Bond Beneficiaries

[Rianne]

After talking to trust attorney, we found out we have to designate our I Bonds and EE Bonds individually to beneficiaries. Mine/my mother's name (mother deceased is on EE Bonds) and will go into probate if I die. And DH/me on I bonds and if we both die, will also go into probate. Attorney said huge hassle and very expensive for him to fix beneficiaries on bonds in safe box. Any suggestions and did I just make sense?

[copyright1997reloaded]

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Originally Posted by Rianne After talking to trust attorney, we found out we have to designate our I Bonds and EE Bonds individually to beneficiaries. Mine/my mother's name (mother deceased is on EE Bonds) and will go into probate if I die. And DH/me on I bonds and if we both die, will also go into probate. Attorney said huge hassle and very expensive for him to fix beneficiaries on bonds in safe box. Any suggestions and did I just make sense?

I believe if they are in paper form, you can exchange them for on-line equivalents and can manage/change the beneficiaries. https://www.treasurydirect.gov/indiv...changeinfo.htm

[OldShooter]

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Originally Posted by Rianne After talking to trust attorney, we found out we have to designate our I Bonds and EE Bonds individually to beneficiaries. Mine/my mother's name (mother deceased is on EE Bonds) and will go into probate if I die. And DH/me on I bonds and if we both die, will also go into probate. Attorney said huge hassle and very expensive for him to fix beneficiaries on bonds in safe box. Any suggestions and did I just make sense?

This is yet another example for people who think estate planning involves reading some web sites and consulting SGOTI. This is complex business and for an estate of any size at all, expert help is needed. Good job, @Rianne!

(IANAL, but DW was in the trusts & estates business and regularly brought home horror stories.)

[Gill]

Your attorney just gave you some very incompetent advice. There is no need to have beneficiaries on these bonds and it is perfectly fine to have them pass as part of your testamentary estate under your will.
Gill

[GrayHare]

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Originally Posted by Gill Your attorney just gave you some very incompetent advice. There is no need to have beneficiaries on these bonds and it is perfectly fine to have them pass as part of your testamentary estate under your will. Gill

I was thinking similarly but was not sure, glad you posted.

[CaliKid]

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Originally Posted by Gill Your attorney just gave you some very incompetent advice. There is no need to have beneficiaries on these bonds and it is perfectly fine to have them pass as part of your testamentary estate under your will. Gill

Depending on the amount in total of the bonds (and other assets) I believe they will go through probate though and probate can be VERY costly in some states. I believe the federal threshold to avoid probate is $100k but not sure on that amount. So for an amount under the threshold you avoid probate by doing the small estate affidavit. if over the threshold, in total, you have to do a full probate. Here is the form. I am too lazy to read it: https://www.treasurydirect.gov/forms/sav5394.pdf

P.S. The best advice is to sell all government bonds because they are a pain! Yes, I realize that can be tax disadvantageous so I am half joking.

[Rianne]

They are > $100K. Thanks for the treasurydirect link. That website is a nightmare.

[pumpkineater]

I have some ibonds and tbills too at Treasury Direct (electronically) and just finished naming a beneficiary on each of them (it only allows naming 1 single beneficiary per "lot" of bonds, but you can divide your bonds into as many lots as you need).

It might be easier to hold the bonds through Vanguard (which I understand charges nothing to buy treasuries in an auction) and having a "transfer on death" for to apply to whatever happens to be in the account at the owner's death...

[ERD50]

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Originally Posted by Rianne They are > $100K. Thanks for the treasurydirect link. That website is a nightmare.

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Originally Posted by OldShooter This is yet another example for people who think estate planning involves reading some web sites and consulting SGOTI. This is complex business and for an estate of any size at all, expert help is needed. Good job, @Rianne! (IANAL, but DW was in the trusts & estates business and regularly brought home horror stories.)

OldShooter, I think you overstate this. Of course one should not be casual in accepting anything from SGOTI. But this does not sound like rocket science either. OP stated the bonds are over $100K ( which is a bit besides the point, if the limit for probate is $100K, the entire estate value must be < $100K), and anyone having a living trust set up is probably aware of this, and that's probably a prime reason for doing it.

Out of curiosity, I looked this up in my book from NOLO, and it says to go search for Treasury form PDF 1851E, and that took me right to:

https://www.treasurydirect.gov/indiv...rm_reissue.htm

which I think will answer OPs questions.

-ERD50

[OldShooter]

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Originally Posted by ERD50 OldShooter, I think you overstate this. Of course one should not be casual in accepting anything from SGOTI. But this does not sound like rocket science either. OP stated the bonds are over $100K ( which is a bit besides the point, if the limit for probate is $100K, the entire estate value must be < $100K), and anyone having a living trust set up is probably aware of this, and that's probably a prime reason for doing it. Out of curiosity, I looked this up in my book from NOLO, and it says to go search for Treasury form PDF 1851E, and that took me right to: https://www.treasurydirect.gov/indiv...rm_reissue.htm which I think will answer OPs questions. -ERD50

Agreed to an extent. If you know the questions to ask, most or all of the answers can be found on the internet. In many cases though not this one, the answers will change depending on state law. Not all states allow perpetual trusts for example.

