Will vs Trust

[superdave]

Having gone thru this process recently with a family member. From my limited experiences...
1) simplier is better
2) in the heat of the moment, possibly long help family issues will likely arise regarding dispursements

That said, simplier is better.

 

[FreeAtLast]

Note that a durable power of attorney can accomplish the same tasks in the event of incapacity.

Yes, I forgot to mention that we also had a DPOA. I believe that the DPOA has to be in place prior to the incapacity which it was in our case.

 

[Darryl]

Will with testamentary trust for minor children some items have wife as beneficiary and kids as contingent other have wife as primary and trust as contingent beneficiary. Trustee has higher NW higher income AND more frugal lifestyle than I do so there is certainly no motive for him to misbehave.
Lawyer felt this was more cost effective and simpler to administer than full blown active trust (so far he's always been on the money). Knew for sure I was on the right track when I was at an estate planning event hosted by my accountant. I used the term testamentary trust while speaking with an attorney I had never met and she did the eye roll and disgusted facial expression I get from the salesman at best buy when they try and sell me the extended protection plan and I say no thank you.

 

[kaneohe]

Yes, I forgot to mention that we also had a DPOA. I believe that the DPOA has to be in place prior to the incapacity which it was in our case.

Have you ever used it?

 

[kaneohe]

Will with testamentary trust for minor children some items have wife as beneficiary and kids as contingent other have wife as primary and trust as contingent beneficiary. Trustee has higher NW higher income AND more frugal lifestyle than I do so there is certainly no motive for him to misbehave.
Lawyer felt this was more cost effective and simpler to administer than full blown active trust (so far he's always been on the money)..

Isn't this also eventually more lucrative for attorney if estate is decent sized?

 

[Darryl]

Isn't this also eventually more lucrative for attorney if estate is decent sized?

Talk me through this.

Advice was given and accepted 13 years ago, updated everything 2 years ago.

Substantial chunks go straight to kids as contingent if wife and I check out at the same time.

Testamentary trust issue as written today would go away in 16 years but if I'm still around in 10 and kids are on track I would probably let it be a straight will w/o trust.

If I can grow my spending and crash on target estate will be zero (possible but unlikely).

Certainly depends on the year but if forced to make a guess today expect to leave between 2-5MM behind.

Willing to explore more structured approach in 60's,70's,80's or if presented with a serious predictable health issue but at <50 with no known issues flexibility and low cost seem attractive.

 

[meierlde]

Yes, I forgot to mention that we also had a DPOA. I believe that the DPOA has to be in place prior to the incapacity which it was in our case.

Agreed because you have to be competent to sign the DPOA. If one has troubles with the bank, there is always having the lawyer make contact, in general a letter from a lawyer tends to get more attention than a letter from joe nobody.

 

[kaneohe]

Talk me through this.

.

as the story goes.........some old school attorneys prefer trusts imbedded in the will so that the assets go through probate to get into the trusts. Depending on circumstances (state, amount of assets,etc.), you either pay more upfront for a living trust (typ? 2.5K vs 0.5K for a will) or you pay more later for probate. In my state I understand attorneys can get about 1.5% for estates in your range......say 30K for a 2M estate. Of course there is the time value of money so you'd have to evaluate 2K more upfront for the living trust vs 30K for probate, hopefully many yrs later. Perhaps not so different depending on age when events happened. YMMV.

 

[SteveL]

The trust vs. will issue seems to be very dependent on your state of residence. If you call the local bar assn. they can refer you to attys. who specialize in this particular area. Where I live, WA, my atty advised no need for living trust. Probate is easy, and relatively cheap. Unless your assets exceed the Fed. Credit limit, no need to do a Fed. return.

For my in-laws in CA, the answer was the opposite. And, even then, with the trust, the costs were high. However, they were lower and it was simpler than if I had had to use Probate. For my parents, also in CA, no trust was necessary. Probate was not necessary because the estate size was small.

Find a good atty, and then follow their advice.

 

[calmloki]

A few weeks ago a couple that did rental real estate and was younger than us got rear ended by a truck while parked. Both dead at 55. Kind of an eye opener.

