avoid probate, the ownership interests should be held in the name of a living trust. Thus, when the individual dies the interest or stock is not held in his or her name, but rather in the trust’s name. At the individual’s death, the interest is held by the trust and the trust document appoints another individual to act as the successor trustee. The successor trustee has full power to sell the stock, vote the shares or do whatever they have to in order to make the company continue.

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