But more importantly, an experienced trusts & estates attorney has both anticipated and dealt with many estate problems. His/her experience will help design an estate plan that meets the client's needs and wishes. I have seen a lot of very bad ideas on this forum for handling trust disbursements to beneficiaries, for example. An expert will also help handle things like death or divorce of beneficiaries, judgments against or bankruptcy of beneficiaries, minor children as beneficiaries, etc. He/she can also make the documents lawsuit resistant so beneficiaries cannot easily subvert the wishes of the clients. Finally, there are tax tradeoffs when we are bequeathing IRAs, Roths, and taxable accounts and, very importantly, making sure the basis step-up on death is not lost by clients' gifting plans. Lots or stuff ...

[ERD50]

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Originally Posted by OldShooter Agreed to an extent. If you know the questions to ask, most or all of the answers can be found on the internet. In many cases though not this one, the answers will change depending on state law. Not all states allow perpetual trusts for example. ...

And the NOLO books (and probably some other sources with a good track record) take a person through the questions to ask, and cover State specific requirements.

An individual may still want/need a pro for the final work, but IMO, something like NOLO does a great job of prepping you to get the most from the pro in the least time/effort.

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Originally Posted by OldShooter ... But more importantly, an experienced trusts & estates attorney has both anticipated and dealt with many estate problems. His/her experience will help design an estate plan that meets the client's needs and wishes. ...

But this is a bit like the "good FA" paradox. How does one know if the attorney is any good or not, unless they know what to look for?

My MIL/FIL went to an attorney with a good reputation, been in business decades, nice office, nice demeanor, etc. I thought they did an awful job. A bunch of boilerplate junk spit out by a program - the principal attorney could not answer simple questions about wht some of this junk was in there for. It seemed clear to me it was just a lot of filler to make the client feel like they were getting something for their money. My MIL/FIL had no idea, they just got their papers done by some firm that a friend recommended, and thought they were set.

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Originally Posted by OldShooter .... I have seen a lot of very bad ideas on this forum for handling trust disbursements to beneficiaries, for example. ...

No doubt. But for something this important, I doubt that anyone is just going to go off and act on a posting and that's that. It's info for them to consider. It might be helpful, it might not. I'd start with something like NOLO, ask specific questions, and at that point, most likely find a pro to close it out. But maybe the NOLO forms in the book will do it. I actually feel more confident with the NOLO forms than I do with the average person picking an Estate firm without knowing what questions to ask.

Your DW would know the good attorneys, so that may be influencing your viewpoint. The average person is at a disadvantage unless they arm themselves with some knowledge upfront.

-ERD50

[Rianne]

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Originally Posted by ERD50 Out of curiosity, I looked this up in my book from NOLO, and it says to go search for Treasury form PDF 1851E, and that took me right to: https://www.treasurydirect.gov/indiv...rm_reissue.htm which I think will answer OPs questions. -ERD50

Thanks, ERD50. I'm disappointed in our attorney. He should have directed us to this form. It's pretty straightforward.

[OldShooter]

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Originally Posted by ERD50 And the NOLO books (and probably some other sources with a good track record) take a person through the questions to ask, and cover State specific requirements. An individual may still want/need a pro for the final work, but IMO, something like NOLO does a great job of prepping you to get the most from the pro in the least time/effort. But this is a bit like the "good FA" paradox. How does one know if the attorney is any good or not, unless they know what to look for? My MIL/FIL went to an attorney with a good reputation, been in business decades, nice office, nice demeanor, etc. I thought they did an awful job. A bunch of boilerplate junk spit out by a program - the principal attorney could not answer simple questions about wht some of this junk was in there for. It seemed clear to me it was just a lot of filler to make the client feel like they were getting something for their money. My MIL/FIL had no idea, they just got their papers done by some firm that a friend recommended, and thought they were set. No doubt. But for something this important, I doubt that anyone is just going to go off and act on a posting and that's that. It's info for them to consider. It might be helpful, it might not. I'd start with something like NOLO, ask specific questions, and at that point, most likely find a pro to close it out. But maybe the NOLO forms in the book will do it. I actually feel more confident with the NOLO forms than I do with the average person picking an Estate firm without knowing what questions to ask. Your DW would know the good attorneys, so that may be influencing your viewpoint. The average person is at a disadvantage unless they arm themselves with some knowledge upfront. -ERD50

All true, but that line of reasoning is true for almost any professional you might consider hiring, from plumbers to criminal defense attorneys. The more subjective the quality of work is, the more important and the more difficult the selection process. But, seriously, you aren't going to study diligently on the internet and then defend yourself in a criminal action, are you?

