Think of your heirs!

[ERD50]

There have been a few helpful threads like the one running now:

http://www.early-retirement.org/forums/f28/the-in-case-of-death-plan-96695.html#post2203818

And since I'm presently helping DW in closing out her Mother's estate, a few other related things come to mind. Specifically, I'd like to make settling my/our estate as easy as possible for my heirs. Along with the big ones (like in the above thread, documenting our accounts, locations and worth/story behind valuables, etc) there are a lot of little things we can do. Nothing earth shaking, but why not make things easy for your heirs? They may be at a stage of their life where they are very busy, and every little thing takes time. Every little thing adds up. The basic premise is, as Thoreau would say "Simplify, simplify!".


Some of these may have cons I have not thought of, so please jump in if you see downsides.

A) Executor/Trustee - How about naming just one, with named successors in place in case that one cannot/will not serve? Co-trustees sounds good in theory, with an odd number for tie-breaking, but in practice, it makes things difficult. In our case, one of the co-trustees is out-of-state, and travels a lot. So getting signatures, mail, etc, and just organizing things in general becomes much more difficult.

Maybe even have a form already filled out when you get your will/trust done, so that each trustee could sign away their rights to the next in line, and just get that signed/notarized. That would save the heirs a trip to a lawyer to get that done.

Maybe it seems risky to put it on one, but we are thinking of this, making it clear to our kids that they are expected to work together, but this means only one signature/visit required for handing paperwork. Who knows if your selected trustee will be out of state when you pass? Being out of state does complicate things.

And in that “Death Letter”, it would also be helpful to spell out some of the details I had to go learn - like exactly when/how to file the Will in your State/County residence, How to obtain the EIN, etc. plus the current sources for this info, in case it changes.


B) Leave Grandchildren out of your will/trust? Fortunately for us, all the grandchildren (of DW's Mother) are past minor age, but still, the fewer beneficiaries you need to deal with the simpler. Let the parents deal with it. This would have been even more involved if her IRA had named the trust as a beneficiary - we would have had to get each grandchild to set up an Inherited IRA?


C) Consolidate! When FIL passed, they had accounts all over the place. You need to visit each bank, submit the paperwork showing you have authority, then they usually say “come back after our legal department reviews this, etc....”, make another appointment, etc. It would have been so much simpler to consolidate these when convenient and while he was still around and of sound mind. Fortunately, we did get this done before MIL passed. Except for her local bank checking account (with my DW as joint/wros, everything was at Fidelity. Still, many little things to follow up on.

As an example, DW is one of three beneficiaries on her Mother's IRA, and must now take RMDs (in 2020, the 2019 RMD was already completed) based on the inherited table and her (DW's) age. After being split among the other heirs, this isn't a large amount. I'm planning on taking as large an RMD as we can w/o getting to a higher tax bracket, just so we can zero it out so there is one less account for our heirs to deal with.


E)IRAs - As mentioned in B, if you do include a larger number of beneficiaries in your will/trust, consider naming only primary beneficiaries for your IRAs. This avoids needing to set up Inherited IRAs for all.


F) Insurance policies - If you still have life insurance, consider just cashing it in, especially if it is a small amount. That will be just one less thing for the heirs to have to call in, obtain the forms, figure out how to fill them out (they manage to make it fuzzier than it should be - just exactly what do you want for entry xyz?), mail in with certified copy of Death Certificate, etc. Wait for checks to come in, deposit checks in the named beneficiary account, then distribute as needed. MIL had two small policies ($2,000 and $5,000 face), taken out in 1970's 1980's. Why such a small amount? Really makes no sense, this wasn't “bury me” money for them.


G) As you consolidate or cash out things, mark any old paperwork you wish to hold onto as “OLD - transferred this Bank ABC account to Bank XYZ account # in 2012”. Otherwise, someone going through this old paperwork may think there is an active account they didn;t know about.


H) While I really appreciate that Vanguard forced other companies into providing low cost index funds, when it comes to some of this, having access to a local Brick & Mortar office can be helpful. You may need medallion signatures for some of this otherwise.

It could also make things smoother if each of the heirs already had accounts at the same financial institution your main accounts are at. That can make managing the transfers to heirs easier, and they won't be dealing with setting these accounts up at the same time they are dealing with everything else.

