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Will vs. Revocable Trust
Old 10-20-2018, 06:02 PM   #1
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Will vs. Revocable Trust

Looking for opinions... Particularly for a married couple.

Have read this, but wondered how others feel, and why? We have made out both but only legalized our wills. Now wondering if the revocable trust would be better.

https://www.thebalance.com/the-benef...a-will-3505405

If a trust, joint or individual.
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Old 10-20-2018, 06:19 PM   #2
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We just went through the process of 'restatement' of our revocable trust. As the article mentions - a good trust will deal with issues of mental incapacity of one or both spouses and how that is determined. Our lawyer gave us several options to choose from in determining mental incapacity. (We chose a panel of friends/relatives who we trust.) A good trust will allow IRAs to be dumped into retirement trusts if beneficiaries aren't of age. (Our case.) which allows for the IRA to continue to 'stretch'. And it avoids probate.

Probate can also be expensive, depending on the state.

We're in process of the last of our accounts into the name of the trust (or adding the retirement trusts as contingent beneficiaries on the IRA). Discovered our credit union won't let us do this because at one point (not currently) my husband had an IRA CD attached to the main account - and their rules won't let it be retitled if there was ever an IRA associated with the account. Bummer for them - they were our main day-to-day bank and I've started to process of moving it to another bank we use.

Other than the one time hassle of re titling bank/brokerage accounts and real estate, once it's set up - it's good to go.
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Old 10-20-2018, 06:25 PM   #3
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My parents both had just plain wills, but they did not have any real estate, just cars and household furnishings. For my mom I had to file a letter of administration for a small estate, and for my dad he was under the limits for probate entirely, as both of them had almost all their money in TOD retirement accounts except for daily checking.

My partner and I have set up a trust, as we have our primary residence and a lot more money saved than my parents did, although the amount in non-retirement accounts is in the low six figures. That still seemed like enough to warrant letting our child avoid probate when the time comes, and the total cost was about $5K for both trusts (two individual trusts, one for each of us, with the two of us named as joint primary trustees on both trusts...that might be a state law issue, though, check with your lawyer), wills, POAs, HCPOAs, and letters of instruction.

So my thought is that if you plan on leaving anything that would need to be probated, it might be worth it to set up a revocable trust.
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Old 10-20-2018, 06:40 PM   #4
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Not only is probate expensive, I didn't want my heir's inheritance to be public information. I spent $2,770 on a trust.

Now they can blow the money in secret.
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Old 10-20-2018, 07:34 PM   #5
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We just wrote out a revocable, living trust. The reason why is we do not have children and I worry about the situation of both of us being incapacitated, which can result in a third party being appointed by the courts to manage our assets. No way do I want that to happen. And of course there is the advantage of avoiding probate, although we won't care at that point. We specified a relative as a trustee who would manage the trust before (if we are both incapacitated) and after we die.
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Old 10-20-2018, 07:39 PM   #6
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I have both will and trust. Only real estate will go into the trust, IRA will go straight to beneficiaries, same with life insurance and after tax account.

Trust is for someone to take over. Also for medical proxy too, but all 3 remaining kids and one parent to decide on the fate of the other parent. I was afraid we would be too old and senile and don’t make the right decision. At least with 3 there’s a safety in numbers.

It cost me $5000 back in 2011 and almost $900 for maintenance ever two years. Eventuality we stopped the maintenance. If we need to redo the will and trust in 10 years, we might break even with the maintenance.
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Old 10-20-2018, 07:39 PM   #7
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We have a simple setup. No minor kids, brokerage accounts, bank accounts, house, cars, camper, boat, etc.

Setup all accounts with beneficiary setup. All of these will go directly the the beneficiaries with no expense/no probate/no lawyers.

Our state allows TRANSFER ON DEATH on cars, boats , campers and REAL ESTATE.

Just completed the house paperwork and filed with the county. Have one straggler car that will be taken care of shortly.

