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Making a will and living revocable trust
Old 07-01-2012, 11:48 AM   #1
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Making a will and living revocable trust

Even though she drives me nuts and I think her retirement advice is for the birds, I'm considering purchasing Suze Orman's will/living trust kit. It appears to be a amazing value.

I'm 38 with no dependents, but I would like to get my affairs in order and plan for the inevitable (hopefully decades away).

Anyone use this could or another affordable alternative?
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Old 07-01-2012, 12:24 PM   #2
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I would also check out Nolo Press and see what they have to offer. I used their book when settling my mother's estate in the late '90s and it was invaluable. This reminds me that I should also do this. DH freaks every time I mention trust/will, but it's time.
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Old 07-01-2012, 12:30 PM   #3
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If you have substantial assets you should have a will. Why would you want/need a living trust?
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Old 07-01-2012, 12:52 PM   #4
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Quote:
Originally Posted by pb4uski View Post
If you have substantial assets you should have a will. Why would you want/need a living trust?
I can't speak from experience of going through probate, but I can speak of experience dealing recently with my grandmother's estate. She had everything titled under her Revocable Living Trust.

It was RELATIVELY painless* to retitle everything with her set-up. I haven't known anyone that has gone through the probate courts for estates, but I'd imagine it would only add a substantial amount of extra legwork and difficulty that a simple few forms filled out today (for a RLT) would completely avoid. And then there's the customary 2%-3% probate court fee levied on the entire estate for the probate process. And the public filings of the deceased's assets.

The successor trustee indicated on the trust paperwork (previously submitted to the financial institution) simply gets their signature notarized or medallion guaranteed, and then transfers the assets/retitles the accounts as they need to, working only with the financial institutions, without having to wait on getting everything approved and passed through the probate court, with associated probate fees and delays and publicity.


*I say "RELATIVELY", because there are, of course, the incompetent people you come across at various financial institutions that don't have one iota of knowledge on what to do - yet still try to give you the wrong information. And it did take (in some cases) a month or two longer to get things taken care of than the institutions originally forecasted, and there are plenty of forms you have to fill out to retitle things. However, like I said, I can only imagine the additional agony and banging-the-head-against-the-wall due to things dragging through the courts and required appearances that having a will-only might have required.

Would it have been disastrous if she only had a will? Of course not. But if you can avoid an extra several months of delay and headaches by simply filling out a few forms now and retitling things, why not do it? I read about Nord's experiences with being the court-approved conservator for his father's assets, and all of the headaches he has to go through with accounts, etc. It is certainly a different scenario than dissolving an estate, but whenever you have court-issued paperwork and approvals that various institutions have to receive/question/ask for again, I would never wager that it's a fun situation.
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Old 07-01-2012, 12:58 PM   #5
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FWIW...Why You May Not Need a Living Trust | Nolo.com
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Old 07-01-2012, 01:29 PM   #6
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Quote:
Originally Posted by 2035 View Post
Suze Orman's
Anyone use this could or another affordable alternative?
Run away fast.

You could use a copy of Quicken Willmaker or other (cheap) software as a starting point, but the utility of will-creation software is to make sure you've considered most of the issues before you visit the lawyer to "do it right". Intuit occasionally bundles Willmaker with TurboTax or other Quicken products.

You'll use your cheap will-creation software to draft things the way you think you want them, and you'll give the file to the lawyer to run through their will-creation software to fill in the (inevitable) holes and to make it comply with the state laws that your will-making software probably missed.

Spouse and I go back & forth on revocable living trusts because they're a "pay me now or pay me later" issue. The majority of the people who set up their RLTs don't transfer their assets over properly (as MooreBonds pointed out) and then they forget to maintain the trust by dropping/adding assets as necessary. (Buying/selling a home or a car.) So setting up your RLT is a lifetime commitment, and it's probably cheaper than probate. It's also a good way to keep the terms of your will out of the press-- many RLT lawyers compare Howard Hughes' estate planning to Frank Sinatra's, although it's probably time to pick new celebrities for those roles. Midpack's Nolo link points out all the reasons why we do not have a RLT, and may never get one.

For now, spouse and I have everything "joint", "beneficiary", and "transfer on death". (We also have a will specifying pretty much the same arrangements.) We have a good turnover file, and our daughter knows how to use it. As I age, spouse will set up a joint checking account with our daughter and eventually turn over all the financial management to her. It accomplishes the same as a RLT without the legal fees... and with about the same amount of protection from untrustworthy successor trustees. There are separate legal issues with joint accounts that aren't applicable to RLTs, but that's a whole 'nother thread.

It would've been convenient if Dad had a RLT, because then we would not have had to spend the money on a conservator appointment. However most states will help you establish conservatorship for minimal expense (especially when you're a resident of that state). What was far more necessary, though, was his turnover list of financial accounts with logins & passwords. A RLT would help you keep that organized, but you could also achieve a similar result with a good "In case I wake up incapacitated" letter.

Frankly the court's conservator appointment letter is not worth a bucket of warm spit with the companies that hold your money. In our case it's only worked well once, "eventually" in a second case, and failed miserably two other times. Now I only whip out my appointment letter if I am directly challenged.

I suspect that if you call up a financial institution and announce that you're the successor trustee of the RLT, you'll get every bit as much respect as the conservator's appointment letter earns. But if you have a good turnover file and you continue to do business over the institution's website, they never need to know (or care) who's in charge.

