Is "avoiding probate" a scam?

[SecondAttempt]

My ex-wife and I had an estate plan done by an attorney after her mother died about 20 years ago. Even though I thought I was fairly knowledgeable, I certainly learned a lot. There was no pressure or fear tactics at all. We met with her mother's lawyer, explained our wishes, and he said, we probably would not need anything too complicated. There were a few specific people in my family that I wanted to not inherit anything. We had no kids and no mortgage or other debts. So fairly simple but not cookie cutter. He set up a living trust, wills, living wills, and various powers-of-attorney all for about $700 total for both of us and even helped get all our accounts properly retitled. I thought it was a bargain.

We divorced a few years ago and dissolved the trust as part of that. I also now live in a different state. My partner and I are not married (yet?) but the partner of one of her cousins died suddenly several months ago after a hospital stay and Hawaii is such that they would barely let the partner visit him in the hospital much less give her information or let her make decisions when he couldn't even though they had been together for many years. So getting medical POAs and living wills set up is high on the agenda and I will probably have the lawyer write wills as well. I will probably skip the trust at this point until we get married.

 

[pb4uski]

For a revocable trust... not an irrevolcable one... but you do not get the protection with a revocable one... the main thing is to not do probate... for Texas it is not a problem...

If a revocable trust seems much like owning the assets yourself, that's because there's really little difference in the eyes of the law. Any assets in your revocable trust still count as part of your estate and aren't sheltered from either estate taxes or creditors.
​

https://www.kiplinger.com/retiremen...ing-between-a-revocable-and-irrevocable-trust

I thought the issue under discussion was avoiding probate and a revocable living trust works for that and you get step up. I agree if the objective is other than avoiding probate, like having taxpayers pay for your LTC, then an irrevocable trust is needed.

 

[Lewis Clark]

My wife was executor for an aunt's estate about 10 years ago. Probate was not inexpensive.

The estate was simple. A few bank/brokerage accounts (some had TOD designations), a small amount of personal property (home furnishings and decorations, clothing and jewelry), and a life insurance policy. No real estate or vehicles. Not huge dollars involved. The aunt lived about 200 miles away from us.

We hired the aunt's attorney to guide us through the probate process, which in retrospect was probably a mistake. This simple estate took about 15 months to probate and cost around $15,000 in attorney fees and court costs, if I recall correctly. We felt at the time that the attorney was dragging it out longer than necessary, as it took about six months longer than the attorney had estimated at the beginning.

A few years later, my parents created a trust and paid their attorney about $5,000.

In some situations, a trust can be created for significantly less than the expected probate costs. And a trust can often be liquidated far faster than probate may allow. And a trust is private while the probate process is public, which may matter for some people.

I would not describe all trust packages as a scam if the costs I know about are even close to representative. A trust may make good financial sense if the cost of a trust is much less than the expected cost of probate (in terms of both dollars and time).

 

[PatrickA5]

My wife was executor for an aunt's estate about 10 years ago. Probate was not inexpensive.

The estate was simple. A few bank/brokerage accounts (some had TOD designations), a small amount of personal property (home furnishings and decorations, clothing and jewelry), and a life insurance policy. No real estate or vehicles. Not huge dollars involved. The aunt lived about 200 miles away from us.

We hired the aunt's attorney to guide us through the probate process, which in retrospect was probably a mistake. This simple estate took about 15 months to probate and cost around $15,000 in attorney fees and court costs, if I recall correctly. We felt at the time that the attorney was dragging it out longer than necessary, as it took about six months longer than the attorney had estimated at the beginning.

A few years later, my parents created a trust and paid their attorney about $5,000.

In some situations, a trust can be created for significantly less than the expected probate costs. And a trust can often be liquidated far faster than probate may allow. And a trust is private while the probate process is public, which may matter for some people.

I would not describe all trust packages as a scam if the costs I know about are even close to representative. A trust may make good financial sense if the cost of a trust is much less than the expected cost of probate (in terms of both dollars and time).

What about this estate caused it to be that expensive and time consuming? With no vehicles/houses, it seems like it should have been simple and possibly have avoided probate altogether if all accounts had been POD/TOD.

 

[Pluperfect]

If the surviving spouse dies with an "All to husband" will and the husband is dead, then I think the estate would devolve to the state intestacy rules. Which may or may not be what she wanted.

All the provisions you describe are common in a typical attorney-drafted will. But they are not included in a simple "All to husband" will, which was the situation I was referring to.

So you're talking about a will made with a DIY form? I've never looked at them--do they not provide for contingent beneficiaries

Or maybe they provide a space for them but don't emphasize the importance of designating them? (I don't know how much "advice" or "guidance" these will forms provide.)

