Question:  “I want to transfer the title to my home to my revocable living trust I created for as part of my estate plan so it will not have to go through probate on my death.  My home is encumbered by a deed of trust that secures a debt I owe to my lender.  The loan documents say that the lender has an option to call the loan if I transfer the title to the home.  Can my lender call my loan?

Answer:  No as if the borrower continues to occupy the home.  Most of the time when you ask a lender if it will consent to allow you to transfer the title to your home to your revocable living trust, the lender's personnel will either say no or require you to jump through a bunch of unnecessary hoops.  There is a federal law called the Garn-St. Germain Depository Institutions Act of 1982 (12 U.S.C. § 1701j-3(d)) that prohibits a lender from exercising a due on sale clause in loan documents when you transfer the title to the home in which you live to your revocable living trust.  Here is the pertinent language of the statute:

(d) Exemption of specified transfers or dispositions. With respect to a real property loan secured by a lien on residential real property containing less than five dwelling units, including a lien on the stock allocated to a dwelling unit in a cooperative housing corporation, or on a residential manufactured home, a lender may not exercise its option pursuant to a due-on-sale clause upon –

(1) the creation of a lien […]

Arizona Republic:  “A federal investigation into elder abuse has found that Probate Courts nationwide are failing to protect vulnerable adults from exploitation by the guardians appointed to look after their health and finances.  In a report released Wednesday, the Government Accountability Office reported instances of abuse in 45 states, including Arizona, where courts failed to conduct background checks or monitor those it put in charge of an incapacitated adult.”

Wealth Strategies:  “A sobering reality is confronting many Americans in general, but there is a niche that has unique and serious planning problems–and we are not referring to all those who are going bankrupt, losing their homes to foreclosure, or filling out forms for unemployment benefits.  They won't be getting much sympathy from the one in seven Americans living in poverty, nor from the vast majority of Americans with less than $1 million in total assets, but those with $20-million estates may have the most to lose in a short time if they aren't extremely vigilant right now–and over the next several years.”

Forbes:  “The tax law is maddeningly uncertain. But there's still much a rational taxpayer can do now.  Congress has headed home for elections, leaving the tax code an unstable mess. . . . So what's a rational taxpayer to do? It's certainly tempting to put off planning and hope for a quick resolution after Nov. 2. Don't.”

Wall St. Journal:  “life-insurance companies gradually have shifted away from their broad historical base of middle-class households. Instead, statistics show, an increasing portion of insurers' business consists of selling large policies to wealthier Americans, often as part of complex estate-tax plans.  The shift means that a growing proportion of the tax benefits of life insurance goes to the well-off, not to the middle class that once was the industry's backbone.”

Arizona Republic:  “Many Americans have planned for their eventual demise by drafting wills and writing down instructions for divvying up family keepsakes.  But many have overlooked another issue: the chance that before they die, illness or age will rob them of their ability to take care of themselves or manage their own finances.”

Associate Law Professor Phyllis Smith of Florida A&M University College of Law has written an article called “The Estate and Gift Tax Implications of Self-Settled Domestic Asset Protection Trusts: Can You Really Have Your Cake and Eat it Too?”  Here's the abstract:

“Abstract: Self-settled asset protection trusts are wealth preservation trusts coupled with the spendthrift provisions. This type of trust permits the settler to have the benefit of treating the trust as a separate entity thereby protecting his assets from creditors while maintaining a pecuniary interest, as well as some level of control over what ultimately happens to the trust property. By providing asset protection from potential creditors while still having the ability to maintain a beneficial interest in the trust, the settler can essentially “have his cake and eat it too.” The typical domestic self-settled asset protection trust may not be treated as an asset of the settler for creditor claims. Whether these assets should be treated as owned by the settler for the purpose of inclusion in the gross estate of the decedent for estate tax purposes is the focus of this Article. The author asserts that it is appropriate to include certain property settled in a domestic asset protection trust (“DAPT”) in the settler gross estate for estate tax purposes because of the control the settler retains over the trust assets up until his death.”

Anne Alstott of Harvard Law School wrote an article called “Family Values, Inheritance Law, and Inheritance Taxation.”  Here's the abstract:

“This symposium paper, originally presented at the September 19, 2008 NYU Tax Law Review Symposium on inheritance taxation, begins to examine what it might mean for the law to protect a “right to use one's resources to benefit one's family.” The paper draws on historical debates over inheritance law to identify and examine three rather different ideals of the family that have recurred in various debates over time.

The analysis shows that, while one can interpret values associated with family life in such a way as to oppose the taxation of inheritance, there are equally plausible interpretations according to which the family can co-exist peaceably with the taxation of inheritance, at least in some form. And this basic point holds whether one conceives of the family in liberal terms, in conventional terms, or in functional terms. But although each vision of the family might co-exist with inheritance taxation, the three ideals do have markedly different implications for the terms of inheritance law and inheritance taxation.”

Forbes:  “Wealth advisors have been telling clients all year that if you want to shift wealth to your kids or grandkids with a so-called GRAT, you should be doing one sooner rather than later. Well, it looks like the best time for this tax-saving estate-planning strategy is in October.”

AARP:  “For most people, a will is the first choice for passing on an estate to heirs. But it's not the only choice. Among other estate planning tools, the revocable living trust is gaining in popularity, especially among boomers.”

Many states, including Arizona, have laws that allow people to create trusts for the benefit of family pets. Texas Tech University School of Law Professor Gerry W. Beyer published an article on this subject called “Critters in the Estate Plan.”  Here's the abstract:

“Shadow, Dolly, Spot, Lady, Ming, Trouble, Roxy, and Madam Shan are just a few of the pets that have received favored treatment in their owners’ wills. Because of the foresight of their humans, these beloved companions lived out their lives in comfortable surroundings rather than meeting the Grim Reaper in the local animal shelter’s death chamber.

Virtually all clients want to provide for their pets but few actually do. Why is this? For the most part, either they do not plan their estates as is the case with most Americans or their estate planning attorneys neglect to explain how they can make arrangements for their four-legged, feathered, or scaly friends.

Lawyers should, and may be ethically obligated to, inquire about their client’s pets so that they can make certain their clients’ pets are properly cared for when the client is unable to do so due to injury, illness, or death. This article provides information designed to assist estate planners to carry out the wishes of their pet owning clients.”