Can Beneficiary Lists replace Wills/Trusts?

[km4hr]

I'm 65 with no will/trust. Other than my house, almost all my assets are in investment accounts (few million). No debt. Very simple. So do I need a will/trust? Or can the beneficiary lists at the investment companies suffice? I understand beneficiary lists override wills/trusts anyway.

I'm single with no children. If I died today my assets would go to my brother and sister or their families, I suppose. I don't have a big problem with that. I don't have any grand ideas as to what else I want done with it anyway. After all, I'll be dead. But I understand everything will have to "go through probate". I've never experienced that process. Is it really a big deal?

I've always heard the mantra that "everybody needs a will". I wonder how much this is true or lawyer propaganda?

Mostly because of the mantra, I recently contacted a couple of estate planning attorneys. They require me to complete a form listing all assets, beneficiaries, executors, etc in detail. I don't have answers to some of the questions. For example I don't who will be the executor (can you hire an executor?).

The pre-consultation forms are so detailed that it seems they could be converted directly into a will just by signing. But instead the attorneys want thousands of dollars to set up complicated trust documents and so forth. I suppose that if I ever wanted to change anything I'd have to go back to them. Is this really necessary? It's so easy to login to my investment accounts and change beneficiaries. Do I want to give that up?

So again the question is, do I need a will/trust? Or can beneficiary lists suffice?

I value your experience/opinion/comments. One lawyer charges $350 an hour to discuss this. Even then, I don't know if I get unbiased answers.

 

[pumpkineater]

I understand that most investment accounts can be handled through beneficiary designations, bank accounts you might consider handling by titling them joint with a younger, trusted relative in addition to yourself. That leaves the home and automobile(s).

There is something called a quit claim I've heard of used to transfer title to real estate posthumously but I don't know anything about that. Michigan has an exemption from probate for vehicles up to $25,000 I believe.

Your risk may be falling I'll before you die. My advisor had a client who had a stroke and even his family was not able to spend his own money on him to help him out because there was no general or durable medical power of attorney.

 

[ShokWaveRider]

That is what we use with out credit Union. the NCUA gives us $250k per beneficiary as well as both of us listed as joint.

 

[RunningBum]

So, who gets the house when you die? How sure are you of the answer? What if one sibling dies before you? Do you want the house to go totally to the other sibling, or do you want half to go to the sibling, half to the deceased siblings children?

Same question for you car, furniture, any other possessions outside of your investment account.

That's what a will provides for. Without a will you'll just leave behind a headache for your siblings and their children, and more chance for bickering about even the small things.

From what I understand, you do not state in a will what happens to accounts that are handled through a beneficiary, for just the reason you state, that you may change the beneficiary and now they are out of sync. I set up a transfer on death for my account, which is supposedly even more certain to be paid outside of probate.

You can probably write the will yourself, and get it properly witnessed and notarized. I did this initially, then had it redone when I got in some kind of plan that gave me a free simple will. The lawyer written will is basically the same as what I wrote. Nolo.com is probably a good place to find a standard will that you can tailor as needed.

Better to name an executor than not. I'm not even sure what happens if you don't have one. Maybe the state assigns one who can charge a hefty fee. Just ask your siblings which of them wants to do it.

 

[gwraigty]

I understand that most investment accounts can be handled through beneficiary designations, bank accounts you might consider handling by titling them joint with a younger, trusted relative in addition to yourself. That leaves the home and automobile(s).

Bank accounts can also be handled through beneficiary designations.

 

[pumpkineater]

I didn't realize that. It seems like if you get really sick sometime, someone besides you should be able to pay your bills with your own money for you....

Bank accounts can also be handled through beneficiary designations.

 

[JustCurious]

I've always heard the mantra that "everybody needs a will". I wonder how much this is true or lawyer propaganda?

I've never heard that "everybody" needs a will. Do you have a cite where someone said that? Some people need a will and some people do not. You do not need a will for any bank or investment accounts with named beneficiaries. In fact, a will is irrelevant to determining how those accounts are distributed after your death.

 

[RunningBum]

I didn't realize that. It seems like if you get really sick sometime, someone besides you should be able to pay your bills with your own money for you....