Anything to add/change?

-ERD50

 

[HarveyS]

Well, I would argue for co-trustees. You see, in my case, one of my siblings was/is the sole trustee. While DM was alive but not with-it mentally, he/she took care of all financial aspects (sort of). Bills went unpaid (rent at least once per year, medical premiums at least once, credit card once) or bills got overpaid (cable TV, phone, car insurance after car was sold). He/she decided that he/she does not need to keep the rest of us siblings informed of the estate business, is not willing to provide annual updates, etc. etc. I have no idea what his/her motivation for such behaivour is, and really don't want to speculate. Nor do I want others on the forum to hijack this thread with speculation. I only want to point out that if there were 2 trustees, each getting investment statements, bank statements, etc., the rest of us might have a better idea what the assets are, how to pay for bills, etc..

I went so far as to contact a lawyer about having him/her removed. Basically was told that it would be very expensive, and unlikely the judge would rule against the trust for these "minor" issues.

So, you can expect your kids to work together. In my parent's case, that did not happen. We are now at a point where we hardly speak to the "trustee" over their lack of attention to our parent's wishes and utter defiance of any request we other sibs may have had.

 

[Dtail]

^^^
2 of my siblings are co-trustees with me for my parents' trust, but I make all the financial decisions and investments for the trust and all their accounts.
However, I provide quarterly updates of all their investment accounts. They don't seem too interested in the details.

 

[38Chevy454]

A) I would go for a single trustee, with successor trustee in case that first person is not able to do it.
B) Since DW and I do not have children, the grandkids is not an issue for us. But we did include nephews and nieces for specific vehicles for them to receive. So that's kind of like a beneficiary, just limited to the vehicle.
C) Agree, make it easier by having less accounts to have to go through all the paperwork to allow you access and control.
D) no item D
E) On all of DW and my IRA's we have each other as primary beneficiary, and our trust as the secondary.
F) Once retired and living off savings, I do not think there is need for life insurance. Mine lapsed once I quit working.
G) That's a good idea, although even better is to purge records according to age and tax requirements.
H) Being I have consolidated all to Fidelity, I appreciate the local brick and mortar locations. Not just for talking with advisor, but also for forms or other signatures as you suggested.


I) My added item: DW and I put a clause in our trust that anyone not specifically listed as beneficiary is excluded from being a beneficiary. So no long lost relative or whatever person can contest anything, they are automatically treated as a non-beneficiary.

 

[GrayHare]

For accounts set on "don't mail me a statement" make sure the executor/trustee knows where to find key information. My uncle had money in a Paypal account about which I did not know for over a year after he passed.

 

[imoldernu]

And since I'm presently helping DW in closing out her Mother's estate, a few other related things come to mind. Specifically, I'd like to make settling my/our estate as easy as possible for my heirs. Along with the big ones (like in the above thread, documenting our accounts, locations and worth/story behind valuables, etc) there are a lot of little things we can do. Nothing earth shaking, but why not make things easy for your heirs? They may be at a stage of their life where they are very busy, and every little thing takes time. Every little thing adds up. The basic premise is, as Thoreau would say "Simplify, simplify!"., so please jump in if you see downsides.
-ERD50

Thank you

I thought I had everything covered, but... a son who was divorced by his wife while she was pregnant. My son passed away at age 39 in 2001.... we never knew or saw his son, but received a message from him a year ago. Never even considered that... I have grandchildren that I know and love, who I'd like to help in our will...

Don't know if this may count, but instead of paying a thousand dollars to update our will, jeanie and I are aware of what we'd both want. If either of us should become unable, for whatever reason the plan is to bring the kids together and update with a lawyer. Our family is so close with us, and with each other that we can't even conceive of problems. We're very lucky.

 

[ERD50]

Thanks to all for the quick feedback - good to hear some pros/cons to my "thinking out loud" approach on this.

So far:

Well, I would argue for co-trustees. ...
So, you can expect your kids to work together. In my parent's case, that did not happen.

There's definitely an argument to be made. I'm not 100% sure of my approach, I'm looking at it from the bureaucracy of two or more people needing to co-ordinate signatures/paperwork/notaries, etc.

And even though I expect our kids can work together, who knows what the future brings? Things can and do change.

