Hello and welcome to the trusted podcast. I’m your host, Blake Johnson. And today I want to talk about, uh, six common misconceptions that I hear frequently about living trust. So these are the things that people, uh, that keep them from doing a living trust. They think it’s not worth it. And, uh, so I want to debunk those misconceptions and myths today. Trust Attorney Las Vegas So when you set up a trust or meeting with your estate planning attorney and you say, you know, I hear all the time, I just need the will. I’ve heard from my other attorneys, especially if they come from back East, that I just need a will. I don’t need the trust, I don’t need it cause I don’t have a whole lot of assets. You know, all those things that people say. And, um, really it comes down to a lack of education. One of the biggest things is if you have an attorney telling you that it’s because they want to get your probate when you pass away because they make way more money doing a probate than they do from setting up the trust.
So that’s why they’re giving that advice. Um, especially like I said, back East, for some reason they haven’t caught on to the trend of doing the truest state planning in the sense of doing trusts and avoiding probate court. Um, so they’d still just continue to tell their clients, Hey, look, just do a will. That’s all you need and you know, then we’ll take care of it when you pass away. Um, but the problem with that is that is more expensive. So first misconception or myth is that a living trust is expensive to set up. Now there is an upfront fee you’re paying for the attorney’s time. But as a, I like to say with any legal matter, you can either pay a little, uh, an attorney a little bit upfront or you can pay a lot later when it’s a mistake or when it’s not done properly.
So it’s the same thing with the trust. When you set up a living trust with your estate planning attorney, you’re going to pay an upfront fee depending on, you know, your city and what the going rate is. It could be anywhere from um, you know, 1500 up to 5,000, depending on the state and this and the area that you’re in. Now when you set up a will, yes, Trust Attorney Las Vegas it’s less expensive initially to get that done, but you need to take in the true cost of what that’s going to look like down the road. If you do a living trust, that’s that one time fee and you’re done. Now if you amend it down the road, you might have to pay some amendment fees, but with a will, you have to calculate the cost of probate. I as a rule of thumb, do a minimum of 5% of your total estate value is going to be the cost of that probate.
And if you’re a smaller state, it’s even more costly, uh, as a percentage wise. And that’s going to court costs to attorney’s fees to filing fees and all that. The transferring that has to go on. You also may have to pay a personal representative, uh, fee, uh, cause most States have statutes as far as what percentage they can take of the estate to do that. So, um, you could even increase that even more. So you know, you, you calculate that into there. You also calculate the timeframe of doing a probate, you know, minimum of six months in most States and usually much longer that especially if you have real property involved versus a trust when you away, once the trustees have a death certificate, they can sign an affidavit of successor trustee does basically saying that you died and they accept the role of trustee and then they have access to everything.
They don’t have to wait for a long time, they don’t have to get the courts involved. Um, so that’s, that’s the true cost. You got to take into account. Do you want to pay a little bit now or pay a lot later? Now a lot of people say, well, I’m, I’m dead. I don’t care. I’m all let you know my state paperwork at that point. But the other thing is, you know, the hassle of your kids going through probate court. That’s, that’s a big issue. So, you know, we’ll talk a bit a little bit about that more, but you know, it’s just not fun for them. The second myth is that trust or for the wealthy people only, and I don’t have that much well here in Nevada, if you have an estate over $25,000 or if you have any real property, even if your equity is under $25,000, you have to go through probate court.
And that’s the primary reason I’m in a living trust is to avoid probate court altogether. And so if you have it set up properly, then it does that and you need a trust. So if you own any real property or if you have assets totalling $25,000 or more, you need a trust. It’s just that plain and simple. Um, you know, trust have been around for hundreds of years and they’ve been used primarily for the majority of that time for the wealthy people because they were taking advantage of it for special tax planning or other reasons. Trust Attorney Las Vegas Uh, but you know, really the, the cost of probate and, you know, go, we didn’t even talk about this. The cost of, you know, doing a conservatorship, if you ever become, uh, you know, incapacitated, you know, that adds that cost. Where as part of your estate plan, you can have the documents in place to avoid that.
Uh, you know, so those are things are all part of what a living trust can help avoid and keep the cost of your state down and make, make it so that, you know, really, like I said, the two main things are whatever your state minimum is for the size of your state or if you own a house. Because almost every state that I’ve encountered has that. If it’s real property, doesn’t matter what the value is, you have to go through probate court. So it’s not just for the wealthy. Everybody needs to do their state planning. Another key thing is if you have minor children, if you want a designate who gets those kids and how to protect the money so that it’s not, um, they don’t get it as soon as they turn 18. And you’re letting the government decide how it’s going to be spending until they turn 18.
