Dear Mr. Premack: I often get cards in the mail inviting me to
seminars and free lunches. They want to tell me about my opportunity to
avoid probate with a living trust. Now and again they say that laws have
changed and that all estates must now go through expensive and
time-consuming probates. I’d like a free lunch, but I’m worried about what
it might really cost me to go to one of these seminars. What do you think?
There is nothing wrong with gathering information, so long
as it is unbiased and accurate. I don’t know who is sponsoring the seminar
to which you refer, but if the invitation was misleading it is a good
indicator that the seminar will be misleading.
The invitation, as
your related it, first tells you to avoid probate with a living trust.
There is nothing wrong with that concept, as long as you understand a few
A) Just having a living trust does nothing to avoid
probate. To avoid probate, the trust must be properly “funded”. That means
that you must convey virtually all of your assets into the name of the
trust. It also means that as you acquire new assets, you must do so in the
name of the trust. If even one testamentary asset is left out of the
trust, your estate may still go through probate.
B) Probate is
not a dirty word. Texas has a streamlined and efficient system. If you
have a qualified attorney prepare for you a well thought out Will, then
probate is fast and affordable. The cost of probate may be about the same
as the cost of setting up that living trust, so avoiding probate by using
a living trust may not save you a lot of money.
The next thing
the invitation states is that “laws have changed” and all estates must go
through expensive and time-consuming probates. In fact, the laws do change
in Texas about every two years when the legislative session ends. A whole
batch of new laws will be coming into effect between now and September 1,
2011. But none of those laws require that “all estates must go through
probate”. None of the changes to the probate laws that were passed in this
last session of the legislature were designed to require all estates to be
On the contrary, the Texas Probate Code provides several
methods to pass your estate without a courtroom probate. One of them is to
use a “community property survivorship agreement”. Another is to utilize
accounts with “pay on death” or other beneficiary designations. Our laws
do not require all estates to go to probate court (though generally the
less preplanning that you do, the likelier it is that your estate could
end up in court).
What might it cost you to get this free lunch?
The sponsor wants to sell you something. This sponsor is a
broker/insurance agent who is using your fear of probate, and the lure of
avoiding it using a trust, to get a foot in the door. The sponsor hopes to
gain your confidence and gather your personal information. If the sponsor
is like many others who hold these lunches, sell an annuity to you is the
Using a trust as the wedge to sell an annuity is
ironic. Why? Because one purpose of a trust is to avoid probate. But if
you invest your funds in an annuity, you will be buying a policy with a
beneficiary designation. The annuity policy does not go through probate,
so why do you need the trust? Because you won’t go to the free lunch if he
invites you to an annuity sales pitch. (Annuities are also fraught with
other issues, like penalties for early withdrawal and non-guaranteed
Remember that the sponsor is not licensed to give
legal advice, but is still doing so by holding this seminar. Your best
bet: give up the free lunch. If you want an annuity, talk to your trusted
investment advisor. If you want a living trust, make an appointment with a
qualified Elder Law Attorney who can give you the pros- and cons- and help
you find the best legal tool for your specific goals and circumstances.