Living Trusts as a Means of Avoiding Probate

This document is prepared for general education purposes only. The production of copies for anything other than free distribution is prohibited. A word about the speaker: Brian Sheppard is a member of the National Academy of Elder Law Attorneys and the San Fernando Valley Estate Planning Council. He has worked with seniors and their legal issues since 1990 and is Certified as an Elder Law Attorney by the National Elder Law Foundation. He focuses his practice on Elder Law issues, including Wills & Trusts, Conservatorships and Probate. A word about the talk: The following talk is meant to be a general overview only. For specific questions contact an attorney or the agencies mentioned later in this talk. If you believe you have been a victim of a fraudulent trust sales scheme contact the California Attorney General, at 300 South Spring Street, Suite 500, Los Angeles, CA, or the Estate Planning Fraud Hotline at (888) 460-7364. 1. Correcting some misimpressions about trusts. Many people think they do not need a trust if they have less than $600,000. This is a confusion about the need to probate the property and the “Exemption Equivalent” (which until recently was $600,000, but is now $1,000,000). Your heirs can benefit from a trust even if you only have a house worth $101,000. A trust is not always necessary to avoid estate taxes. If you have less than the amount of the Exemption Equivalent, (currently $1,000,000), there will not be estate taxes even if there is not a trust. If you are a single person, having a trust will likely not affect the amount of estate...

What is a Reverse Mortgage?

A reverse mortgage is a home loan that allows the homeowner to receive money from the bank instead of paying money to a bank. The usual roles of borrower and lender are reversed. Here the homeowner with a reverse mortgage receives money from the bank instead of paying money to the bank. The bank uses the home as collateral for the “reverse mortgage”. Usually, when the homeowner sells the house, or dies, the home loan is paid off. However, if you want to take a reverse mortgage out on your home you must be very careful that the lender will not collect until you sell the house or die. You must also be careful to avoid what are called “shared appreciation” loans. With a “shared appreciation” loan the lender not only collects the amount owed, but also collects a percentage of the appreciation that occurs over the life of the loan. If you apply for a “reverse mortgage”you should have an attorney review the terms before you sign the loan documents. Like any legal document, reverse mortgages can be confusing; you can’t afford to find out what your loan says after you have signed all the papers. A reverse mortgage does not require the homeowner to make any payments while he or she is alive. This is different than a home equity line of credit, which is a loan that must be immediately repaid. Some reverse mortgages are often insured by the Federal Housing Administration. If you take a reverse mortgage you want to be sure to get a mortgage which is insured by the federal government. As a...