 

[dadu007]

After handling the estates for both my FIL and mother in the past 5 years, I learned two important things:
- Wills do not mean squat and will not prevent probate if no beneficiaries are listed on accounts (where applicable). My mother had one account that didn't have beneficiaries listed and it took almost two years in probate to recover the funds.
- A trust prevents prying eyes of other relatives and can also spell out any instructions you would put in a will. My wife's aunt was very angry that my wife inherited everything from her father; it wasn't a huge amount but the aunt would have been even more vicious if she knew how much.

Consequently, we spent about $3000 to set up a trust (we have two sons).
I recommend it.

 

[marinauser]

I have handled a parent's estate where there was no will or trust and was done under the state's intestate laws. I have also handled a parent's estate where virtually everything other than a bank account were in the trust. The trust was far easier to deal with and did not require involving the court and legal fees for the intestate filings required by the state. The intestate process took far longer than the trusts. In essence, the trust was completely dealt with in 6 months other than filing the final tax return and all of the assets were distributed/disposed without involving the attoreny other than for preparing the trustee deed for the home sale.

 

[Lewis Clark]

What about this estate caused it to be that expensive and time consuming? With no vehicles/houses, it seems like it should have been simple and possibly have avoided probate altogether if all accounts had been POD/TOD.

We have no idea. That's one reason why we think the attorney's office was just running up the bill because they could.

Agree it would have been simpler if all accounts had POD/TOD, but our aunt did not want that. No, I don't recall why.

It is beneficial to have one reasonably-sized account that is NOT TOD/POD so the estate has available cash to pay the final bills.

 

[Doribe]

My mother put her home and a few other assets in a trust. I was named as the executor and trustee. The trust helped my family because I have six brothers and we will never have complete agreement on anything. I was able to sell her condo without noise from the peanut gallery. I got the best price I could and no one complained. The trust made it easy for me to access her accounts and disperse the money to the heirs. She kept her checking account out of the trust and she used a small estate (less than $100k) form so there was no probate.

We went through probate with my Dad's estate. My brother was the executor and he had to hire a lawyer for one court date. Going through probate was not a problem.

 

[Which Roger]

So you're talking about a will made with a DIY form? I've never looked at them--do they not provide for contingent beneficiaries

Or maybe they provide a space for them but don't emphasize the importance of designating them? (I don't know how much "advice" or "guidance" these will forms provide.)

NoLo WillMaker walks you through this. It takes about 2 minutes to create a very simple will stating that "I leave everything to my spouse. If my spouse pre-deceases me, I leave everything to X".

 

[PatrickA5]

It is beneficial to have one reasonably-sized account that is NOT TOD/POD so the estate has available cash to pay the final bills.

I had my dad add me as a joint owner on one of his checking accounts for this purpose. I could have paid for everything out of my own money and reimburse myself, but this was easier. Most of his funeral/burial expenses were pre-planned and prepaid, so the only expenses he had were mainly utilities and a couple of other bills.

I called my estate lawyer and asked her if there was any reason to even consider probate as the only thing that wasn't POD/TOD/Joint was household furnishings, etc. She said as long as my brother and I can split things up amicably, she couldn't think of any reason to go through the hassle of probate. The entire estate (including selling the house) was wrapped up in 5 weeks.

 

[Lewis Clark]

I had my dad add me as a joint owner on one of his checking accounts for this purpose. I could have paid for everything out of my own money and reimburse myself, but this was easier. Most of his funeral/burial expenses were pre-planned and prepaid, so the only expenses he had were mainly utilities and a couple of other bills.

I called my estate lawyer and asked her if there was any reason to even consider probate as the only thing that wasn't POD/TOD/Joint was household furnishings, etc. She said as long as my brother and I can split things up amicably, she couldn't think of any reason to go through the hassle of probate. The entire estate (including selling the house) was wrapped up in 5 weeks.

I'm impressed. Clearly, your lawyer was better than the one we used.

There is a disadvantage of being a joint owner of assets. In the event of a lawsuit against you (traffic accident, for example) your dad's account could be seen as your asset if you loose the lawsuit, putting your dad's account at risk. I know many people who have been added as joint account owners for this reason, including myself. Yes, the risk is probably small for most of us, but the risk is not zero.

I learned about this while reading a book about estate issues that was written by an estate lawyer.

 

[SecondCor521]

So you're talking about a will made with a DIY form? I've never looked at them--do they not provide for contingent beneficiaries

Or maybe they provide a space for them but don't emphasize the importance of designating them? (I don't know how much "advice" or "guidance" these will forms provide.)