And ... to amplify your point there were times when DW came home fuming about having to do to court to get a bad document fixed, including some done by supposed trust & estate specialist attorneys. SHe knew 'em all and, unfortunately, came to know all the judges as well.

[ERD50]

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Originally Posted by OldShooter All true, but that line of reasoning is true for almost any professional you might consider hiring, from plumbers to criminal defense attorneys. The more subjective the quality of work is, the more important and the more difficult the selection process. But, seriously, you aren't going to study diligently on the internet and then defend yourself in a criminal action, are you? ....

The "study diligently" part can only be a good thing, right? At that point, you can decide if DIY or not. Your research might tell you that DIY is fine. It really depends on the complexity of the situation, and how well you feel your study prepared you, and your own personal motivation to DIY.

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Originally Posted by Rianne Thanks, ERD50. I'm disappointed in our attorney. He should have directed us to this form. It's pretty straightforward.

You're welcome. And that's a great lead in to the 2nd part of OldShooter's post...

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Originally Posted by OldShooter ... And ... to amplify your point there were times when DW came home fuming about having to do to court to get a bad document fixed, including some done by supposed trust & estate specialist attorneys. SHe knew 'em all and, unfortunately, came to know all the judges as well.

So how does Rianne (or anyone) find a good attorney?

Back to the complexity issue. I've been involved as executor/trustee to 4 estates (parents and parents-in-law). After sorting through a lot of fluff, the key is who gets how much (and when for g-kids under 30 YO). It's all in one section, not rocket science for a basic estate. And yet, these 'pros' screwed that up. I pointed it out to them There were two redundant, but differently worded paragraphs - they said the same thing, but with different words. Very confusing, was one meant to convey something different? One lawyer at the firm told me they did cover different cases, but none of us could see the distinction, and she could not explain the difference. I asked again to the principal attorney, he agreed they were redundant and struck one out. How can I have any confidence in them, when they don't seem to know what they are doing? There were other sections they could not explain. I would have 'fired' them, but they represented my MIL, and I had already stirred the pot enough.

And this isn't some fly-by-night place, they have been in business for decades, in a high net-worth area.

If you have complicating factors, divorces, step-children etc, maybe a pro is needed. I dunno, we don't have that situation, so I skipped over all that in the NOLO books. But if it applied, I'd read up and then decide if I need a pro or not.

We had our plan done by 'pros' about 18 years ago (a MegaCorp benefit, but even paying the income taxes on that makes me question if I got my money's worth). Big bound books with so much fluff. I know that 99% of that is filler to impress us. I had to work with the attorney on a one page flow-chart-like sketch to understand what it meant.

Time to revisit those plans, as our kids are all responsible adults now. I need to do another deep dive, but from my studies so far, I'm hard pressed to see what a 'pro' would bring to the table that isn't already covered in the simple, time-tested forms that NOLO provides.

Yes, there are also the issues of Power of Attorney (medical and $), those need to be looked at as well. But the trust part really is quite simple for many. And again, I trust NOLO as a resource over my attempts to pick a good attorney. I could get fooled.

-ERD50

[OldShooter]

As you like. It sounds like you are a good candidate for pro se representation in court as well.

Yes, it's not necessarily easy to find a good trusts estates person but IMO that is not a reason to use the known amateur that you see in the mirror every morning. Our plan with periodic updates costs us a tiny fraction of 1% of the estate. IOW, a pittance compared to the cost if an opportunity is missed or something gets screwed up.

The problem for an amateur is not the known unknowns. These, as you point out, can be researched. It is the unknown unknowns and, by definitiion, you will not figure these out on your own. But, hey, it's your decision. Do what you like.

[ERD50]

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Originally Posted by OldShooter As you like. It sounds like you are a good candidate for pro se representation in court as well. Yes, it's not necessarily easy to find a good trusts estates person but IMO that is not a reason to use the known amateur that you see in the mirror every morning. Our plan with periodic updates costs us a tiny fraction of 1% of the estate. IOW, a pittance compared to the cost if an opportunity is missed or something gets screwed up. The problem for an amateur is not the known unknowns. These, as you point out, can be researched. It is the unknown unknowns and, by definitiion, you will not figure these out on your own. But, hey, it's your decision. Do what you like.

Sure, but I really don't view this as "using the known amateur that you see in the mirror every morning", when I'm using NOLO books as a guide. Have you looked at these as a resource?

It's not the cost, it is having assurance the job is being done right. The firm my in-laws used cost plenty, but they were awful. As you admit, it may not be easy to find a good estate attorney, and I'm an amateur at doing that. so it gets rather circular. But if I turn to a source like NOLO, it just seems far more transparent than trying to pick a firm based on recommendations of others who might not know much about picking a firm either.

-ERD50