So it makes me wonder - can I specify two or more co-trustees, but specify that any/only one is needed for signature authority? It would work the same as a joint checking account? So all would have access to account statements, but only one would need to sign for something? I'll try researching that if no one comes up with anything.

^^^
2 of my siblings are co-trustees with me for my parents' trust, but I make all the financial decisions and investments for the trust and all their accounts.
However, I provide quarterly updates of all their investment accounts. They don't seem too interested in the details.

That's pretty much how it's working for us, but we still need to get the signatures from the somewhat disinterested, out-of-state, travelling party. Which is kind of a pain, be easier/faster if we could just do it ourselves. We go out of our way to keep everyone informed of anything we do, probably to the point of info overload. Better that than the alternative though.

D) no item D

That was just to see if anyone would disagree with it!

E) On all of DW and my IRA's we have each other as primary beneficiary, and our trust as the secondary.

Yes, but if the trust has multiple beneficiaries, will this be some extra work? Maybe no good alternative though, depending on the situation. In our case, with MIL, I just suggested using the "prime" beneficiaries (her children), rather than the trust, as the trust included all the g-kids in addition.

G) That's a good idea, although even better is to purge records according to age and tax requirements.

Yes, but I find I want to hang onto them for a year, just in case... Then I forget to purge. For me, it works better to mark them now, in case that purge doesn't happen, or something happens to me before the purge.

I) My added item: DW and I put a clause in our trust that anyone not specifically listed as beneficiary is excluded from being a beneficiary. So no long lost relative or whatever person can contest anything, they are automatically treated as a non-beneficiary.

Sounds good, something to run by the trust-writer.

For accounts set on "don't mail me a statement" make sure the executor/trustee knows where to find key information. My uncle had money in a Paypal account about which I did not know for over a year after he passed.

Yes, as much as I like doing things electronically, it's just not as visible to a trustee as getting something in the mail. Heck, some bills are annual or semi-annual, so even that can take a long time to rise up.

I thought I had everything covered, but... a son who was divorced...

I've got a family member who is divorced with 2 kids and re-married someone with kids, and he still hasn't updated his will/trust! That's really important.

-ERD50

 

[Mr. Tightwad]

I went with one trustee. Too many cooks spoil the broth.

 

[Bamaman]

I was the executor of my mother's estate, and her business was kept very simple. We had already sold her main residence, however she still had a lake house.

Had she not had a lake house, probate wouldn't have even been required.

Our problem was my sister has a house in a ski resort. I had to buy her half of the lake house (located in my city), and it was quite expensive.

 

[GalaxyBoy]

DF named me and my brother executors but since he lived on the opposite coast at the time, we agreed that I, being local, should handle it solo. But we get along and there were no issues. YMMV

DF made life easier by showing us exactly where his will was, and he left a list of on-line accounts with passwords, including his yahoo mail. He neglected to tell us where he kept his safety deposit box key, but I had the duplicate so we were able to access it.

One thing that is a bit of a thread hijack, I suppose, is to tell your kids as much of your personal and family history as you can. I'm constantly coming up with questions I would ask DF if he were only still around.

 

[Scrapr]

re:closing out a trust.Mom & Dad passed recently. Middle brother is executor. He is snowbirding in Az. I am in Oregon. Bank of America had a few hundred thousand in it, Trying to get them to disburse that money is/was virtually impossible. After overnighting signature pages back & forth & forth & back I walked into a branch & asked the best way to do this. Manager is listening in. After VP in charge of not getting stuff done says he has no idea how to do it the manager walks away.She saw a sh!tshow in the making. I finally was frustrated and asked him if the best thing to do is fly down to AZ and present ourselves at the bank....silence.

Lesson learnt...pull everything from BofA ahead of time

 

[gwraigty]

It could also make things smoother if each of the heirs already had accounts at the same financial institution your main accounts are at. That can make managing the transfers to heirs easier, and they won't be dealing with setting these accounts up at the same time they are dealing with everything else.
-ERD50

This does not matter. I didn't have accounts at any of the same financial institutions as my late father. I inherited (mostly via POD) funds from a TSP, a bank, and 2 life insurance policies with 2 different firms. Only the TSP required me to set up an inherited IRA to receive the rollover. Most of the other funds were paid via check that I deposited into one of my existing accounts.

