Hi and a Question about Trusts!

[lem1955]

We set up a Family Revocable Trust for three reasons - 10 years difference in our ages creates concern about one of us becoming in need of long-term care far earlier than the other; 4 children and 3 grandchildren with different abilities and needs; state estate tax limit is much lower than the federal. Lawyer charged a flat rate.

 

[Dash man]

Many of you said things along the line of "get a good trust and estates attorney". Not to open a can of worms...but what does that mean?



I googled estate planning for the city\state I am moving to and there are hundreds and hundreds of firms. What should I be looking for?



By the way, this thread has been very valuable. Thanks to all!

Find an attorney that specializes in Estate Planning, not a “Jack of all Trades” type. I’d recommend you avoid individual attorneys and go with a firm that has some back up in case the attorney you work with retired or has health issues.
Get recommendations if you can from colleagues and friends. Find an attorney that will tell you a flat fee price once you’ve had the discussion about your needs. Avoid an attorney that wants to be the executor or trustee. It’s okay if they offer to be the trust protector in my book.
Plan ahead on the questions you want to ask before you commit.

 

[DrRoy]

We set up a RLT almost 15 years ago when our kids were minors. They were to receive full control of the inheritance by age 30. They are over that now and I think we should re-visit the trust and update it.

 

[Janez]

OP response

Hello again,

In response to the question about complaining about my father's estate attorney and wanting to complain or fire them, I appreciate everyone's input. The lesson here for me that I hope I can share, is if you are setting up a trust for your family, make sure your kids knows what the fees are ahead of time. My parents could have easily negotiated the fees for when they died, and either they did not tell us or the attorney did not. Considering they told us so little, my guess is that the attorney took advantage of this and just told my brother and I their fees and we were too in shock from my father's passing to even ask if this had been done, to look for it in their disorganized papers, or even think we could negotiate. My brother wanted to keep things simple and stay with this attorney, which I understand. An expensive lesson learned! Those funds could have gone to better use than this attorney.

Based on everyone's input, I spoke to my DH and we are going to wait until post retirement to set up a trust. We want to see if we are going to downsize and sell our house in Colorado, identify where we may settle permanently, and see what happens with our kids if/when they get married and start a family. Right now we have our two siblings managing our wills (my DH's sister, a CPA, and my brother, an IT consultant) and know they will not only responsibly manage our assets but guide our children in case we both get wiped out together.

Thank you again to everyone for their input and guidance!

 

[OldShooter]

Many of you said things along the line of "get a good trust and estates attorney". Not to open a can of worms...but what does that mean?

I googled estate planning for the city\state I am moving to and there are hundreds and hundreds of firms. What should I be looking for?

By the way, this thread has been very valuable. Thanks to all!

Oh, that! Sigh.

Coincidentally DW and I were talking about that on a drive home from our lake place last week. She is a retired megabank SVP who spent most of her career in trusts & estates, has all the little alphabet soup designations on her business cards etc. Bottom line is there is no guaranteed way to do this.

Forget the directories and the lawyer rating sites, the latter being at best popularity contests and at worst frauds. Talk to the professionals in your networks, your GP lawyer, CPA, insurance agent, banker, etc. If your bank has a trust department see if you can get names there. Call the people these folks recommend and talk to them, ask them too for referrals. In our city, the local magazine annually published a "Super Lawyer" list comprising attorneys recommended by other attorneys. Maybe you can find something like this. When you have a few names, call and see if you can get an intro appointment. That should be no charge but if there is a charge it may be worth it. Don't just stop at one interview. Two or three minimum and look for someone you can "click" with.

Sadly, in the end there is no guarantee. DW knew a couple of supposed-experts who just elicited groans from the bank legal staff when the names were mentioned or documents they had drafted came in.

Sorry and good luck.

 

[RetireeRobert]

OP said: "This has left my husband and I to try to figure out if we need to do a trust as well. Our assets are far below the $11 m threshold, and are all in IRAs, cash, stocks, and the house. It is my understanding that if all our assets have direct beneficiaries to our two children, that they will avoid probate and avoid having to pay these legal fees that I am paying right now for my father. Am I missing something here? Is it enough to have a will, advanced medical directive and POA directive, and beneficiaries and not have to go through the hassle of creating a trust..."