You should get power of attorney to handle that.

 

[RunningBum]

I've never heard that "everybody" needs a will. Do you have a cite where someone said that? Some people need a will and some people do not. You do not need a will for any bank or investment accounts with named beneficiaries. In fact, a will is irrelevant to determining how those accounts are distributed after your death.

Really? I've heard that plenty of times. Google "should everyone have a will" and you'll see plenty of sources that give a clear yes.

Obviously not everyone needs or should have one. A 10 year old kid doesn't. A vagrant who carries their only possessions with them probably doesn't. Someone with $3M, a house, and no clear heir (wife or single child) should have a will.

 

[Souschef]

One of the many things I learned here is the "per stirpes designation for a beneficiary
An estate of a decedent is distributed per stirpes if each branch of the family is to receive an equal share of an estate. When the heir in the first generation of a branch predeceased the decedent, the share that would have been given to the heir would be distributed among the heir's issue in equal shares.
What that means is, for example, if you have 2 beneficiaries, and one dies before you,, unless you indicate per stirpes, the other beneficiary will get all of the funds.
I did have a trust, but dissolved it. We went to an estate attorney and they drew up POA for health care and POA for finances, plus a "pour over" will. All of our accounts are TOD with beneficiaries per stirpes.

 

[easysurfer]

I suppose if you really don't care, you can let the surviving folks sort things out.

For me, when the singer Prince died suddenly (he had no kids, not married) only surviving siblings, that scared me so I went ahead and got an updated will drawn up. I had one years ago, but lot of the info was old so better to have a current one.

For me, I wouldn't want everything divided evenly to the beneficiaries. One example are some personal belongings that I wish to leave to nieces. With no will, they aren't next of kin, so they'd get nothing.

Yes, an attorney can be named as executor. Of course, he or she would have to be willing to take the job too as executor. Also, you'd want one that you can trust. You can also have co-executors too. For example, as co-executors, you can have a family member that knows your situation and your attorney who is better with the legal part. You can also hire a trust department from a bank as executor but I read that can be expensive, feel impersonal and many won't serve unless you have a good sized amount of assets.

 

[JustCurious]

Really? I've heard that plenty of times. Google "should everyone have a will" and you'll see plenty of sources that give a clear yes.

Ok, fair enough. But we agree that everyone does not need a will.

 

[pumpkineater]

You should get power of attorney to handle that.

As a child doing this very task for my elderly mother who became bedridden and has a little dimentia but still wanted to live in her home, the jointly titled bank account is far easier to use than a power of attorney ever would have been. A lot of institutions didn't want to accept power of attorney documents that they did not create themselves or that were more than a year or two old

 

[gwraigty]

Isn't there a risk with having a jointly titled bank account? For example, the relative of the elderly person might get hit with a lawsuit. The funds in the joint bank account, which might in fact really all be sourced from the elderly person, are then frozen while it all gets sorted out.

IANAL

 

[JustCurious]

Isn't there a risk with having a jointly titled bank account? For example, the relative of the elderly person might get hit with a lawsuit. The funds in the joint bank account, which might in fact really all be sourced from the elderly person, are then frozen while it all gets sorted out.

Not true. IAAL.

 

[gwraigty]

Not true. IAAL.

Well, that's good to know. I do see this "warning" given a lot though.

 

[gauss]

My understanding is that the funds in the joint account would not be frozen during the lawsuit.

On the other hand, once an unfavorable judgement has been issued, those funds are indeed at risk of being seized.

Not a lawyer, but I have tried to understand collection processes in my state.

-gauss

 

[JustCurious]

Well, that's good to know. I do see this "warning" given a lot though.

There is certainly a lot of misinformation out there, most of it from people who are not lawyers and do not know what they are talking about.

 

[Taxman59]

Not true. IAAL.

Like all questions, the answer is "it depends ". If you are just a signer, then a judgement against you wouldn't affect the account. If you are an owner, then it will be subject to the claims.
Talk to a lawyer.

 

[gauss]

Like all questions, the answer is "it depends ". If you are just a signer, then a judgement against you wouldn't affect the account. If you are an owner, then it will be subject to the claims.
Talk to a lawyer.

gwraigty did frame this as a jointly titled bank account. To me that implies ownership and not merely being a signer.