So no need for trusts, wills, lawyers, or expense.

The only thing left is the stuff in our junk drawer - various batteries, knobs that don't fit anything, keys to unknown locks, etc - I'll be dead so I don't care who gets it.
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Old 10-20-2018, 07:57 PM   #8
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Dad has both.
Comments:
1. regarding the mental incapacity benefits of a trust:
Its worthless if you put in some sort of "when the Dr says I'm nuts" clause.
Doctors are EXTREMELY hesitant won't state somebody is mentally incompetent until things are REALLY REALLY bad... as in too late. PC Dr, hospital staff, and rehab social workers all use the same test.


Either you trust your trustee to look after your interests and decide for themselves when they need to take over, or you need a different trustee.


2. From what I've read, IRAs should stay out of the trust and use beneficiaries to xfer the asset. A trust has to be a "see through" trust (apparently revocable trusts are not) or else the RMDs are accelerated to drained in 5 years. If the IRA xfers to a beneficiary, the RMDs are calc'd based on the age of the beneficiary... ex spread over 30 years instead of 5 years.


3. Check your accounts to see if they can be owned by a trust or not. Discover Bank will allow the trust to own a money market account, but a trust can not own the higher interest savings account. (or resign yourself to maybe shuffling accounts around a little)


4. Unless you got big $ that run into estate taxes, keep it simple. Splitting into A and B trusts on the death of 1 trustee is a waste of ink if the survivor needs the assets to survive. On the other hand, distributing 1/2 the assets at the death of the first trustee can be a good thing if the survivor can get by with whats left.
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Old 10-20-2018, 08:18 PM   #9
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The A/B is probably outdated now with the higher limit for estate.
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Old 10-20-2018, 09:25 PM   #10
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A revocable living trust and a will to catch anything missed. The interview with an attorney who does trusts and wills will be illuminating. You really need to title significant assets in the name of the trust.
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Old 10-21-2018, 06:24 AM   #11
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Quote:
Originally Posted by Retiree_Having_Fun View Post
We have a simple setup. No minor kids, brokerage accounts, bank accounts, house, cars, camper, boat, etc.

Setup all accounts with beneficiary setup. All of these will go directly the the beneficiaries with no expense/no probate/no lawyers.

Our state allows TRANSFER ON DEATH on cars, boats , campers and REAL ESTATE.

Just completed the house paperwork and filed with the county. Have one straggler car that will be taken care of shortly.

So no need for trusts, wills, lawyers, or expense.

The only thing left is the stuff in our junk drawer - various batteries, knobs that don't fit anything, keys to unknown locks, etc - I'll be dead so I don't care who gets it.
+1

Our situation is straightforward... adult children, no prior marriages, no business assets, no complicated scenarios, and unlikely to exceed estate tax threshold.

All of our financial assets are either jointly owned with TOD to our 2 kids, or individually owned with spouse as primary beneficiary and kids as 50/50 contingent beneficiaries (and per stirpes). Texas allows TOD for real estate and motor vehicles. So all of our real estate and vehicles are also jointly owned with TOD to the kids. I've also been told (can't find an authoritative source) that household goods in Texas can be informally divided by surviving family if that's the only thing left in the estate. So that pretty well covers everything including the junk drawer.

If one of us dies, the survivor gets everything. If we both die at the same time, the kids get everything 50/50. Very simple and straightforward... no probate, no lawyers, no cost, no public disclosure. We also have a will, including living will and durable POA, that we did a few years ago on LegalZoom for a couple hundred dollars.

For our situation, I think the expense of a trust is completely unnecessary.
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Old 10-21-2018, 10:16 AM   #12
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Trust is good for healthcare directives. Plus if and very rate case of if, the beneficiaries also die with the parents, like a trip somewhere for the whole family. I think the trust also takes care of that. I’m not sure the will does or not.
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Old 10-21-2018, 10:36 AM   #13
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Originally Posted by Cobra9777 View Post
+1

Our situation is straightforward... adult children, no prior marriages, no business assets, no complicated scenarios, and unlikely to exceed estate tax threshold.

