Is "avoiding probate" a scam?

[meleana]

"protect assets" from whom or what?

Medicaid? Creditors?

 

[CRLLS]

Something not mentioned yet is that, upon death, a Will is filed with the county and Probate is a court action. Both are public knowledge. Beneficiaries of a trust are not public knowledge. If you want your beneficiaries to remain private, a Trust works better than a Will.

 

[Tuirc]

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.

I am a Virginia lawyer. (Not currently practicing law) but I still keep current with my bar dues. Avoiding probate may be a big deal for some people. There are good and legit reasons to get a trust and organize your assets into a trust or trusts. That said, it doesn’t make sense for everyone. It’s definitely not a “must do” for estate planning. Going through probate will impose delays and costs on your administrator and beneficiaries, but should not be particularly onerous unless they need the money right now. There are other tools you can use for avoiding probate for the majority of your potential probate estate. You can have joint tenancy with rights of survivorship set up on real property. Similarly, you can title vehicles the same way. You can add beneficiaries to bank and investment accounts. States vary in how any whether they do this. Florida, for instance, has what they call a “ladybird deed” where the property is transferred but the current owner maintains a life estate in the property and unusually, maintains the ability to alienate the property without reference to the ladybird deed holder. So, lots of devices out there for avoiding probate other than using a trust, it’s just a matter of planning and executing what you want to do.

 

[Pineapple13]

Divorce and Lawsuit Protection

Trusts can protect assets from a new wife or husband from getting their hands on it. Even if inherited funds are kept separate outside of a trust, any increase in value becomes joint assets. In a trust all the funds remain with the beneficiaries of the trust.

Sharing a real life example. Both my nieces inherited substantial funds from my father's estate. They never had any money and their lives are rocky. The trust allowed him to make my sister co trustee until she determines they are responsible enough to be their own trustee. Had he not, the money would be gone. Depends on how much control you want. Both are now divorcing. Their ex husbands are not entitled to any funds under trust. If they inherited it outright, the funds would have been comingled and they would be entitled to half. Same will be true for future husbands. The trust can even buy assets like houses to protect those assets. It serves a purpose in those circumstances.

My Dad (who was an attorney) hated paying attorneys and paying taxes so he put everything in a trust including his house and kept his bank accounts below the probate threshold. I have heard depending on your state, as much as 10% of estate value spent on probate and it can take a very long time.

 

[Kat07]

Can the TOD list more than 1 person? We have 3 sons, but the TOD could only transfer to 1 of them.

I live in Minnesota and have a TOD for both my house and cabin. It is in both my daughters’ names. All my other financial accounts list them as beneficiaries as well.

 

[RetMD21]

My Dad (who was an attorney) hated paying attorneys and paying taxes so he put everything in a trust including his house and kept his bank accounts below the probate threshold. I have heard depending on your state, as much as 10% of estate value spent on probate and it can take a very long time.

That's my plan too. I am not sure of the value of our house contents. Our homeowners insurance insists that the contents have a value of 80% of the structure. Although I know that's too high but the true value might exceed the probate threshold. On the other hand if the kids can work things out among themselves who would ever know.

 

[Pluperfect]

Both are now divorcing. Their ex husbands are not entitled to any funds under trust. If they inherited it outright, the funds would have been comingled and they would be entitled to half.

Just to clarify--it's possible to not commingle inherited funds. Maybe not in your nieces' case because they're the type to have rocky lives and might not be with-it enough to set up and properly maintain an account just for the inherited funds. But it's definitely possible to keep an inheritance out of the spouse's hands.[/QUOTE]

On the other hand if the kids can work things out among themselves who would ever know.

I think that's something people misunderstand about probate.

The purpose of probate is actually outward looking--notifying creditors that someone has died and giving them a time certain by which they have to present their claims, or maintaining a chain of title for real property. And appointing someone to represent the estate in these matters.

As far as how the property gets divided up, which is what most people think probate is all about, the court doesn't really care. Notice that all that gets filed in court in a routine probate is the will, and then an inventory of the estate. There's not a listing of who gets what.

And the only time who gets what becomes an issue is if someone with standing complains, e.g. a beneficiary complains that the executor violated his fiduciary duty to the beneficiary by the way the executor distributed property. But absent a complaint, the court doesn't care which kid gets the piano and which kid gets the oil painting.

 

[RetMD21]

I think that's something people misunderstand about probate.