An oddity was that one of the life insurance policies was paid out via an account the company opened up in my name to receive the funds on my behalf. I didn't want to keep the account, so I closed it at the earliest opportunity and got the funds into one of my existing accounts.

 

[ERD50]

....

An oddity was that one of the life insurance policies was paid out via an account the company opened up in my name to receive the funds on my behalf. I didn't want to keep the account, so I closed it at the earliest opportunity and got the funds into one of my existing accounts.

Yes, the small insurance policies I mentioned were with Prudential, and their 4 pages of forms were about 3.5 pages of how to open an account there, and deposit the life insurance proceeds into the account. Simply getting them to send you a check was an option that you had to write in (no check box).

And about that much of the accompanying instructions dealt with that account that we didn't want. It made the whole form filling out process look 10x harder than it was. They were making it difficult for you to just get a check, and DW looked at all these instructions, looked at me and . She figured it out, but also figured she was wrong, what was all this about an account? Took me a while to wade through it and understand - just ignore those 3.5 pages, and write "Lump Sum Check" on this line.

That's a terrible way to treat a customer, especially as some of these people will be having trouble coping at this stage, and may also really need that money to tide them over. Once we get our check cashed, I might just call someone at Prudential and get that off my chest. I can understand they want you to keep your money with them, that's business. But don't do it in such an underhanded way, and with such vulnerable people.

-ERD50

 

[old woman]

Clean your house. My boyfriend has a small farm with a huge garage and barn filled with stuff and 3 boats and a ton of tackle. I dread his death more because I would need to rid the stuff. Some has enough value to bother with but much is tiny stuff. An auction house wants 40% then to charge the buyers 10% so a loss of 50%. If he would stop buying and sell old tire rims and stuff now it would be easier.

 

[RobbieB]

I took advantage of the Prudential offer as it pays 2.5% and they sent me a checkbook.

 

[skipro33]

Two things I want to add. Maybe they were already covered. If so, sorry for the repeat.
1. Make sure your insurance policies are payable to a real person and not, "to the estate of... (fill in the deceased here)". My father's 2nd wife left several life insurance policies that we could not redeem because of that language. In order to pay out, the insurance companies insisted that a probate be opened. None were of much value, a few thousand each, and not worth the cost to hire someone to help my dad collect.

2. Make sure all safe deposit box keys are marked well. A co-worker's father passed away. Cleaning out his home, he ran across several safe deposit boxes that didn't even have the bank listed on them. Nothing. He hasn't a clue how to go about finding out where they are and how to access them. Who knows what fortunes lay waiting?

 

[Dtail]

"That's pretty much how it's working for us, but we still need to get the signatures from the somewhat disinterested, out-of-state, travelling party. Which is kind of a pain, be easier/faster if we could just do it ourselves. We go out of our way to keep everyone informed of anything we do, probably to the point of info overload. Better that than the alternative though."

When you talk about signatures above, do you mean you need to get signatures on every decision?
Fidelity allows me to invest in any vehicle without any of the the other trustees signing any documents.
They only had to sign the original trust document.

 

[Lewis Clark]

Don't know if this may count, but instead of paying a thousand dollars to update our will, jeanie and I are aware of what we'd both want. If either of us should become unable, for whatever reason the plan is to bring the kids together and update with a lawyer. Our family is so close with us, and with each other that we can't even conceive of problems. We're very lucky.

Have you thought about what would happen if you and your wife both died at roughly the same time, perhaps due to illness, perhaps due to a vehicle crash?

There may not necessarily be enough time to gather the family together, or consult with a lawyer. And you may not be in a mental condition where a lawyer would agree to update the will.

If your current plans don't allow for the possibility that you will both go at about the same time, you should consider updating the plans.

 

[WestUniversity]

Two things I would add. Get way more Letters Testimentary than you think you will need. So much easier to order too many than to have to go back and get additional copies.

Cash out of any stocks and distribute cash. Trying to split up shares between beneficiaries is a pain...

 

[steelyman]

One thing I ran into as independent executor regarding letters of testamentary is that some places (Schwab comes to mind) require them to be recent. In the case of death/birth/etc certificates, it’s helpful to have more copies than you think you need

 

[pb4uski]

Yes, the small insurance policies I mentioned were with Prudential, and their 4 pages of forms were about 3.5 pages of how to open an account there, and deposit the life insurance proceeds into the account. Simply getting them to send you a check was an option that you had to write in (no check box).