It’s another great reason to do a trust. And the thing you got to remember is there’s going to be hopefully life insurance money coming in and so there is actually going to be funds. Um, it’s going to your, your stale actually grow when you pass away because of that. All right. Myth or misconception number three is most people end up going to probate court anyway. So why do the trust, and the reason most people go if they go to probate court is because they didn’t fund the trust properly. So a lot of attorneys will just set up the document of the trust, the legal document, and that’s all they do. They don’t educate their clients that, Hey, this has to be funded and your assets have to be transferred for this plan to work. So they do a poor job of educating their clients on what needs to be done and they don’t help with that process.
What we’ll do is we’ll do with the deeds for any real property into the trust. And then we’ll also help you, um, with, with getting your other assets into the trust. So, uh, you know, transferring your bank accounts, changing those into the name of the trust, changing beneficiaries on your life insurance and retirement accounts, uh, transferring your business ownership into the trust. You know, all those things need to be done. So you want to find an estate planning attorney who’s going to help walk you through that. Trust Attorney Las Vegas And if you want more on funding, um, you trust and how to do that, I do have another podcast that you can listen to that has more information on that. All right? Myth number four, I would have to give up control of my assets if I set up a trust. And if we’re doing a living trust, that’s not the case at all.
You’re the trust or meaning. You set it up. You are also the trustee, meaning that you manage the assets of it and then your third, you’re the beneficiary. So you get all the benefit of the trust while you’re living. And so even if you know, let’s say you got incapacitated, you wouldn’t be the trustee because you couldn’t, you know, your function to sign the checks or what not, but you’re still the beneficiary of your trust. So you’re not giving up any control. You’re actually planning and taking more control by doing your estate planning and um, making sure that the state doesn’t get involved when you pass away and all your wishes are carried out. So you’re actually, you know, taking control of the situation and making sure it goes the way that you want to. Ah, the other thing is you can always change, you know, if, if the terms aren’t good, you can always change it.
So you are in complete control with the living trust. Now there’s other trusted, you may have to give up control and that’s where that misconception comes from. But that’s if where you’re worried about asset protection or qualifying for different federal benefits or other things. And so that’s where that, that comes into play. But in a living trust, it’s not the case. All you maintain full control of your assets doesn’t affect anything from your day to day level except for that your trust name is on your bank accounts that have your personally along with that misconception number five is that you people think, Oh, I have to pay a trustee fee if I set up a trust. Well, if you do, you’re just paying yourself. Cause like I said, you are the trustee in most cases of your trust and the successor trustees, if they are entitled to a fee.
So if you named like a bank or a trust company, that’s going to charge a fee. And even if you name family members with friends, they could charge a fee a up to a reasonable amount or you can specify the amount, but that doesn’t kick in until you die. So you’re not signing up and saying, I have to pay this person right now. It’s only when you die and you can change that trustee or and change the terms of what they’re going to get at any time up until you pass away or you become incapacitated. Trust Attorney Las Vegas So that’s, um, that myth is not true. Last myth. Myth number six or MIS misconception number six is, you know, I have to, I have to get a separate tax ID. Um, and I have to file a separate tax return for your trust with the living trust. If it’s done right, if the estate attorney does it right, it does not get its own tax ID.
It is just your social and so everything flows through to your individual tax return. You actually don’t even have to put it on there cause it’s a disregarded entity and so it’s all just going to go on your personal return and it doesn’t take change anything from your tax filing status. Now some attorneys do go and create that separate tax ID and you can still have it flow through, uh, but it’s unnecessary. It’s an unnecessary step when you’re doing your estate planning. So just, you know, just know that when you set it up, you don’t have to um, get a separate tax ID. You can just keep going the way you are, not file separate tax return and you don’t increase your costs that way. That’s with irrevocable trusts. So that’s another step with worried about, once again, asset protection, estate taxes, other planning things.
But for the basic estate plan of your living trust revokable trust, you do not need a separate tax ID. All right? I hope you found those, uh, six myths or misconceptions, um, understandable that this is, you know, why they do, they are out there, but they’re not true. And so hopefully this helped you understand that. And thank you for listening. As always, if you could please subscribe Trust Attorney Las Vegas so that way you get the latest updates from us. Um, that’d be great. And then, um, if you can leave us a review, let us know how we’re doing and what stuff you’d like to listen to in the future, we’d be happy to, to get that information as well. So this is Blake Johnson. Thanks for listening.