Estate Planning. Where to Start?

[FIREd]

Yes, I know, we should have done it a long time ago. But here we are: married, 41, no kids, 2 cats, a sizable net worth and no estate plan in place.

Everything we own is either owned jointly or we are each other's primary beneficiary. So if one of us dies, the other one gets everything. We do have cats, and the trustworthy person who has agreed to take care of them in case of our early demise is the secondary beneficiary on our retirement accounts. So the cats would be provided for. But beyond that we have no plan in place, no wills, no trusts, nothing. Until recently, our attitude was very nonchalant about it, to be honest. We didn't really care what happened to the money after we were gone.

Well, my wife's sister has just come out of the woodwork. We have had no contact with her for 8+ years. She is having money problems after a divorce (we've had bill collectors calling looking for her). So now we have some motivation to get our affairs in order because she has treated my wife very badly in the past and we do not want that person to get a cent.

So where to start? Would a simple will be enough? Do we need something more ironclad?

 

[meierlde]

Yes, I know, we should have done it a long time ago. But here we are: married, 41, no kids, 2 cats, a sizable net worth and no estate plan in place.

Everything we own is either owned jointly or we are each other's primary beneficiary. So if one of us dies, the other one gets everything. We do have cats, and the trustworthy person who has agreed to take care of them in case of our early demise is the secondary beneficiary on our retirement accounts. So the cats would be provided for. But beyond that we have no plan in place, no wills, no trusts, nothing. Until recently, our attitude was very nonchalant about it, to be honest. We didn't really care what happened to the money after we were gone.

Well, my wife's sister has just come out of the woodwork. We have had no contact with her for 8+ years. She is having money problems after a divorce (we've had bill collectors calling looking for her). So now we have some motivation to get our affairs in order because she has treated my wife very badly in the past and we do not want that person to get a cent.

So where to start? Would a simple will be enough? Do we need something more ironclad?

I think wills and beneficiaries should be enough. If you have nieces and nephews you could provide a trust for them that pays out at age 25 or 30 or so. (Income before then administered by the trustee). A chat with a local lawyer should not run more than a couple of hundred, and you can get a quote on a will at that time.

 

[sengsational]

If you own most everything jointly (or have individually owned things TOD), and have each other as primary beneficiary on tax deferred accounts, even without a formal estate plan, you are not in such bad shape....unless both of you go down in a plane together or something that is statistically miniscule. As long as one of you is around, most everything important will avoid probate...and prying eyes. Oh, I guess too you should see if your state is a community property state. But you still should get a will done, but I'm not sure it's worth making a big deal about.

 

[zinger1457]

A recent death in the family was the kick in the butt I needed to start getting my estate in order. I had Nolo's Willmaker software on the shelf that I had received from a Quicken purchase so decided to take a run through it and found it worthwhile and educational. It's not expensive and worth the cost IMO even if you end up using an estate attorney to draw up a will.

 

[Sarah in SC]

Honestly, this is not something I would DIY if I were y'all. As cheap, I mean frugal, as I am, we had a lawyer draw up our wills each time. The first was in our twenties, and most recently a few years ago.
You may find, as we did, that leaving a specific amount for the cat caretaker in your will or in an attached letter of instruction works best. That way we were able to leave everything to the estate and have it paid out (two trusts, one for each "set" of nephews and niece) so that it wouldn't just be given to them at a certain age.
And I have heard that if there is someone who expects to be in the will and isn't, that you should name them and specifically exclude them, to make it clear that the oversight was intentional.

 

[papadad111]

Legalzoom.Com can draw up wills and trusts. We did this a few years ago and it was Very easy to do. All online. Less than 1000 per person.

 

[Bamaman]

If you're of sizable net worth and 41 years old, you should see attorney to have the will drawn up. It doesn't sound as if you'd be responsible enough or detail minded enough to prepare your own will with a program like Nolo's Willmaker.

If someone's is going to be approaching $5 million net worth in the foreseeable future, they especially need to see a tax attorney looking for angles to avoid the "death taxes", etc. The IRS wants a big share of your estate in cash within 9 months of the last living person's death.

While we're financially stable, we choose to spend our income--much of which is on world travels. We have bought our daughter a large house, and it's up to her to chart her own course in life. We've met our responsibility, and the last 1/3 of our lives hopefully will be with great joy--looking forward.

 

[Brat]

Absolutely have an attorney draw up a will for each of you.

Before meeting with an attorney make a list of all your assets, how they are held and beneficiaries on each account. Don't overlook life insurance policies.

Read over the thread about people in the early stages of dementia, you want to protect your survivor's assets so that they can provide for their needs even under those circumstances.