So... set up a RLT if it helps you sleep better at night. You have to be willing to maintain it, and it's worth spending the money to do it right. As for spouse and me, I don't think we'll bother. I'll leave it up to her and our daughter.
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Old 07-01-2012, 03:47 PM   #7
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A few other notes on "will+probate" vs RLT:

Probate on multiple locations - you or a spouse/parent has assets under title in more than one county/state. Now you have to go through that probate process in each and every county. As I noted, I haven't personally experienced the probate process, so I don't know how many personal appearances one has to make (probably varies by county/state). But regardless, you've just multiplied the involvement factor overall by 100% for each county that's involved.

And one other item: for larger estates (i.e. exceeding the estate tax exemption threshold), RLTs allow you to specifically reference whatever the (at the time of death) federal estate tax exemption amount is to pass to your heirs, and your spouse to receive everything above that exemption amount. This greatly facilitates the minimization of federal estate taxes, and doesn't require you to constantly update your account titles so certain accounts pass to your spouse vs other heirs when the estate tax exemption amounts change from time to time. (This would be properly set up such that each spouse has roughly the same assets under each of their trusts)

Quote:
Originally Posted by Nords View Post
I suspect that if you call up a financial institution and announce that you're the successor trustee of the RLT, you'll get every bit as much respect as the conservator's appointment letter earns. But if you have a good turnover file and you continue to do business over the institution's website, they never need to know (or care) who's in charge.
I was referring more to the process of getting to the point of having the court-appointment in hand to give to the institution, rather than the process of closing/transferring accounts. It could very well take several months for a $1-$2M estate to go through the probate courts before getting to the point of closing/transferring accounts, versus just a week after death with a RLT.

Also, I agree that if you have on-line passwords, you can do a heck of a lot....but if an account has to be probated, the courts could be very particular as to any transaction that happens after death for which you didn't have explicit power to act on.


Quote:
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There are separate legal issues with joint accounts that aren't applicable to RLTs, but that's a whole 'nother thread.
These aren't all the considerations that Nords alludes to, but a few biggies:

From a tax perspective - the IRS officially views placing someone's name as joint owner on an account or property as 'gifting' them 50% of the account value. If it's your spouse, you have the unlimited marital transfer exemption (if they are a US citizen) and there is no problem. If it's not your spouse that you're naming as joint owner, and the value of 50% of the account/asset is more than the annual $13,000 gift tax exclusion, I believe you technically have to file a gift tax return and either pay a gift tax on 50% of the value, or use up part of your estate tax exemption to avoid gift taxes. Does the IRS catch each and every account that's set up as a joint owner and make sure you file the form? No. Do you want to roll the dice by not filing that return and using part of your exemption? It's your call.

From a liability perspective: if the non-spouse who is a joint owner on the account gets divorced or sued, their 'interest' in the account is up for grabs. And if you hurry up and take their name off of the account right before divorce/lawsuit takes place, the courts can accuse you of trying to illegally conceal assets (even though they may have never been their assets to begin with). Not to mention it's the Joint Owner's 'right' to withdraw any amount of money from the account(s) at any time. Hope you REALLY trust that child/sibling that's joint owner!


If you have just one child, and they are getting everything, a TOD may work beautifully and simply - although there's still the aspect of "what if myself, spouse and DD/DS die at the same time?" Sure, it's not a very likely scenario at all...but if it were to happen, that TOD may become a very onerous thing for whoever is left (sibling, parent), because they may first have to probate everything to your child's name, and then probate it all again to however the state handles dying without a will based on your child (if they're of legal age). And if that child is not of legal age, perhaps an additional period of time at the courts. Again, not a very likely scenario at all....but an RLT is a form of "insurance" for the death that is guaranteed to happen to each and every one of us, not a "what if" for a hurricane, fire, or earthquake hitting your home that may never occur.

And if you have more than one heir (multiple children, or perhaps child(ren) and some charities), using a TOD requires you to keep tabs on account values at all times if you're trying to leave certain % to certain heirs, and then having to liquidate/shift around assets to maintain certain account values for even distribution. An RLT neatly and perfectly divides up the whole shebang (for accounts titled under the RLT) by an exact percentage to each heir, so you can spend what you want from whichever account and not worry about one heir getting shafted because you died before transferring something over.

An RLT is certainly not the perfect solution to estate planning...but for many members of this forum (assets > $1MM, several family/charitable heirs), there are legal, tax and estate planning issues for which an RLT is better suited for them compared to the Average Jane and Joe in the US (for whom a simple TOD and/or Joint Owner could suffice).
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Old 07-01-2012, 04:01 PM   #8
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If you have substantial assets you should have a will. Why would you want/need a living trust?
Because a will can be contested in court. I have circumstances, ref a previous marriage, where I wouldn't want my will contested. You can avoid that with a revocable trust. All assets were made part of the trust including new wills. The value of your estate may have nothing to do with the need for estabishing a trust. Circumstances dictate. When I pass away, all my assets are distributed according to the trust. The courts are not involved.
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Old 07-01-2012, 05:44 PM   #9
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Thanks for the advice everyone, you've been enormously helpful.
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Old 07-30-2012, 12:56 PM   #10
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Has anyone had any experience using prepaidlegal.com for a simple will?
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Old 07-30-2012, 06:59 PM   #11
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Because a will can be contested in court. I have circumstances, ref a previous marriage, where I wouldn't want my will contested. You can avoid that with a revocable trust. All assets were made part of the trust including new wills. The value of your estate may have nothing to do with the need for estabishing a trust. Circumstances dictate. When I pass away, all my assets are distributed according to the trust. The courts are not involved.
Ditto, except substitute "siblings from hell" for "previous marriage".

I am single with no heirs, and made sure Mr B (not married) would be taken care of if I push daisies before he does.

The trust mechanism is often better for all of the reasons JOHNNIE36 listed.
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