Hi Lee Phillips here.
I'm an attorney and I want to talk to you about
why trusts fail
and the fact of the matter is the vast majority of living revocable trusts
that everybody gets for their estate planning stuff
they fail.
They don't deliver the goods as advertised.
They don't work.
Why don't they work?
Well to begin with
there was an article quite a while ago
in Fortune magazine
and they quoted one of the big-time lawyers
and he said
only 1% of American lawyers know
how to draw up a proper
a good
living revocable trust.
That's not a good statistic guys.
It doesn't work.
So you go down to the average liar-- lawyer
I'm a lawyer, yeah,
not liar, lawyer
well
y'all know how to tell if a laywer's lying
yeah his lips are movin, that's true
see---they're moving.
If you're so good then do you know what a good dead lawyer does?
a good dead lawyer lies still.
We're talking about the living revocable trust and death
because the living revocable trust
is used as a probate avoidance tool.
And we're going to have to do another YouTube on what are probative avoidance tools
but you avoid probate with it.
That's why you use it.
You don't really save any taxes
you don't
you can control there's some management issues that are good for it
because if the guy becomes incompetent
you can have him declared incompetent
if the right terms are in the trust
and not have to go to court
and then the successor trustee
can manage the assets, so that's an advantage
and I'm not really into advantages of living revocable trusts now
I'm in why you get screwed when you set one up
and the reason is,
is the lawyer never bothers to tell you
how the trust works.
What's the legal trick of the trust?
you have to understand the legal trick of the trust
otherwise the trust fails
and the trick involves moving ownership
of your assets
into the trust.
Your probateable assets
have to be owned by the trust
you have to move them out of your ownership
into the trust's ownership.
And I have YouTube's on how to move the bank account
and how to do the real property
and all that sort of stuff
excuse me chokes me all up
because it's a big deal
when you have to "fund" the trust
or move the assets into the trust
and the lawyer just kind of never bothers to tell you that.
As a result
the trust doesn't work.
The family doesn't avoid probate.
That's okay
because in 90+% of the cases
the family is going to come back to the same lawyer
who drafted the trust.
Now they're going to be hotter than beans
because they figured out that they have to go through probate
and this trust that dad paid $5,000 for
isn't going to work.
All the trust was okay
but it ain't gonna work
because
dad didn't understand the legal trick
he didn't make the trust own all of his property
as a result the trust didn't work
and the family is just steamed
when they come back to the other lawyer
er--to the lawyer
and they say hey look
you didn't teach dad how to use the trust
you didn't tell him this trust isn't working
and and dad didn't put the assets into the trust
and everything else--it doesn't work
you screwed dad out of $5,000
and now we got to go through a probate.
And the lawyer says okay, okay, okay, just just cool off for a minute
and he goes into the file
and he gets a letter that he has given dad
when he made the trust out for him.
And the letter says that dad has to move all the pieces of property over into the trust.
Dad didn't really realize that
he's bought a new house, oh he even put
the lawyer put the house in the trust
but dad bought a new house
and he bought it in his own name
he didn't buy it in the trust's name.
And the lawyer has outlined all of this in this letter.
And he maybe even had dad sign a copy of the letter
saying that he received the letter.
so the letter with dad's signature on it
is in the file
and the lawyer whips that out and says,
no no no not my problem
it was your dad's problem
your dad screwed this up.
I will help you out in the probate I feel bad for you
I'll give you a deal.
Yeah we gonna give you a deal.
But he gives him a deal
and then the family says okay.
So in 90% of the cases
the guy got the $5,000 for setting up the trust
and then he gets all the probate too
it's a conflict of interest
it's a double-dip.
As a result by far the majority and I don't know this exact statistic
but I'm gonna guess
85-90% of the living revocable trusts
the family go through probate.
There are advantages to probate--that's another YouTube
but we've got lots of YouTubes in case you haven't figured that out
in fact I've got a full book on this called
Protecting Your Financial Future
and it teaches you how to operate the trust
how to set it up
how to make it work
avoids taxes, avoids probate, avoids all kinds of things if you do the trust properly
it's a fun read by the way it's the story of my neighborhood
and people all the time they read the book and they say well I know who this is
I mean that is, but who's that guy?
So it's it's kind of fun
but in fact it's been a Time Warner Book of the Month Club book
but at any rate
besides the book
don't get cheated by the lawyer
if you're gonna get a living revocable trust
understand the trick
fund the trust
put your assets into the trust
there's another YouTube of Funding the Trusts
but put the assets into the trust
make sure you maintain the trust
by keeping all of the assets into the trust
you have to think
I've got to live differently
I'm not living as me anymore
I'm living as a living revocable trust
so think
do it right
and the trusts are really actually cool
when they work effectively,
This is Lee Phillips talking on how you get screwed with a living trust.