 

[Meadbh]

The first step in estate planning is to decide what you want and don't want to happen with your estate. Sounds like you have that covered to some extent. Who would be your executor (a big responsibility). Would your estate require a trust? Next, think about what you would want if you became unfit to make decisions about your health or your financial affairs. Whom would you trust to decide on your behalf?

Next, realize that legislation is specific to your jurisdiction. If you move out of state or out of country, your will, POA and other documents may not be enforceable and will need revision. But you have to start somewhere.

Precise wording can make or break the successful implementation of your wishes. That's why, unless it is extremely simple, I recommend consulting with an estate attorney.

 

[FIREd]

A few more details based on the responses so far:

* nieces and nephews: only one niece for me, all the nieces and nephews on DW's side are estranged. My niece is already the secondary beneficiary on my small Roth IRA. I feel that's enough since she will already benefit from my dad's largish estate.

*We are each other's beneficiary on our retirement accounts. All of our taxable investments, CDs, bank accounts, cars, i-bonds, etc... are held jointly or co-owned. We live in a community property state. I hold personal assets (outside of community property) in Europe, but the line of succession on those assets is already established. My wife would not inherit those assets (they would stay in my family), so I took a life insurance policy in the US for an amount equivalent to the value of those assets with my wife as a beneficiary. So in case I die first, DW loses nothing.

*I have purchased one of these "Willmaker" programs, filled out the information but I am not sure that the final document correctly reflects my wishes. For example, I did not find a way to specifically exclude someone from the will. I feel like a crafty attorney could take this apart in no time. So an attorney-prepared will would definitely "feel" more solid, but perhaps it is a matter of perception.

* As for not being responsible or detailed-minded enough, well that seems a bit harsh. And it is quite wrong, as anyone who actually knows me could attest. The death tax would probably be more of a concern if we had heirs.

 

[Meadbh]

If you're of sizable net worth and 41 years old, you should see attorney to have the will drawn up. It doesn't sound as if you'd [-]be responsible enough or detail minded enough[/-] have sufficient legal knowledge to prepare your own will with a program like Nolo's Willmaker.

Fixed that for you.

 

[Ian S]

For some reason, I'm reminded of the funny 1969 Volkswagen commercial where the man excludes his spendthrift relatives and leaves his billions to his Volkswagen-driving nephew

I think one way to avoid problems in cutting people out of your will is to actually bequeath them a token amount. But best to do it through a lawyer who should be able to make it iron-clad.

 

[meierlde]

I suspect that beyond direct descendants it becomes harder to challenge a will. Assuming the Niece and the cat are taken care of then the rest needs really to go to some charitable organization. BTW in many cases its better to leave direct cash to a human heir and 401ks and IRAs to charities as taxes may be due on regular IRA/401ks that charities will not pay. (income in respect of decedent).

 

[FIREd]

Are there any good resources to help me find a suitable attorney - beside Yelp?


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[skipro33]

You need to consult with an Estate Attorney. Lawyers are like doctors, they specialize. You need a specialist in an estate attorney.

What you want is to establish a trust in your name or your's and your wife's names. You also want a will, a power of attorney for financial and a power of attorney for medical decisions if you are ever incapacitated and can't make decisions for yourself and in your best interests.

You do not want to use on-line forms. They can and do vary by state and are enforced int he state you are a resident of. Remember that saying of Clinton's? Depends on what your definition of what is, is. The same here. Your layman definition may not mean the same as the legal definition of a word and could change the meaning of your intent in a self-written or on-line form will.

A good E. lawyer will ask you lots of questions and set up your estate to make sure it will meet your intentions and will be honored by the courts.

It will be the best money you spent!!

 

[skipro33]

To find a good estate attorney, try asking for a referral from your pension administrator or financial planner. They will know lawyers who understand that money and assets need protecting and will be fiduciarily accountable to you legally to protect your assets.

Here's the guy I contacted and had set up my estate issues.
Drobny Law Offices | Sacramento, CA Estate Planning Attorney

His seminars are well worth attending even if you eventually decided to go with another atty or method.

