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Hi from MA
Old 10-01-2016, 06:24 AM   #1
Confused about dryer sheets
 
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Hi from MA

My DH and I retired two years ago. We have done pretty well with our retirement savings and asset allocation. We have both now reached the age of 66 and are taking our social security along with my pension which covers most of our needs.

My dad passed away last year and I inherited a large amount of money from him. Including our home which is paid for we are worth about three and a half million. We have no children.

We have a truck and a fifth wheel trailer for our traveling adventures and we also have a new boat to enjoy for day trips.

The situation that is giving us fits at the moment is setting up our estate planning. We have an estate planning lawyer. We have our hippa forms and health care proxies done. We are hammering out our POA. We trust each other without reservation. The problem is in deciding how much power to give to someone else in case we are both incapacitated or one of us incapacitated after the death of the other. Our attorney believes in giving broad powers so that there is no need to go to court in the event of a need to alter some investment or other. We are not sure we like this idea and are talking with her about a narrower POA.

We also like our home state of MA and are not willing to move to save estate taxes. Our attorney has suggested setting up revocable living trusts for the two of and also putting our house in a trust so that all of our assets pass outside of probate. Having a trust for each of us enables us to take advantage of the allowed one million dollar deduction per estate. Otherwise when one of us passes there is no tax owed until the second one dies but then there is only one million dollar exemption allowed.

We are trying to decide whether we want the bother of fussing with trusts and all to enable our relatives to receive the maximum in inheritance. It would be our siblings and their children who would benefit.

It is tricky to discuss these things with friends and family as we are not all that willing to have them know how much we have. I have been reading past posts here about estate matters. I would value your advice as to how much leeway any of you have given to alternative POA people.
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Old 10-01-2016, 06:39 AM   #2
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Welcome! We lived in the Boston area for a while and I recall visiting Nahant to play golf and go to the beach. Pretty area.

As someone who has been a court-appointed custodian twice I second your lawyer's advice to give your POA broad powers. Actually, even with a POA or court appointed custodian papers it is often hard to get things done as financial institutions are suitably skeptical of strangers accessing other people's money. I found online access to be a savior as I could register and log on and do transactions without guilt since I knew I was authorized to do so.

A one-million deduction per estate is small. I think it would be prudent to change residence to a more estate tax-friendly state and one with pleasant winter weather. My criteria was being able to see palm trees and wear shorts year round. You can move your boat there too if you wish and there may come a time when you may tire of traveling in the 5th wheel. While there will be a cost to obtaining and maintaining a new residence, the cost will be a pittance compared to what you will save in income and estate taxes. Our winter condo in Florida cost us less than $200k, is lock and leave and costs us about ~$8k a year to keep.

You can still keep your MA house and enjoy it during our beautiful New England summers.
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Old 10-01-2016, 08:49 AM   #3
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Having the job of medical POA when my dad became quite ill at the age of 92, I can tell you that it was already difficult enough to get doctors and others to listen to me. On top of that I had to work through other family members who thought they knew better. My dad was with it all the way to the end so many decisions he could and did make. People are decent and won't make horrible decisions, but won't make perfect ones either. Having some sort of restrictive poa will make it hard at an already difficult time and will be very problematic for the family member who is in charge. Trust your attorney on this.



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Old 10-01-2016, 08:53 AM   #4
Confused about dryer sheets
 
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I meant the financial POA. The health care POA is all set.

Thanks
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Old 10-02-2016, 08:43 AM   #5
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How about following your attorney's recommendations regarding broad powers but naming a non-family member as the POA? That way you could avoid divulging your assets to family but achieve the kind of flexibility that would best serve you and your wife's named POA on your behalf. With respect to your attorney's recommendations as to trusts, with the amount of assets you have as of today, not an insubstantial sum, and the low estate tax threshold in MA, I would follow his advice. We have these sorts of trusts set up and our home is in the name of a trust. This would be a pretty boilerplate set of docs to set up. The cost shouldn't be that great, seeing that you are already dealing withe other standard estate planning docs such as HIPA and POA. As a mathmatical exercise, what tax would you owe if the second of you died tomorrow with these trusts vs without. If you don't care about your relatives inheriting that extra amount of money, perhaps you have a favorite charity and think what such a bequest would mean to that charity and the relatives would still get what they would have had you not set up the trusts.


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Old 10-02-2016, 09:14 AM   #6
Confused about dryer sheets
 
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Thank you, it is a good idea to consider a non beneficiary having POA. We have all of our funds at Fidelity and they offer different services related to such matters. We have an appointment with our representative coming up this month. We could talk with him about it. It is not that we do not love our family members but past experience has shown us that temptation can cause otherwise good people to justify using funds that actually belong to others for their own benefit. We have seen several examples of parents who trusted their children being tossed out of their homes due to the untimely death of their child or divorce of a child. Some people have no sense of shame or conscience.
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Old 10-02-2016, 03:05 PM   #7
Confused about dryer sheets
 
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Another part of the revocable trust turning into an irrevocable trust after the passing of one of us is the potential cost of operating the trust until the passing of the second partner.


I believe that once the trust becomes irrevocable that it will require a tax return of its own. I believe that it is a 1041. If the last partner to die lives a long time after the passing of the first partner the costs of having the trust manged and tax returns done could mount up over time.

Would any of you who have experience with an irrevocable trust have a general idea of the yearly costs involved in maintaining the trust?
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Old 10-02-2016, 04:42 PM   #8
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I am from Mass and I think you should stay and pay a lot of taxes, someone has to pay the bills. Thank in advance.
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Old 10-03-2016, 06:20 AM   #9
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Following with interest b/c I'm also from MA and considering the POA issue. Is there anybody here who is single and has either employed a POA who is a true third party like a lawyer, or who has no POA and is just going to wing it with everything falling into state hands?
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Old 10-03-2016, 02:23 PM   #10
Confused about dryer sheets
 
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Our proposed POA is fine for the two of us because the very broad things we would be allowed to do would not be a problem. We are not interested in doing anything too exotic. The POA for someone to act for the surviving spouse our attorney has proposed is many pages long. It is full of stuff like investing in small businesses and lending out the money or making gifts with the money and any number of actions we do not want them to do. The POA I had for my dad who passed last year was a simple two page document with reasonable actions like paying his bills and looking at his bills and other mail. Is it common for those of you here to have long elaborate POA?
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Old 10-03-2016, 02:53 PM   #11
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Mu recollection is that our POA's are several pages long, but the reason is for the most part designed to list various scenarios that are not mainstream but possible nevertheless and are options that the signor can opt into or out of.


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Old 10-03-2016, 05:03 PM   #12
Confused about dryer sheets
 
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Thank you, that is a great help. So you are able to indicate which of the scenarios you are willing to permit. My dad's had a column of things that I could do and there were boxes for him to indicate the things he would not want me to meddle in.

Maybe I am just paranoid.
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Old 10-03-2016, 06:04 PM   #13
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Exactly-no need to grant POA for events or transactions that are outside the mainstream. On the otherhand because these scenarios are unlikely to happen, as long as the POA is a third party, i wouldn't worry about the POA being likely to venture into such activities.


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