And about that much of the accompanying instructions dealt with that account that we didn't want. It made the whole form filling out process look 10x harder than it was. They were making it difficult for you to just get a check, and DW looked at all these instructions, looked at me and . She figured it out, but also figured she was wrong, what was all this about an account? Took me a while to wade through it and understand - just ignore those 3.5 pages, and write "Lump Sum Check" on this line.

That's a terrible way to treat a customer, especially as some of these people will be having trouble coping at this stage, and may also really need that money to tide them over. Once we get our check cashed, I might just call someone at Prudential and get that off my chest. I can understand they want you to keep your money with them, that's business. But don't do it in such an underhanded way, and with such vulnerable people.

-ERD50

I took advantage of the Prudential offer as it pays 2.5% and they sent me a checkbook.

Most life insurers went to this approach in the mid 1990s... I would argue that it is good... many beneficiaries are still in shock and are disorganized and have no idea what to do with that big check coming in... receiving a checkbook give them the option to have the death benefit still earning money while they decide how to spend or invest it. Now admittedly, it is beneficial for the life insurer too.

 

[pb4uski]

After having spent a lot of time recently cleaning out my mother's home to prepare it for sale I would add that another big thing that you could do to help your heirs is to declutter and simpify your stuff.

 

[Z3Dreamer]

True story. Lesson is to close those tiny accounts.
In '92 distant relative Ralph passes. In '94, MIL passes. In '95, county where Ralph lived sends MIL's estate a bill for inheritance tax on Ralph's IRA. What IRA? says DW who was MIL's executrix. So DW has to jump through many hoops to settle this inherited IRA. For maybe $1,000.

IN 2016! Yes, 24 years after Ralph passes. DW, gets notice that Bank XX is holding Ralph's IRA. This is a different bank than before, so it is a second IRA. DW must get new paperwork in county where MIL passed to present to bank. DW must get a Death Certificate where Ralph died, which took a while to find out where he died. He did not die where he lived. I think DW had to open an estate bank account to receive the distribution. Finally, DW had to file with IRS since this was a taxable estate. Oh, I forgot she had to do k-1's for the beneficiaries.

All of this for less than $1,000.

 

[ERD50]

Great inputs, thanks for the additions.

One clarification from me. When I replied to the singe/multiple trustees issue, I said "There's definitely an argument to be made." - and I meant "an argument to made for each side". Wasn't sure that would read that way when I saw it.

True story. Lesson is to close those tiny accounts.
.... So DW has to jump through many hoops to settle this inherited IRA. For maybe $1,000.

IN 2016! Yes, 24 years after Ralph passes. DW, gets notice that Bank XX is holding Ralph's IRA. This is a different bank than before, so it is a second IRA. ... I think DW had to open an estate bank account to receive the distribution. Finally, DW had to file with IRS since this was a taxable estate. Oh, I forgot she had to do k-1's for the beneficiaries.

All of this for less than $1,000.

Yep. That's a lot of frustrating paperwork to do for $1,000. When I helped get things consolidated for my MIL after my FIL passed, she had about 6 CDs in her IRA. But it seemed that they weren't "in" her IRA, the bank seemed to treat each CD as it's own separate IRA. It was a pain to get that converted, as each CD had a different redemption date, you only had a 30 day window to redeem, etc. Again, for a few thousand $. Way too complicated.

And yes, if the check is made out to the estate, you'll need an estate account to deposit it.

Quote:
Originally Posted by RobbieB View Post
I took advantage of the Prudential offer as it pays 2.5% and they sent me a checkbook.

Most life insurers went to this approach in the mid 1990s... I would argue that it is good... many beneficiaries are still in shock and are disorganized and have no idea what to do with that big check coming in... receiving a checkbook give them the option to have the death benefit still earning money while they decide how to spend or invest it. Now admittedly, it is beneficial for the life insurer too.

OK, probably good for a large check, but these were small, we don't want/need another account (Simplify!). And I just didn't like how Prudential made it difficult and confusing. Seems they were preying on people at a bad time.

Cash out of any stocks and distribute cash. Trying to split up shares between beneficiaries is a pain...

