Can Beneficiary Lists replace Wills/Trusts?

[Walt34]

Quote:

Originally Posted by gwraigty 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.

What the creditors do is sue the executor for the violation of fiduciary responsibility. The law (at least in MD where I handled my mother's estate) is very clear that the taxman is first in line, then creditors, then heirs. In MD that's part of the reason the estate has to be open for a year, to give creditors time to learn of the passing and file a claim with the estate. Only after that period had expired could I then make distributions to the heirs and my two sisters were fine with that. None of us needed the money anyway.

Some executors have learned this the hard way and depending on the family, it might be "good luck" getting that money back if it is owed to creditors.

[joeea]

Quote:

Originally Posted by 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.

As long as you don't care what happens to your estate, you don't need a will. That will just make untangling your estate someone else's problem.

Every state has rules as to what happens when you die without a will ("intestate"). It's basically like having a state-mandated will. Those rules will be applied. Maybe your brother, sister, and their families will inherit. Maybe they won't.

If you die without an executor specified, the court will appoint an administrator to handle the process of closing your estate. That administrator may be the one you would have chosen as executor, or might be someone else. Each state has a formal "priority" they go through to determine the administrator. Some states require that the administrator live within that sate.

If you don't care, then you are fine.

If you do care, it may be worth your time to understand what your state's rules will be and then decide if you want something else or not.

[albireo13]

My wife passed away when she was 42, with no will in place. Our joint accounts were no problem. I still had access. Her life insurance paid out to my in quick order. Also, I inherited her modest IRA funds, being the primary beneficiary on the account. There was no probate involved in anything. Actually, I was surprised at how quickly and painlessly it was all resolved ( in < 3 months). The only thing I had to do was provide a valid death certificate, an original.
I live in the state of New Hampshire.

[PatrickA5]

I just went through the estate process for my 97 year old father. It was relatively easy because we took care of things in advance. He had a will, but it wasn't needed. He had me as Power of Attorney which came in handy a couple of times while he was in the hospital. I was also his Health Care Proxy, (which is absolutely necessary) - I was able to make the difficult decisions about his care.

There was no probate necessary. Bank accounts were jointly owned, so we had no problems paying bills and splitting the leftover money. Brokerage account was POD. Life insurance had beneficiaries. Car was jointly owned. His house had a TOD Deed with me and my brother as beneficiaries. It worked like a charm and we were able to sell the house within a month of his death. So, while he had a Will, it turned out to be unneeded because we arranged everything beforehand to avoid probate. No Trust necessary.

I should add that even though the Will wasn't needed, we did have a lawyer write one up along with the POA, Health Care POA, and the TOD Deed on the house. I could have done all of this myself without a lawyer, but decided not to.

[Bamaman]

The act of probate is where a judge gives the authority for an executor to sign legal documents for the act of estate liquidation. Of course the judge wants to be assured that all debts have been paid, especially any taxes owed to the state and federal governments.

If someone dies without any real estate, it is easy to have joint ownership of bank accounts and beneficiaries noted on savings and brokerage accounts. Then no probate process is required usually.

Often, people will sign their real estate over to their children before they die. This is not good for future taxation purposes. It is best to keep the house in Mom/Dad's name and go through probate. The house would be appraised, and that would be the "basis" for tax purposes. Otherwise the basis would be what the parents paid for the house originally, and a huge tax liability could be due. If the home was transferred early to the children, gift taxes would/could come into play.

[pb4uski]

Our state allows TOD for vehicles and enhanced life estate deeds, so between beneficiary designations for our financial accounts, an enhanced life estate deeds for our real estate and TOD designations for our vehicles, there would be very little left to go to probate... probably less than $10,000 which is the limit for small estates which have a simpler process.

While we would probably still have a will, it would effectively be superflouous since all major assets would pass to heirs outside of probate.

[JustCurious]

Quote:

Originally Posted by gwraigty 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.

This is generally correct.

[googily]

OP, I am also single (widowed) and childless. I have the works--pour-over will, trust, PoA and health care PoA. Most of my accounts have POD/beneficiaries, but I'm less concerned about what happens when I die than what might happen if I'm incapacitated. My trust allows for my trustee to have access to funds owned by the trust (a VG brokerage account) and also to sell my house to help pay for my care. My sibling will be my executor, which he can just deal with given how much he'll probably make on the deal!

Also, I would hate to leave a financial mess. Disposing of my worldly possessions will be a big pain on its own...

[67walkon]

With no will and several million in assets, lawyers will make a lot of money when you die. Some of that money will come out of the assets you leave behind. As a retired trial lawyer I can tell you some horror stories arising out of similar situations. Get a cheap will!

[indiajust]

You need a will to keep property out of probate. Insurance policies designed to pay taxes are also going to require an executor and a will.



I use a transfer on death for my taxable account, and the beneficiaries on the IRA. Account designations such as these take effect PRIOR to anything in a will anyway.


If you sold your property with a reverse mortgage, that would be outside the will as well, since death transfers the property to the mortgagee.



All that is left is possessions. Sell the cars outright and use the money for Uber. Or make sure there is a TOD clause in a vehicle lease. Or just sign the titles over and make them easy to be "found" by the right person in the event of death and transferred before the death certificate fuss and bother freezes everything.


Most relatives can strip a house of possessions in short order.