 

[mathjak107]

do not use internet canned documents , see a specialist.

i have dealt with one defective will and 1 defective trust already in my lifetime.

much of what protects your wishes is not even in the documents. it is protocol and is the questions asked at the signing in front of witnesses.

state laws change on the fly . we had a co-worker hit a snag because the internet form used was not the new statutory form required as mentioned below.

we hit a snag on the refinance of a house we inherited through a simple will.

it read i leave my house and possessions to my child beth.

the title company stopped the refinance since a word was missing. that word was ONLY " as in only child.

well i had to pay all the attorneys for the day and lost my rate while we got affidavits there were no other children.

we had a court rule a rrust defective as well as it lacked a sentence relating to predeceasing the parents.


as the judge told us , it is clear what the intentions were but he cannot re-write history or add missing words.



some of the issues those who use canned documents in our state ,ny run in to are :

Preparing and executing a valid health care proxy provides a good illustration. The health care proxy is a document that allows an individual (the “principal”) to appoint an agent to make health care decisions in case he/she becomes incapacitated. The main purpose of the health care proxy is to appoint an agent. There is a presumption that the agent knows the principal’s wishes. Nonetheless, according to New York State case law, if a principal’s wishes regarding the withholding of artificial nutrition and hydration are not articulated, an agent will not be able to make such decision. Based on this case law, it is imperative for the principal to set forth his/her wishes regarding the administering of artificial nutrition and hydration either in the actual health care proxy or in a separate living will. Failure to do this can result in unforeseen consequences – which is exactly what the principal was trying to avoid in the first place. Secondly, many individuals erroneously believe that they can appoint more than one agent at a time on a health care proxy. This would make the document faulty because only one agent at a time can make medical decisions. A person drafting a health care proxy can add language to avoid insulting other family members, but again- this requires the help of someone with experience. Finally, the document must be witnessed by two individuals in order for it to be validly recognized. A person should not have his agent, spouse or child be a witness to the signing.

We see even more problems in the area of powers of attorney. The main thrust of a power of attorney is to appoint an agent to act on an individual’s behalf with respect to financial matters in case such individual becomes incapacitated. Many people innocently refer to this document as one that is “simple” to prepare. This could not be further from the truth. Firstly, New York State passed legislation effective September 2009 in an attempt to create a statutory form that would be uniformly accepted. This legislation was the result of tremendous abuse that was found in this particular area, with some appointed agents taking advantage of the disabled and elderly.

The new power of attorney law results in a much lengthier document, and significantly restricts the actual power given to the agent over financial matters. If transfers are to be made on behalf of the principal, a separate gift rider must be executed. The gift rider must specifically articulate the agent’s power to make gifts to himself/herself or to third parties. Further, any additional powers beyond those enumerated in the statute, must be added to a modification section. Finally, while the law mandates banks, brokerage houses and other financial institutions to recognize the power of attorney, the form utilized must be statutory. Accordingly, if someone decides to cut corners and download a form from the internet, this may result in a tremendous disservice because if the form is not statutory, it does not have to be legally recognized. The power of attorney is an extremely important tool for estate and elder law practitioner. If the principal incorrectly drafts and/or executes this form, his/her ultimate plans regarding Medicaid eligibility or gifting to loved ones could be completely stymied. It is imperative to have this document prepared by an experienced practitioner.

A last will and testament is yet another document that must be prepared under the supervision of any experienced attorney. After the person who executed the will dies (the “decedent”), the will gets admitted to probate through surrogate’s court so that the decedent’s wishes can ultimately be fulfilled. Through the probate process, the will is reviewed and the court checks to make sure the will was drafted and executed properly. The number of witnesses, the affidavit they sign and the way the will is fastened are some examples of what the court reviews. Any mistakes, such as the removal of a staple or an ambiguous bequest can result in unnecessary delays, costly legal fees, and at worse, an inability to complete the probate process.

 

[Sarah in SC]

Our attorney is a member of the eldercare group NAELA and we asked her for a reference to another specialist practicing in NC when we needed assistance for DHs parents.
Your CPA might also be a good person to ask for a reference.

 

[FIYes]

Reading this reminds that our estate plan is inadequate. DH and I do have simple wills each leaving everything to the other. We have not prepared for what would happen if both of us should go at the same time. On the other hand, I am ashamed to admit how old we were before we got around to making the wills. At least we have taken one step.


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[JoeWras]

Well, my wife's sister has just come out of the woodwork. We have had no contact with her for 8+ years. She is having money problems after a divorce (we've had bill collectors calling looking for her). So now we have some motivation to get our affairs in order because she has treated my wife very badly in the past and we do not want that person to get a cent.

So where to start? Would a simple will be enough? Do we need something more ironclad?

I got a bad chill when I read about the woodwork emerging sister. Yikes. You at least need a will!

You've done good so far, but consider you both perishing in a car accident. Happens every day in America. Without that will, you'd be involving that sister, others and the state. She could really grind the gears of others involved that you love.

My advice: ask your friends for a recommendation for a local attorney. Have them do a simple will. It won't cost a ton. See if you enjoy the relationship with this attorney and if you do, you can perhaps do something more complex later. One other thing to think about: consider who would be the executor.