I was actually thinking of this:

https://en.wikipedia.org/wiki/Holog...Guinness Book of World,work and no one else's.

As you allude to, most wills prepared by estate planning attorneys and probably most decent software would address the scenario.

 

[PatrickA5]

I'm impressed. Clearly, your lawyer was better than the one we used.

There is a disadvantage of being a joint owner of assets. In the event of a lawsuit against you (traffic accident, for example) your dad's account could be seen as your asset if you loose the lawsuit, putting your dad's account at risk. I know many people who have been added as joint account owners for this reason, including myself. Yes, the risk is probably small for most of us, but the risk is not zero.

I learned about this while reading a book about estate issues that was written by an estate lawyer.

Yes, that's a risk. The account in question had maybe $5K in it, so it wasn't a huge risk. I probably wouldn't put my kids on one of our accounts at this point, but once the first of us dies the survivor might consider it. I know my wife is on one of her dads checking accounts, but again I think it's a small account.

 

[Sunset]

I'm impressed. Clearly, your lawyer was better than the one we used.

There is a disadvantage of being a joint owner of assets. In the event of a lawsuit against you (traffic accident, for example) your dad's account could be seen as your asset if you loose the lawsuit, putting your dad's account at risk. I know many people who have been added as joint account owners for this reason, including myself. Yes, the risk is probably small for most of us, but the risk is not zero.

I learned about this while reading a book about estate issues that was written by an estate lawyer.

Increase Umbrella coverage by a million dollars if the amount is sizeable.

 

[Sunset]

After handling the estates for both my FIL and mother in the past 5 years, I learned two important things:
- Wills do not mean squat and will not prevent probate if no beneficiaries are listed on accounts (where applicable). My mother had one account that didn't have beneficiaries listed and it took almost two years in probate to recover the funds.
- A trust prevents prying eyes of other relatives and can also spell out any instructions you would put in a will. My wife's aunt was very angry that my wife inherited everything from her father; it wasn't a huge amount but the aunt would have been even more vicious if she knew how much.

Consequently, we spent about $3000 to set up a trust (we have two sons).
I recommend it.

Actually a Will encourages probate if the estate is large, if it's small many States allow an exception of "small estate".
Making a Will or not making a Will does not prevent probate to settle an estate.

 

[ncbill]

My wife was executor for an aunt's estate about 10 years ago. Probate was not inexpensive.

The estate was simple. A few bank/brokerage accounts (some had TOD designations), a small amount of personal property (home furnishings and decorations, clothing and jewelry), and a life insurance policy. No real estate or vehicles. Not huge dollars involved. The aunt lived about 200 miles away from us.

We hired the aunt's attorney to guide us through the probate process, which in retrospect was probably a mistake. This simple estate took about 15 months to probate and cost around $15,000 in attorney fees and court costs, if I recall correctly. We felt at the time that the attorney was dragging it out longer than necessary, as it took about six months longer than the attorney had estimated at the beginning.

A few years later, my parents created a trust and paid their attorney about $5,000.

In some situations, a trust can be created for significantly less than the expected probate costs. And a trust can often be liquidated far faster than probate may allow. And a trust is private while the probate process is public, which may matter for some people.

I would not describe all trust packages as a scam if the costs I know about are even close to representative. A trust may make good financial sense if the cost of a trust is much less than the expected cost of probate (in terms of both dollars and time).

Yep, I'm glad I had my relative pay ~$2,500 for:

a revocable living trust, plus updates to their will (pour-over into the trust),
durable financial POA & health care POA once they received their terminal diagnosis.

It was much easier for me to handle their affairs with the above.

That price included their eldercare attorney moving the house into the trust.

I had no problems using their POA to move their assets into new accounts in the name of the trust.

Once the house sold & the check cleared I distributed the funds to their beneficiaries just a few days afterwards.

I then filed the final trust returns before April 15 of the following year to close out everything.

 

[qwerty3656]

Can you deal with a house w/o a trust or probate? Could you name one of the kids as a TOD and then specify in the will that that kid should sell the house and split up the proceeds (I'm in a state where you cannot name multiple TOD beneficiaries).

 

[Dash man]

Can you deal with a house w/o a trust or probate? Could you name one of the kids as a TOD and then specify in the will that that kid should sell the house and split up the proceeds (I'm in a state where you cannot name multiple TOD beneficiaries).

Once the house belongs to the TOD beneficiary, it’s his to do as he wishes. When he sells the house he would then have to gift the share he gives to another sibling.

