Estate planning

Asked about 2 years ago - San Jose, CA

I am planning to do some estate planning like making a revocable trust . There are two hitches in doing so
1 . I heard that you end up paying more taxes in case of married filing jointly cases.
2 refinancing a mortgage would be difficult .

I would appreciate if somebody can confirm this ?

Attorney answers (3)

  1. Robert Paul Bergman

    Contributor Level 13

    10

    Lawyers agree

    Answered . First of all, it is possible to have a joint revocable trust where each spouse actually owns their own property separately within the trust. In some cases, married couples filing jointly will have more income taxes than if they file separately, but that is not a function of whether or not their property is owned in a trust or not. It is more a function of how income, deductions and gains or losses are characterized by the husband wife.

    Refinancing a mortgage will generally be more difficult in that most lenders will require you to take your property out of trust ownership before making a new loan on the property, triggering the need to then have the property transferred back into the trust. This will cause an additional expense for two sets of deeds and other transfer paperwork, including notary fees and recording fees. This is not a legal requirement in the law, but rather a function of internal rules for the banks.

    A few lenders, however, are no longer requiring properties held in a revocable living trust to be take out of trust ownership in order to be refinanced. In our area of the South Bay, Fremont Bank is not requiring that. Other banks or credit unions should be asked in advance if they have this requirement.

    Please remember to mark what you believe to be the best answer to your question. This answer is provided by... more
  2. Steven J. Fromm

    Contributor Level 20

    5

    Lawyers agree

    Answered . Mr Bergman offers sound advice. There is no substitute for sitting down with an estates attorney to discuss your specific needs and goals. Each family and its assets are different. Do yourself the best service and get with a good estate planning attorney. You will be really happy afterwords and your family will be eternally grateful.

    LEGAL DISCLAIMER Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia... more
  3. James P. Frederick

    Contributor Level 20

    3

    Lawyers agree

    Answered . I agree with Mr. Bergman. I think you were given bad legal advice by whoever spoke with you. It is time to actually meet with an estate planning attorney to discuss this, so you can get straight information. There should be absolutely no difference in taxes if you are using a revocable grantor trust. As for refinancing, it is not a problem to transfer real estate out of trust, if you need to. In Michigan, we use lady bird deeds to avoid the need for this. I understand that that particular type of deed is not authorized under CA law. There may be other options that would achieve the same purpose, however.

    A Trust is an outstanding estate planning tool. Whether or not it is the best option for YOU depends on your assets and your objectives. The only way to know for sure is to meet with an estate planning attorney. You would not want to contemplate setting up a trust without one.

    James Frederick

    *** LEGAL DISCLAIMER I am licensed to practice law in the State of Michigan and have offices in Wayne and... more

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