All of our financial assets are either jointly owned with TOD to our 2 kids, or individually owned with spouse as primary beneficiary and kids as 50/50 contingent beneficiaries (and per stirpes). Texas allows TOD for real estate and motor vehicles. So all of our real estate and vehicles are also jointly owned with TOD to the kids. I've also been told (can't find an authoritative source) that household goods in Texas can be informally divided by surviving family if that's the only thing left in the estate. So that pretty well covers everything including the junk drawer.

If one of us dies, the survivor gets everything. If we both die at the same time, the kids get everything 50/50. Very simple and straightforward... no probate, no lawyers, no cost, no public disclosure. We also have a will, including living will and durable POA, that we did a few years ago on LegalZoom for a couple hundred dollars.

For our situation, I think the expense of a trust is completely unnecessary.
+2

We have everything set up as TOD or POD including both houses and cars. According to my lawyer, there's no reason to probate if the only thing left is household goods. My DF had the same set up with TOD Deed on the house and it worked out great. We'll probably relook at the need for a trust down the road, but for now everything should avoid probate if we die.
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Old 10-21-2018, 10:40 AM   #14
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These threads come along from time to time. Not being critical of this OP, but mentally I always read them as being of the form: "I have decided to do my own appendectomy and am looking for suggestions on technique."

So I'm noodling about why this type of thread is so common. Theories:

  • Most of us have learned through hard experience and come to believe that investing is fairly simple and that the supposed "experts" have little value. So we tend to project that experience into other areas where it may not be the case.
  • Most of us are programmed to LBYM and the thought of shelling out several $K, even if it is a tiny percentage of what we want to protect, is just hard to swallow.
  • There are always people who jump into the threads saying that DIY is really easy; they have gotten the forms, filled them out, and all is well. These people (and the thread readers) don't think about the fact that a discovery that all is not well can happen only after their death(s). At this point the problems could be difficult or impossible to fix. Even if the DIY paperwork is not a train wreck, it may not be anywhere near optimum for taxes and wealth transfer. Again, this will not be discovered until the point where it is impossible to correct.

Admittedly, I am somewhat biased in this because DW retired as an SVP in a megabank trusts & estates division and I have been hearing horror stories for decades.
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Old 10-21-2018, 11:11 AM   #15
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Either you trust your trustee to look after your interests and decide for themselves when they need to take over, or you need a different trustee.
That is what we did. The trustee is a relative who I trust very much. There is no legal "switch" that allows her to act. She could take action within the trust at any time.
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Old 10-21-2018, 02:24 PM   #16
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From Old Shooter:

Quote:
So I'm noodling about why this type of thread is so common. Theories:.[*] Most of us are programmed to LBYM and the thought of shelling out several $K, even if it is a tiny percentage of what we want to protect, is just hard to swallow.[*] There are always people who jump into the threads saying that DIY is really easy; they have gotten the forms, filled them out, and all is well. These people (and the thread readers) don't think about the fact that a discovery that all is not well can happen only after their death(s). At this point the problems could be difficult or impossible to fix. Even if the DIY paperwork is not a train wreck, it may not be anywhere near optimum for taxes and wealth transfer. Again, this will not be discovered until the point where it is impossible to correct.[/LIST]
Point taken.
We filled out both wills and trusts from free online app several years ago. Realizing we weren't legal experts asked lawyer son to run the wills by his friend, who is an estate lawyer.
Got an ok... probably because we don't have enough of an estate to worry about, besides the fact that even a $1K cost means something to our budget.

Am thinking that the time...(hours and hours), detailing our belongings might have happened in a lawyers office... $$$$ old canoe, paddle boat, motor bikes, jewelry, old cars, and several thousand dollars with of tools.
Fee probably more than the value.