 

[Out of Steam]

I had my dad add me as a joint owner on one of his checking accounts for this purpose. I could have paid for everything out of my own money and reimburse myself, but this was easier.

Our adult daughter has had a secondary credit card on my account for several years as a backup to her low credit card limits, but has rarely used it.

She noted a couple of weeks ago that she now has a card with an adequate credit limit for emergencies and that we could cancel this secondary card. My wife recommended we think about the potential for our daughter to use the card to assist in an emergency involving us before cancelling it.

 

[slowsaver]

We have our kids as beneficiaries on all our financial accounts.

In addition to beneficiaries on investment accounts, you can hand off your cash accounts (cd's, checking, savings) via a "transfer on death" (TOD) to avoid cash getting caught up in probate. You generally have to go into the bank to set this up.

 

[slowsaver]

I recommend a book called "Living Trusts for Everyone: Why a Will Is Not the Way to Avoid Probate, Protect Heirs, and Settle Estates" by Ronald Farrington Sharp.

You might be able to find it in the library.

 

[cathy63]

Can you deal with a house w/o a trust or probate? Could you name one of the kids as a TOD and then specify in the will that that kid should sell the house and split up the proceeds (I'm in a state where you cannot name multiple TOD beneficiaries).

I don't see how you could enforce this provision in a will. As soon as the homeowner dies, the property belongs to the TOD beneficiary. A will can't require someone else to sell his own property, though I suppose you could write some provision that prevents that heir from sharing in the rest of the estate as long as he maintains possession of the home.

 

[MarieIG]

Yes, that's a risk. The account in question had maybe $5K in it, so it wasn't a huge risk. I probably wouldn't put my kids on one of our accounts at this point, but once the first of us dies the survivor might consider it. I know my wife is on one of her dads checking accounts, but again I think it's a small account.

After my DM passed, DF had me open his mail, pay his bills, make charitable donations, order clothes, send gifts, etc. It was a Saturday afternoon ritual. I was somewhat uncomfortable signing his name (per his request) so he eventually added me to his checking account. DF had liability and umbrella insurance (I know, I paid the bills) and so did I.

 

[meleana]

designed by lawyers to make you buy useless trust packages? I live in Virginia. I have one husband and one adult child. I'm thinking of doing my own will. Is probate really that big a deal? Why do so many people have trusts? My own father was bamboozled into getting a trust that we had to redo at the end of his life. The lawyer who did it was no longer practicing. It was one of those deals where they lure people in with a steak dinner and then sell them a trust. My father was a retired Navy chief originally from the Philippines, so I suspect having a trust made him feel like he'd made it.

Exactly! We always just had a will in place. When we retired and moved to another state many years after drafting that will, we decided to update. First off, our lawyer we used in our former state said that probate is not such a big deal. He laughed about people being told to get trusts and said it was a waste of money. (I experienced this first hand when my mom passed with no trust. With the exception of the house and car (but she had signed the back of the title years before, so I had no issue with that), everything she owned was in joint with me and my brother or she had designated beneficiaries. The house went through probate. While it did, we cleaned out the house and put it up for sale. It took several months and yes we used an atty that was expensive but he was my brother's friend and he felt he was worth it. We also used my mother's funds to pay him) (My mom was in assisted living for 4 months before she passed and we paid for it with her funds since we were on her accounts)



Before we moved we contacted an atty in our new state and she spent a good hour or more on the phone with me - free of charge-and determined we did not need a trust. Everything we own, except our house and two cars, has a beneficiary designation. We are a couple with just one adult child. When we did move she drew up a new will and other documents like the living will, health care proxy, executor, and an incapacity form as well, etc. She advised us not to sign the back of the car titles, but I'm not convinced we shouldn't.



She told us when we pass our son could live in the house, or eventually sell it if he wants, etc. Probate can be a little slow and wonky in our new state but she still feels a trust is not necessary.



I am very surprised how many people in our neighborhood have trusts. I only know because my husband saw some online when we were exploring this area to move to.


I guess maybe some people use irrevocable trusts as opposed to revocable ones due to possible future medicaid long term care.


I have a 87 year old friend (with a 91 year old husband) who had put everything in an irrevocable trust years ago in case she and her husband would need nursing home care. They have been actually living in their daughter"s home in another state and her son was living in their house until recently when he decided to buy his own home. This forced her to sell the home- but her daughter had to handle everything and it was a big pain in the butt. My friend and her husband never expected to still be alive when the house was sold. Now they have the issue of what to do with the proceeds or something like that to avoid taxes, she said. Seems like the trust idea backfired.