Can Beneficiary Lists replace Wills/Trusts?

[gwraigty]

Quote:

Originally Posted by 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

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]

Quote:

Originally Posted by km4hr 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.

[Texas Proud]

One of the reason you might want a will is to state that there needs to be no accounting with the courts going forward... I think that is still available in Texas...


So, go in, list all assets and liabilities, get letters testimentary and you are done.... without that you have to get approval to sell the house, sell the car, sell the furniture etc etc and you have to have a lawyer present these things to the court... costs can add up quickly even if you have a small estate.


Now, there might be a small estate exception in your state, but I would make sure of that before you blow off a will...


BTW, you CAN get a canned will from the internet and do it all yourself... as you said, after you write the answer to all those questions the lawyer is just going to put them in his/her program that is a canned will that they have... nothing new is going to be in your will that is not standard except who gets what...

[badatmath]

I have a beneficiary deed for my car also. Free and easy.

[1-31-18]

If you don’t have a will, you probably don’t have powers of attorney also. You need to grant powers of attorney to trusted people to make health care decisions for you using your own money, if nothing else. Otherwise you could find yourself in a situation where you are incapacitated and cannot readily access your own money to provide for your care. This is no mere hypothetical. It happens — and it’s a mess. Not only for your family and friends, but also and pointedly for you.

[HI Bill]

One note on probate...not all assets will fall under probate. Joint accounts, and accounts with beneficiaries can be transferred without probate, and are excluded. But other items not included in a trust (house, furnishings, car, etc.), all may be subject to probate. I had just sold my mom's car, and given away her furniture before she passed. But there was a piano left in the house. The piano had to be included in the listed items in probate, and I could not sell it until the testamentary letters were approved by the court.

[Z3Dreamer]

So many options. I am not licensed to give you medical, legal or relationship advice. But, IMHO you do not need estate planning (a few thousand). You need someone to draw up a will (a few hundred). Before you have the will drawn up, you need to figure out what you want done with the assets that do not have a named beneficiary. I am talking about your house, car, beanie baby collection and the like. In our will, we have wording that allows our executor to honor notes we may leave such as "give my beanie baby collection to Ralph". So, everything does not need to be named in the will.

You also need to name an executor. The executor can/will take a fee of, depending on the jurisdiction, maybe 5% of assets. In my world, I would name a financially savvy relative who you trust. For others with family issues, it makes sense to name anyone other than family.

You also need documents that allow someone to sell assets and pay your bills if you are incapacitated. And the good old medical directives. Do you want to name someone to make life and death decisions for you?

Some have pointed to the risks of naming someone as a signor/joint owner. Yes, I will acknowledge that. But I know many financially savvy people who are a tiny, tiny risk.

Good luck!

[RunningBum]

Quote:

Originally Posted by pumpkineater 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

I can see it for that case. For a healthy(?) 65 yr old I can't see giving that kind of control to a sibling, niece or nephew. Or probably even a son or daughter.

[HI Bill]

Quote:

Originally Posted by Z3Dreamer ...IMHO you do not need estate planning (a few thousand).

I respectfully disagree (Have you ever gone through probate? I am, right now), depending on the state you are in. If probate would be required without a trust, and you care about minimizing the amount of time and effort your heirs go through, and want to ensure it goes to the right person(s), a trust is essential. I used to think they weren't needed, also. And after my mom passed in February, I paid $2,000 to the attorneys to create a trust for my father's estate, so I can save $6,000 and several months at a later date.

[CaliKid]

You should probably have a complete living trust package (trust, will, financial POA, medical POA, etc....). Talk to an experienced estate planning attorney. Probably cost you $2,500 +/- depending on where you live. Estate planning, in your case, is really about planning for while you are alive. Payable on death beneficiary designations do not help with that. Get it done right.

[Clone]

Quote:

Originally Posted by km4hr But instead the attorneys want thousands of dollars to set up complicated trust documents and so forth.

We had wills established for my wife and myself perhaps 10 years ago. Power of attorney papers and medical directives as well.


The total bill was less than $300. The big questionnaire is fed into a word processor program and out comes the boiler plate. This was for a simple will, that leaves everything to the surviving spouse, if no surviving spouse, then to our two boys, if one of them has passed then to the one surviving child, or if the whole clan is gone, then to my brother and down through his lineage if necessary. Pretty standard stuff.


I am not sure they even needed detailed information on the investment accounts, because that is all distributed through the beneficiary distribution. The will covers items that are not automatically distributed, like property.