 

[gwraigty]

My understanding is that the funds in the joint account would not be frozen during the lawsuit.

On the other hand, once an unfavorable judgement has been issued, those funds are indeed at risk of being seized.

Not a lawyer, but I have tried to understand collection processes in my state.

-gauss

Yes, that was my previous understanding. I didn't word it well in my original question. Sorry.

Many years ago, I had a joint account with my mother. She was turned over to collections for an unpaid medical bill. All of the money in the joint account was put in there by me. I was advised to close the joint account, otherwise part of my funds could be seized in a judgment against her. The bank confirmed this.

 

[Bamaman]

Someone of any substantial needs needs a will, power.of attorney, health.directives,.etc..You want to call the.shots. And anytime there is no will when there are substantial assets,.the government is going to get more than their fair share.

Many with simple business can get away with Nolo's Willmaker computer program. The tutorial explains estates very well, and the wills produced are legal for your state.

My parent's estate was very simple, and the last one to die had to go thru probate because of real estate holdings. My aunt's estate probate could have been avoided since her home had been sold. But we inherited her portion of a.limited partnership with commercial real estate. Her partners were CPAs and the partnership was awfully complicated requiring very expensive attorney negotiations.

Turn over an estate to your loved ones in proper condition.

 

[Dave J]

I have a beneficiary deed on our home that kicks in when So and I are both gone passing it to my son. Someone smarter then me maybe could explain more on them. I did have an attorney do this 18 years ago. Cost was low.

 

[HI Bill]

My mom just passed in CA in February. Even though she had a will, the house still had to go through probate, which takes at least 120 days, and cost $7,000+ (not including the extra time it took to sell under probate) for a $180K house, with less than $90K in equity. I'd recommend at least making a will using Willmaker Pro (or some free, publicly available forms, or write one out long hand, and sign it), and get it signed and if needed, notarized. The easiest part is designating beneficiaries on accounts. Without a will, the heir is generally forced to go through probate (state and estate-value dependent), selling the house may be a pain. I'd recommend a trust (which for a $200K house is about $2K).

 

[Walt34]

But I understand everything will have to "go through probate". I've never experienced that process. Is it really a big deal?

You do not need a will. No one will arrest you or fine you. But without a will your estate will be a royal PITA to your heirs and the laws of the state where you live will dictate what happens to your estate, except for the accounts that already have named beneficiaries. This is called dying "intestate". Also, the court will have to hire someone (probably an attorney) to go through your stuff and find out exactly what is in the estate, meaning that after expenses your heirs will get less and the attorneys will get more of your estate. If you're fine with that, then don't get a will.

$350/hour for the attorney does seem a tad high but I live in West Virginia, not exactly the highest COL place in the country. Perhaps a bit of shopping around will help.

Besides a will, you really should have a financial and medical POA. If you have a stroke and need care, it will be a lot easier for that care to be administered instead of someone (if anyone cares enough to do it) having to go to court and be appointed by a judge. This also significantly raises expenses, and the POA-to-be may have to spend their own money (if they have it) to make this happen.

Your will can designate the executor/administrator of the estate, but do discuss it with that person beforehand, and have a backup if something happens to that person.

"Probate" is the process of administering the estate. First, all outstanding financial obligations are paid, including any taxes, and if there's anything left the rest is distributed to the heirs according to the directions in the will. This can be a long and laborious process or relatively simple, depending on the complexity of the estate and the laws in that state. I handled my mother's estate and while it took some time, it wasn't really that difficult. The state was MD. But all her assets were financial in nature (she didn't even own a car anymore) the apartment was rented, there were three heirs, and everything was distributed equally. The hardest part was learning the vocabulary.

Consider an elderly widow with one adult child who is the sole beneficiary and she rents an apartment and has $200,000 in a savings account, and that's it. This will be simple to administer and a friend or relative could do it.

Then consider someone with multiple properties in multiple states and different countries, and dozens of bank and security accounts again scattered across those states and countries. That will take an experienced estate attorney to untangle.

So no, you don't need a will. But if you care at all about the people you leave behind, you will get one.