In general I agree, especially if the cost basis is stepped up - just sell and distribute cash. People can buy the stocks back if they want for some reason. And actually, this wasn't a big problem for us. My FIL passed several years back, my MIL did not want to sell the stocks in his trust, and they grew and had some capital gains by the time she passed (cost basis is set at FIL's DoD). I sold off some with losses against gains to net out near zero cap gains in the trust, and to free up cash to distribute to the g-kids. Then I asked each of the primary beneficiaries (the 3 siblings) to open brokerage accounts at Fidelity, and then we transferred those stocks in-kind, splitting the shares by 3. I explained to them, they can now sell and control their individual tax situation, and the grandkids will get K-1's with small amounts on them. Now, DW and I went into Fidelity to do this, because we had to go in to set up her brokerage account under her trust (easy to open a person/non-trust account on-line, but they said for trust, easier to come in with the papers), so we filled out the transfer in-kind paperwork while we were in, but I think we could have done it over the phone - but there is a $30,000/day limit on phone transfers...

1. Make sure your insurance policies are payable to a real person and not, "to the estate of... the insurance companies insisted that a probate be opened. None were of much value, a few thousand each ...

Having the ins policies pay to the trust would have avoided that, but it still seems odd. But probate rules are by state, so maybe that's it. In IL, the executor can fill out a form saying the estate does not need to go through probate, and they present that to get the funds released (it isn't processed by the State/County). That would work for small accounts, but the probate limit in IL is $100,000, so no institution should release that amount without the probate court involvement. I guess they can't know if you have four $30,000 accounts at different places, but legally, I guess they are off the hook, and it's on you if the state finds out.

When you talk about signatures above, do you mean you need to get signatures on every decision?
Fidelity allows me to invest in any vehicle without any of the the other trustees signing any documents.
They only had to sign the original trust document.

They had to sign the original trust document, and they needed to sign the change of ownership of the trust accounts (from living person's SS to EIN). The account gets a new account #. It's like a whole new thing, old preferences and links to banks 'die' along with the owner, and need to be redone. Fortunately, I had the EIN and Death Certificate by a Thursday, and the co-trustee was in that Friday noon for the memorial service, leaving early Monday and we were able to squeeze it in at Fidelity Friday afternoon. But it would have been better to handle that the following week, and not have to have this interfere with the limited time he was in the the service.

I suppose he could have done his part at another Fidelity office, and Fidelity could tie it together, but that probably would have been difficult to co-ordinate as well.

Yes, once that's done, either co-trustee can make changes to the investments in the accounts.

-ERD50

 

[Spock]

On the pre-decluttering, its a danged if you do, danged if you don't deal.
My dad has started to fret about needing to clear out junk and not leave a mess to be cleaned up. But. His idea of "junk" is way different than anybody else's.



He went and sold his wedding ring to a cash-for-gold shop for $40... I had modeled mine after his... so it would have been a nice to have.



He has a small dumpster load of paperback books/cds/dvds that "charities" (scams) send him as thank-yous for his donations. He wants me to find a place that wants them rather than throwing them out.


Similarly he has a shed full of scrap wood that "somebody could use that".


In order to keep him from tossing mementos, I told him to just leave it all. When the time comes I'll pick through stuff for a few keepsakes, donate the furniture, and dumpster the rest. Seems like it would just be easier that way in our situation.


One big area I would add to your to-do list is pre-death incapacity planning. Since I'm still on the he's-not-dead-yet (Monty Python joke) end of the equation, I see it as way more complicated dealing with guardian issues than it will be once dad passes. Dad keeps wanting to do financial things that he doesn't understand/remember to do any more. He's 84yo and Drs have been saying he shouldn't be living alone any more. He has tried to cancel his LTC policy because its too expensive, cash out his IRA in a lump sum (the tax torpedo is huge), change rental property managers despite being under contract until 2021, signed loan papers (Miracle-ear hearing aids) that he didn't know was a loan, and open a new bank account to receive his Spanish Lottery winnings, etc. etc.

Either trust your trustee to take over or chose a different trustee that you do trust... don't make them have to take you to court to save you from yourself. The "when a Dr's letter states I'm incapable" clauses in a trust are worthless as a Dr won't write such a letter... two different healthcare professionals have responded: "he's still making decisions, they are just bad decisions".