The purpose of probate is actually outward looking--notifying creditors that someone has died and giving them a time certain by which they have to present their claims, or maintaining a chain of title for real property. And appointing someone to represent the estate in these matters.

As far as how the property gets divided up, which is what most people think probate is all about, the court doesn't really care. Notice that all that gets filed in court in a routine probate is the will, and then an inventory of the estate. There's not a listing of who gets what.

And the only time who gets what becomes an issue is if someone with standing complains, e.g. a beneficiary complains that the executor violated his fiduciary duty to the beneficiary by the way the executor distributed property. But absent a complaint, the court doesn't care which kid gets the piano and which kid gets the oil painting.

Right, if they can solve the piano and oil painting issue themselves the court won't be involved. Of course, if they want to be meticulous they could get appraisals and do probate if the total value exceeds the exclusion.

 

[lemming]

bump. This was a helpful thread for both legal and emotional opinions even if it does not settle my decision.
I'm getting ready to go to a law office to set up estate and I am already mad about it .I asked about having a will written but the questionnaire is digging into what my financial assets are to try to upsell me on trusts and annuities. IMHO.
The title of the thread I was going to start was something like "I don't like anybody very much" I want to transfer financial assets to my father's second family kids and not include my sister who is my age-we are in a race to the finish line. She is more than financially stable and I do not want to pass anything to her descendants.
If I sold my house and had a standing order to have a goodwill truck stop by for the detritus I would be better off with a TOD on my accounts. Is there any way to have a death certificate mailed to someone? There ought to be a registry by county.

 

[pb4uski]

From what you wrote it sounds like between beneficiary designations for financial accounts, TOD deed for your house and a will for any spillover that you would be all set... in all cases naming your fathers second family kids (your step-siblings) as beneficiaries.

The financial account beneficiary designatons you can do yourself. You can do a simple will with WillMaker. You'll need to have a lawyer make and record a TOD deed for you.

Is your sister aware of your wishes and that you indend to bypass your nieces and nephews because your sister has done so well?

If you leave instructions with the funeral home that will be burying you they can arrange to have a death certificate mailed to whoever you designate.

 

[lemming]

I do sound grumpy don't I.
My older sister does know. She is controlling the purse strings from the grave in a trust that she has set up for her daughter. The daughter is not well from life style and mental issues and is best limited in funds. Her kids are over thirty and not in contact with their grandmother or even their Mom much.
My estate is large enough to be of interest to some but divided by 4 it is only a cushion not a substitute for their own planning. I had to contact someone to get address and birth date information. Now I find out there are 3 new nephew/nieces. We are not a close family. I feel like I need an executor but not a trust.

 

[RetMD21]

We talked to a couple of attorneys before picking one. If a trust is recommended they should have some reasoning but it's you decision.

 

[vafoodie]

Can you check out some DIY books? I feel you. I’m with Shakespeare: “First let’s kill all the lawyers.”

 

[Gumby]

Can you check out some DIY books? I feel you. I’m with Shakespeare: “First let’s kill all the lawyers.”

I'd prefer that we kill all the high school English teachers instead.

Or how about we not advocate killing anyone?

 

[Pluperfect]

Can you check out some DIY books? I feel you. I’m with Shakespeare: “First let’s kill all the lawyers.”

Who do you think writes the DIY books?

 

[athena53]

"protect assets" from whom or what?

Medicaid and creditors were cited above; I think only irrevocable trusts are not counted in assets if you're trying to qualify for Medicaid for LTC. One poster here was trying to undo an irrevocable trust his parents had set up for themselves because the parents now needed the money to buy into an Assisted Living community. Ummm... what part of "irrevocable" did they not understand?

I must have a pretty vanilla trust; 3 years ago I got my revocable trust revised with a "pour-over" will and the healthcare POA and directives. It was about $1,300 for it all in MO. DH had died since the original one, although it laid out a pretty solid order of how things would go if he died first (the trust was only in my name). My son is my only heir and though he's VERY responsible and just passed an actuarial exam on compound interest with flying colors, he shows little interest in investing and I also want to make sure that he's not overly generous with his church and keeps some for his own retirement. So, my brother the tax CPA, also a devout Christian, is a co-trustee. DS can be involved as much or as little as he wants.

I pretty much don't have to file any tax forms; my brother says this kind of trust is "invisible" to the IRS so I pay taxes on investment income the same way I would with any non-trust, after-tax accounts.