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  • Complicated Trust Question

    Hello everyone:

    I am a single male and wanted to set up an irrevocable trust as my beneficiary in Illinois. Basically I have 2 elderly parents and 2 disabled siblings. All 4 of whom are unable to manage things on their own. I have talked to a couple of decent Trust Attorneys and they want 7-8k before even talking about the details of how we would set up what I want.

    Irrevocable Trust as my primary beneficiaries being both my elderly parents. Once both parents are gone, 50% to go to sibling1 and 50% to go to sibling2. Or 100% to either sibling if only one of them is still alive at the time. Both siblings are on government aid so these would have to be Special Need Trusts.

    My questions are:

    1) What is the cheapest quickest way to set up the initial Irrevocable Trust that would be my beneficiary? I just need something quick and dirty set up, I can always spend more time later and make a better one. I just have way too many things on my plate and don't have a lot of time now or probably in the next 1-3 years to get into all of this.

    2) Do I need to create the secondary Trusts (i.e. the Special Needs Trusts) for my siblings now as well or can I just say that that needs to be done upon both my parents passing?

    3) Anyone know of a good and fairly priced Estate Planning Attorney licensed for Illinois that could do this for me?

  • #2
    No idea about specific attorneys.

    I suggest you post your question on bogleheads, where a number of estate planning experts participate.

    You probably need the help of an expert to get the special needs issues right.

    Unclear whether you want to fund the trusts now or you want the trusts to receive your assets and perhaps insurance at your death. If the latter, this could be set up in your will.

    You also need to decide how much money is at stake. Once you are gone, someone will need to manage the trust, which over time will cost much more money than you will pay a lawyer to set them up. If you fund the trust while you are alive you could serve as trustee for free. Unless you can find people to do it for free after you are gone, then there would have to be a paid trustee.

    You do need to gather more information. The cost of good estate planning depends in part on where you live. A senior partner in the downtown office of a major firm in a big city will charge much more than someone at a smaller firm in the suburbs. But if $7,000 is large compared to the amounts you expect to end up in the trust, then the whole idea is not going.

    Comment


    • #3
      $7k is a reasonable amount. Irrevocable trusts can't be fixed later. If you are not able to spend the time and money to do it right you are probably better to not set it up now.

      Comment


      • #4
        In your shoes, I might shop for an all in reasonable legal fee to set up the trust, but I would never try to venture to do this on my own.

        You might get reasonably priced trust and estate services in flyover country, certainly much more reasonable than in expensive coastal cities. And of course, this can all be handled remotely.

        Comment


        • #5
          The only short cut I see is to set up a revocable will/trust and get to the details later.
          You might want to actually consult with an elder law attorney. Not for the trust work, but for the advice of which path you should go. You might also get a good referral. They have to deal with these types of issues many times. Well worth paying for advice.

          Comment


          • #6
            You can do research right now online and find a form to set up a trust yourself, there's no legal requirement to use an attorney. If you do, at least make sure it is fully amendable and revocable by you, that you can withdraw all of the proceeds for your own benefit, name yourself trustee, and just draft it how you want, including the distribution scheme you prefer for your family. Then get to a good attorney as soon as you can. That being said, you may decide it's not worth the risk of messing it up. I have handled a few very expensive litigation cases because people did their own planning or went to lawyers who made mistakes. It's worth hiring a good attorney when you can afford one.

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            • #7
              Irrevocable trusts are very complex (and expensive, not just now but in the future as you’ll need to file annual taxes). If you can afford to set up funding for your family members, I’d hope you can afford to do it right. I have seen the results of not-so-expensive or experienced attorneys (after all, how else can less-experienced attorneys compete?) and it is amazing the amount of potential damage in the document waiting to be inflicted at death.

              Another thought - if you are not married yet, you may regret this later. Just be sure to plan for a family and your own responsibilities, if applicable. They will be your top priority. Again, if applicable.
              Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

              Comment


              • #8
                I agree with Gavin West and jfoxcpacfp. Given these facts and circumstances, irrevocable* trusts are unwise and unnecessary. Even third (3rd) party special needs trusts (SNT) can be revocable*. Especially, since you can now get around restrictions on beneficiary self-funding** with a complimentary 529 ABLE account.

                *They should become irrevocable upon your death, but no sense in putting a straight jacket on them before then.
                **Including taxed/untaxed income and gifts from others.

                Comment


                • #9
                  “I am a single male and wanted to set up an irrevocable trust as my beneficiary in Illinois. Basically I have 2 elderly parents and 2 disabled siblings. All 4 of whom are unable to manage things on their own.”

                  First, a single male attempting to provide for a complicated set of 4 beneficiaries is extremely impressive. I admire your sense of responsibility.