Anyway, suppose we don't die?
.................................................. ...........

... to add one thing... The witnesses to our will, have since passed away. Nothing unusual involved... We checked and this won't affect the wills. Though you might be intereted.
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Old 10-21-2018, 02:27 PM   #17
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That is what we did. The trustee is a relative who I trust very much. There is no legal "switch" that allows her to act. She could take action within the trust at any time.
Interestingly, DW and I were just discussing the idea of a relative as trustee with some friends. This is in the context of testamentary trusts where the trustee controls the beneficiary's access to the money after the grantor's death.

She mentioned a trust she had (as a professional trustee) where Grandma specified that the trustee could provide funds for "reasonable luxuries." Beneficiary came to her and said that Grandma had promised him a car and that he had a Jaguar picked out. DW refused and told him that the kind of car Grandma had in mind was a Chevrolet and that she would only fund that kind of a purchase. This kind of stuff happened all the time; beneficiaries wanting disbursements that were unwise from a fiduciary point of view or prohibited by the terms of the trust. The point here is that DW could be the wicked witch, where a family member trustee might have a choice between doing something unwise or becoming an enemy.

There is a somewhat new role that has just be enacted into law in our state, the "trust protector." This person, most likely a relative or close friend, has the power to remove a trustee, to replace a trustee who has resigned, and in general to make sure that the trust is administered economically, that the investments are prudent, and that the grantor's intentions are followed. The "trust protector" is also out of the line of fire when the wicked witch trustee makes a decision that causes friction with a beneficiary. (Our trust protector is a close family friend who is about 15 years younger than we are.)

This is complex stuff. Professional help is needed IMO.
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Old 10-21-2018, 02:31 PM   #18
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From Old Shooter:



Point taken.
We filled out both wills and trusts from free online app several years ago. Realizing we weren't legal experts asked lawyer son to run the wills by his friend, who is an estate lawyer.
Got an ok... probably because we don't have enough of an estate to worry about, besides the fact that even a $1K cost means something to our budget.

Am thinking that the time...(hours and hours), detailing our belongings might have happened in a lawyers office... $$$$ old canoe, paddle boat, motor bikes, jewelry, old cars, and several thousand dollars with of tools.
Fee probably more than the value.

Anyway, suppose we don't die?
.................................................. ...........

... to add one thing... The witnesses to our will, have since passed away. Nothing unusual involved... We checked and this won't affect the wills. Though youmight be intereted.
I’m going to do online will and possible trust for my sister. She doesn’t care and won’t spend the money she doesn’t have either. She has 3 houses to her name. No kids and spouse. Last boyfriend died of a heart attack alone with his dogs, they didn’t find out about his death until 3 days later.
I still think it’s better than nothing.
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Old 10-21-2018, 02:47 PM   #19
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This is complex stuff. Professional help is needed IMO.
I agree. We started out writing it ourselves but then engaged a lawyer. We tried to remove any ambiguities and quantify everything with dollars or percentages to reduce room for disputes. We are compensating the trustee at an inflation adjusted rate. The lawyer commented that we largely did his job with our draft.
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Old 10-21-2018, 03:35 PM   #20
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One night while watching Suze Orman show she gave out a code for her "kit". We downloaded all paperwork we would need. She gave instructions on how to fill out etc. We did the living revocable trust, wills, durable POA (medical and financial). Had notarized and witnessed and gave to daughter who will be the executor and trustee on the trust.

We also have beneficiaries on IRA's with me as primary and kids 50/50 as contingent beneficiaries after my death. Visa versa with DH. Think we have covered all of our bases. Daughter is on main bank account.

We did make a list with all of our passwords and usernames on all of our accounts so they won't have to guess. Our list is password protected. I update the list whenever we add or take away an account or change passwords. (I use it myself a lot as I can't remember all the passwords to all of our accounts.)
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