IRAs and life insurance can be passed on by beneficiary designation. Bank accounts by TOD designation. But stock accounts are trickier to pass, unless by probate or via trust, from what I know. Also, house, at least in my state, cannot be passed except by probate or trust. My wife and I had revocable living trusts prepared by local attorney for cost of about $2700. This included the attorney preparing a new deed for house in name of our trust and recorded with local county deed records. With a revocable living trust, there is no probate needed, nor the attendant probate expense. Upon death of first spouse, the trust assets pass to survivor per trust provisions. Upon death of second spouse, the trust assets pass to trust beneficiaries as per trust provisions, no probate needed. Chances are there will be no attorney work at death of second spouse needed, so no attorney bills. Estate and income taxes of course need to be handled in any case (wills or trust), and therefore the same accountant fees and appraiser fees in either case. I would recommend you do the revocable living trust. BTW, the $2700 attorney fees I mentioned above included for us also the advance directives, durable power-of-attorneys, health information sharing authorization (HIPPA) forms, and pour-over wills. Also, RLTs provide additional flexibility for handling affair if one or both of you become incapacitated and unable to handle your own affairs while you are still alive. Flexibility that cannot be provided by wills. So, look for an experienced estate and trust attorney other than the one who handled your father's estate, and discuss fees upfront. I emailed a local estate attorney, discussed fees, got an outline of types of documents we needed, and was happy with results, the charge by the hour approach---and the way the documents worked upon passing of my wife. Ask around your town of bankers, insurance agents, wealth managers, friends about estate and trust attorneys. I am sure you can find one you will be happy with, and who charges fairly.

 

[SecondCor521]

^ Vanguard lets you name beneficiaries on taxable brokerage accounts, so stocks could be passed that way outside probate.

My state does not allow TOD on houses or cars, but some states do (at least for houses, not sure about cars).

My state (and I think others) has simplified and/or small estate procedures which appear to be simpler/faster/cheaper than traditional probate and probably not require the services of a lawyer. The way my state law appears to be written, if you dispense of the majority of assets via beneficiary/TOD/POD and what's left is small enough, you can then use these simpler procedures for the remainder.

For flexibility one can also do a POA, which can be either financial or medical. Sometimes the medical POA aspect is covered by other documents / terms. Vanguard had no problems accepting my Dad's financial POA, which is extremely broad and means, in effect, I can do anything with his financial affairs. We're at the point now where I'm just monitoring, and most of his stuff is automated anyway, but if he became incapacitated I could step in without any issue.

I agree that estate lawyers are expensive.

 

[zippy2020]

>>Chances are there will be no attorney work at death of second spouse needed, so no attorney bills. >>

This was not our experience; however, state laws differ and tax laws can, and do, change.

I would strongly suggest the OP find a good estate attorney – your state bar association can give you a list of referrals to such professionals in your area – ESPECIALLY because of the change in tax law on non-spouses inheriting specific assets like IRAs. “Stretch IRAs” are no longer allowed as of January 1, 2020 under Pres. Trump’s SECURE Act.

In Googling I found there are alternatives but again, one should consult a professional before selecting ANY of these options:
https://blog.massmutual.com/post/stretch-ira-alternatives

Kiplinger’s article had some useful additional information despite the alarmist title (and annoying flash ads, LOL):
https://www.kiplinger.com/article/retirement/t037-c032-s014-5-ways-the-secure-act-could-harm-retirees.html

Any older members of the FIRE forums - or those with parents in the target age - who were born in the critical 'sunset provision' years 1948-1950 need to be aware of the SECURE Act changes on their IRA distributions and inheritance of assets.

 

[5Miler]

DGF and I set up RTs for each of us about 7 years ago before she retired from Megacorp. We had them both set up for no fee as a Megacorp benefit for legal services with referral to a local Estate Planning Attorney who did the deed. Although not a spouse, at the time I was covered by her medical as a domestic partner so received the same legal benefit that she received. Color me surprised. It included the Trusts, Pour Over Wills, POAs, Living Wills and all the other assorted documents normally associated with obtaining a Trust. The attorney also took care of transferring my Truck title and the Deed to my house into the Trust.

Both of us have been married previously and I have two sons from my first marriage so a Trust is very beneficial in that regard. In the event of my demise I want to make sure DGF is provided for (as if she needs it) with any remaining assets to pass to my sons/grandchildren vs her family.

The same attorney has recently started her own practice and provided us with her new contact information in the event we would like to retain her services and need any adjustments to our documents. Obviously, fees would now apply.

We were very surprised to find that DGFs Megacorp covered all the cost for this service so if you are working, it could be advantageous to check into it.