I can see where a lot of expense comes with setting up trusts, but it sounds like that is not what you are looking for.

[bingybear]

Be careful doing self planning. The POD/TOD are pretty simple. However if there is not enough $ in probate pay your outstanding debts, they could go after those who inherited thru beneficiary paths.
Also be careful with making things joint. Some events could create gift tax events when you do it or later when your new joint owner does something (like start using a non-spouse joint bank account).

You may need the information from these assets for filing federal estate filing.

[gwraigty]

Quote:

Originally Posted by bingybear Be careful doing self planning. The POD/TOD are pretty simple. However if there is not enough $ in probate pay your outstanding debts, they could go after those who inherited thru beneficiary paths.

IANAL, but I've been through this twice.

When my mother died, she was tens of thousands of dollars in medical debt. I notified all of her creditors that she passed and had nothing to settle any debts with, which was true. The collections department of her largest creditor started yelling at me and threatening me. This was within hours of my mother's death, mind you.

She asked me if my mother had any life insurance. I knew there was a small policy on my mother, but nothing more than that. I made the mistake of telling her even that much. This was my first time dealing with something like this. She said that I had to turn that life insurance money over to them right away. I told her I was pretty sure I didn't have to. She kept yelling and threatening me and I hung up.

I consulted with a lawyer that afternoon and was told that the life insurance money belonged to the beneficiary and the creditor couldn't get it. Ironically, I learned later that my grandparents were the beneficiaries, so it wasn't mine to give up anyway.

Several years later, my father died tens of thousands of dollars in debt. I inherited his TSP and some life insurance. Later, I was even able to claim a small amount of funds that his bank had turned over to the state. (He hadn't put a beneficiary designation on the bank account.)

Having learned my lesson the first time, I didn't contact any of his creditors. My father's lawyer made it clear to me that his creditors had no claim to any of the money that he left me via beneficiary designations. The detailed explanation given me at the time is that after the moment of death, any money left via POD/TOD legally belongs to the beneficiary, not the decedent. It is not part of the deceased's estate for that reason. Creditors can only go after the estate, which is what has to go through probate. They cannot go after funds or property that the beneficiaries get via POD/TOD.

Creditors can go after funds that are inherited via the probate process. It's still legally the deceased's property at that point. Creditors with legitimate claims are first in line before anything is given to the heirs. If the executor pays out to heirs before all claims are settled, I believe that's when the heirs can be forced to give money back. How that would be enforced, I don't know.

In effect, someone can die entirely insolvent, yet their beneficiaries can inherit money/property if it's titled POD/TOD and the creditors can get stiffed. (Pun intended?)

[Texas Proud]

Quote:

Originally Posted by HNL Bill I respectfully disagree (Have you ever gone through probate? I am, right now), depending on the state you are in. If probate would be required without a trust, and you care about minimizing the amount of time and effort your heirs go through, and want to ensure it goes to the right person(s), a trust is essential. I used to think they weren't needed, also. And after my mom passed in February, I paid $2,000 to the attorneys to create a trust for my father's estate, so I can save $6,000 and several months at a later date.

You technically do not have to have a trust... after death the assets goes into the estate and the estate can file a 1041 return and act just like a trust... no difference...

[Richard4444]

I'd be mostly concerned about having the proper Health Care Advocate, call it what you may - I've seen too many cases of friends being incapacitated without any one properly running the show with regard to care. A very good friend passed post op with a very large NW and without a will, POA, or health care directive; his incapable elderly sister was in charge of all of his health care (and by default his inheritance). I have never witnessed a more painful passing even in the ICU for over a month. The memory even hurts to type this, but please have someone be in charge of your health care should you ever become incapacitated.

Rich

[FreeBear]

For OP, get Nolo Willmaker. The documentation that comes with it gives an excellent overview of all this stuff in a sane rational fashion. Also recommended doing your own docs. Like POA (health & durable financial) & will even if you will use a lawyer. It will give you a much bette understanding and make you prepared for the lawyer's questions. At first, this process is a hot mess. After days, even weeks reading and fooling with Willmaker it's starting to make sense. Much more able to make sense of a lawyer, or conflicting Internet opinion!

[JoeWras]

Quote:

Originally Posted by easysurfer 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.

We are doing this. It is our gift to our heirs.


Impersonal: YES. Good! They will make the decisions for the heirs.


Expensive: We're dead. I don't care. The heirs should be happy they get anything. (It is a percentage, and yes you are right, there was a minimum.)