We are childless and have named an estate servicing corporation as our executor so that it keeps the family out of the mess. It costs money. So what. We're dead. Professionals will gladly tell the evil sister to pound salt.

 

[Taxman59]

As someone who works in this arena, my first suggestion it to decide what you want the $ to do (charitable) or to whom it should go. Don't worry about taxes, that is the professional's job. Also decide what you want done in the health care area. When you know what you want, think of who would likely agree to carry out your wishes. My parents chose one of my sisters as their HCPOA since they weren't sure about the other's willingness to carry out the plan (my father was afraid my mother would pull the plug for a hang nail and my mother was afraid my father would never let go!). When you have these answers (or at least a start on them) then see the professional with the detail list of assets and beneficiary forms. Having this in advance will save many $ and will help lessen the chance something will go wrong.

As far as who to select to write the documents, look to your state's bar association for attorneys who are members of the American College of Trust and Estate Counsel (ACTEC). Then get recommendations from this list. If the attorney you select pretends to listen and then wants to ignore your preparation and start over with their own forms (without giving a good reason), leave and find someone else. They are not listening to what you want, they are making the decisions for you based on their preconceived ideas. Remember, an estate plan is not a one and done, but a living plan that will change over time based on the facts that are present. Facts change, asset values change, people change. Keep flexibility in the plan.

My two cents.


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[JoeWras]

Remember, an estate plan is not a one and done, but a living plan that will change over time based on the facts that are present. Facts change, asset values change, people change. Keep flexibility in the plan.

Exactly. We did wills 10 years ago. Didn't like the lawyer. Did it again recently with a different lawyer, liked the lawyer. Much better, more organized, asked the right questions, etc. We will visit him again in 5 years or so and probably add some new instruments to the plan, depending on our NW, etc. Even if we don't do that, we'll get a check up. I think we have found our guy.

Our new lawyer was fastidious about state law and worded the will to avoid issues that mathjak107 mentioned. Some of it seemed ridiculous, i.e. naming the beneficiaries precisely with extra descriptive terms. But he had experience with the state. And if there is an evil sister involved, you better get it right. Don't use the internet forms.

 

[Rothman]

FIREd, I think you're wrong on the statement, you do want her to get one cent, or some other item so it is clear she was not "forgotten" in your will but actually considered and bequeathed exactly what you intended. Remember beneficiaries on retirement accounts are important and are outside of the will.


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[H2ODude]

My father had an issue with my brother so his will just explicitly said he was to get nothing. It was prepared by an attorney; it was never tested as he died with only financial assets that were in a revocable trust that passed very discreetly to me. I strongly approve of revocable trusts in lieu of going through probate; haven't done that ourselves yet but likely will as age.

I know there are advocates of the DIY wills and it may be appropriate for some. However, when we finally got around to it I got name of lawyer from our CPA and when done with everything including the sit down with two witnesses and recording, I felt it was the best $900 we ever spent. No nagging feeling of "what if"

 

[skipro33]

Our new lawyer was fastidious about state law and worded the will to avoid issues that mathjak107 mentioned. Some of it seemed ridiculous, i.e. naming the beneficiaries precisely with extra descriptive terms. But he had experience with the state. And if there is an evil sister involved, you better get it right.

Reminds me of what our atty. told us with some definitive language in our will. Our intent is that if we both pass, our two children split everything 50/50. If one or the other child had passed before us, then his children would split his 50% between them.
Our lawyer stipulated in the will the definition of children as the progeny of a lawful marriage union. I asked why that wording. He said that claims from 'love children' from long lost mates will come out of the woodwork, claiming to be the child of either of us or the child of one of our children if one of them passed before we did. While it rarely works in court, many 'settle' and estates agree to a settlement just so they can get on with the rest of the distribution of the estate. They might only settle for a few thousand dollars, but to them it's free money.

There was also once a widow who had a teenage son and the widow was diagnosed with cancer and given little chance of survival. She knew her son would be dead within a year if he inherited her wealth, so the lawyer set it up in her will; he gets nothing and the cancer center gets it all if he drops out of school. He gets an allowance based on his grades. He further gets percentages based on his life choices; full time job, no debts that fall into arrears, etc. At 25 he gets the rest. If at any time he fails any of those conditions, the cancer center gets it all.
Two things;
She had to have an executor who would fulfill the will's language. She chose her estate lawyer. They are happy to do so for a fee.
Her son, at 25, thanked the estate lawyer for helping his mother as he agreed he would have blown through the dough and probably killed himself with drugs, booze, wrong crowd, etc before his 21st birthday.

The moral and lesson here is; you can put ANYTHING in your will. You must be assured the executor will follow your will. You can chose anyone to be the executor including a lawyer.