                  BUT, it seems you have independently decided “irrevocable” is the solution, rather than seek professional advice. There are enough “signs” that a permanent setup might not be appropriate for YOU. Shortage of time, your personal path in life, amounts involved and concerns with cost are just a few. There are downsides to your self selected solution. It might not be best for you in the future. If you ask an attorney to set something up, they will do it. The problem is that might not be what they would actually recommend. You didn’t ask that question. Avoid that mistake. So much depends on your situation, not the parents and siblings.

                  I encourage you to provide your facts and sense of responsibility and explore the potential alternatives and timing. Then consider the cost.

                  Basically, self diagnose of a legal estate problem is dangerous. Let the professionals make their own judgements and recommendations. Well intentioned cause for concern about the impacts on you, your situation will change and there are alternatives.

                  Comment


                  • #10
                    You need to make an appointment with a lawyer. This has the potential of a disaster for you down the road if you mess it up.

                    Comment


                    • #11
                      Thank you everyone for the advice and suggestions! I wanted to do something quick and temporary incase I passed away so it would go to the right people and then work on the details later and make out the succeeding trusts later. I have to get in study mode for my boards before my time expires to take them. Yes it has been a miserable life having to take care of 4 disadvantaged people especially when two of them keep sabotaging my efforts to help them.

                      I think what I am going to do is consult with an estate attorney to draft up a nicely worded WILL of how I want everything to go if I were to pass now. And then once I finish Boards and have more time to think about this and get more informed about it all, iron out details on if/how I want to set up the irrevocable trust and the special needs trusts. I thought it would be as easy as making a blank shell irrevocably trust with it's own Tax ID Number that I could then list as my beneficiary for everything. Currently my beneficiary on everything is my elderly mother but the problem is one of my disabled siblings racked up over a million dollars in gambling debt under all 4 of their names and so if I pass away before them I do not want my hard earned money to go to the debt collectors who are harassing them. That is why I think an Irrevocable Trust is needed to protect it from debtors who are after all 4 of them due to the unfortunate situation.

                      Can I just have an Estate Attorney draft up a detail WILL which dictates that upon my passing all of my assets will go into an Irrevocable Trust that needs to be formed at my death? Would this avoid Probate Court for them?

                      Comment


                      • #12
                        Tell exactly that to the attorney. There are a lot of options for a testamentary trust and I don't think irrevocable trust is the right one but they will know.

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                        • #13
                          A testamentary trust is irrevocable from grantor's prospective when the will is executed and the trust created. You are dead after all.

                          My point was to not unnecessarily have a trust be irrevocable until your death. That can either be a living trust where you put the assets in the trust or a testamentary trust where the trust is created and the assets placed in the trust upon your death.

                          Living trusts are often oversold and generally unnecessary subject to fact and circumstances including your state's probate process.

                          Comment


                          • #14
                            Originally posted by vinny2016 View Post

                            Currently my beneficiary on everything is my elderly mother but the problem is one of my disabled siblings racked up over a million dollars in gambling debt under all 4 of their names and so if I pass away before them I do not want my hard earned money to go to the debt collectors who are harassing them. That is why I think an Irrevocable Trust is needed to protect it from debtors who are after all 4 of them due to the unfortunate situation.

                            Can I just have an Estate Attorney draft up a detail WILL which dictates that upon my passing all of my assets will go into an Irrevocable Trust that needs to be formed at my death? Would this avoid Probate Court for them?
                            I’m beginning to suspect this is a “what if” situation you have created. It’s just kind of bizarre.

                            But in case it’s not…
                            1. Yes, you can have your attorney draft such a document.
                            2. No, it will not avoid probate court.
                            If your biggest concern is avoiding probate court (why?), then you need to put the applicable assets into an RLT. 110% agree with SR’s above comment about RLTs being oversold, but this might be something to consider given your concern. (Note that RLT’s provide zero asset protection.)

                            fwiw, I think it is a little crazy to consider leaving your assets to your elderly parents (who can’t manage things on their own), who can then take said estate and gamble, give it to your siblings, or pay off the debts, if they are still living. If not, your sib’s will inherit, anyway.

                            Of course, your parents are probably younger than I am. In which case, let it be known that I reallly don’t care for your description of the middle-aged population.
                            Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

                            Comment


                            • #15
                              If I am reading your situation correctly, the document you are looking to create is a testamentary special needs trust. Possibly four separate ones or one main trust with four sub trusts.

                              Avoiding probate is neither necessary nor advisable in the majority of situations (except CA).

                              Answering your first three questions:
                              1. Testamentary special needs trust(s)
                              2. No, you can setup a testamentary trust.
                              3. No.

                              Answering your next question:

                              Can I just have an Estate Attorney draft up a detail WILL which dictates that upon my passing all of my assets will go into an Irrevocable Trust that needs to be formed at my death? Would this avoid Probate Court for them?
                              If your dead, any trust you created either in life or via will & testament becomes irrevocable (you're dead, you can't revoke it). No.

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