The gal and I have been together sans marriage papers for 34 years. All our property is held "not as tenants in common but with right of survivorship", all accounts and cars are held the same way or with the other as beneficiary or as POD. If our "estates" aren't already held by the other person at death then they automatically go to them. Probate my socks and toothbrush 'cause that's all there is. Hah!

The gal, being much more caring and solicitous of the welfare of those who might end up getting our assets than I, wishes to plan for both of us kicking the bucket at the same time, as well as doing medical power of attorneys. She also has sharing issues about the stuff we've piled up, having little desire to enrich our good Uncle Sam. Since we have a greater than normal chunk of our assets tied up in rental properties I was considering something new I heard of - a transfer on death deed. Wonder what the effect of that would be on the basis at time of death (currently a great tax saver allowing a property to be inherited at the basis at time of death. Know that that kind of transfer makes title insurance impossible for 18 months after death to allow unpaid creditors of the estate to get paid from any assets including the property. Not sure that doing a TOD on the properties to beneficiaries is the best way to transfer ownership while avoiding taxes as much as possible. Maybe a trust is best?

 

[donheff]

And if (God forbid) she dies before you where do your assets go?

I don't have a precise plan for that. It's hard to get interested. I may be able to spend everything, since it's not that much.

Actually, you do have a precise plan, it is the one established by your state for people who die without a will.

 

[GregLee]

Actually, you do have a precise plan, it is the one established by your state for people who die without a will.

There's no reason for the state to become involved. The state didn't become involved in 1972 when my father died, nor in 2009 when my mother died.

 

[calmloki]

When my Mom died someone told me as long as there were no problems; no bickering relatives; there were no trust police. If someone died and you passed out the assets of the deceased and nobody kicked up a fuss then there weren't going to be any repercussions. I like that idea. Whether it is based in fact...? When my Mom died we kids did just fine, no issues. My gal's Mom's passing is requiring slavish adherence to the minutia of the law. Way more money going to the lawyers.

 

[SteveR]

My $0.02
My late wife and I had individual Living Trusts, Pour Over Wills, Health Care POA, general POA, etc. When she died I was the Trustee of her trust which changed from a Living Trust to an unrevocable Family Trust. The trust pays taxes and is open to IRS audits so saying there is no Trust Police is not quite accurate. Any distributions from the trust are taxable events so the IRS is quite interested in where they do. In my case, there are two different countries involved plus the USA which makes life interesting for my CPA.

My DW and I have Living Trusts and all the other stuff too to protect what exists now and in the future from one group of kids (mine or hers) from coming after the whole enchilada instead of waiting their turn. Our Will is very simple and pours over any assets not in the Trusts to the Trusts.

I have been trough Probate with my late wife's estate twice; even with the Trusts and Wills. Utah law required it for certain items. The process was expensive (lawyer) and time-consuming. If we can help our kids or their kids avoid it and we can starve a lawyer then that is fine with me.

 

[TN_INVEST]

There's no reason for the state to become involved. The state didn't become involved in 1972 when my father died, nor in 2009 when my mother died.

I think it is wise to write a will and to update all the beneficiary information. I also cringe every time I hear somebody talk about putting their kids as joint owner on their assets (bank accounts, etc.).



Here are the Hawaii intestate laws:

§560:2-101 Intestate estate.

(a) Any part of a decedent's estate not effectively disposed of by will passes by intestate succession to the decedent's heirs as prescribed in this chapter, except as modified by the decedent's will.

(b) A decedent by will may expressly exclude or limit the right of an individual or class to succeed to property of the decedent passing by intestate succession. If that individual or a member of that class survives the decedent, the share of the decedent's intestate estate to which that individual or class would have succeeded passes as if that individual or each member of that class had disclaimed the intestate share.



§560:2-102 Share of spouse or reciprocal beneficiary.

The intestate share of a decedent's surviving spouse or reciprocal beneficiary is:

(1) The entire intestate estate if: (A) No descendant or parent of the decedent survives the decedent; or (B) All of the decedent's surviving descendants are also descendants of the surviving spouse or reciprocal beneficiary and there is no other descendant of the surviving spouse or reciprocal beneficiary who survives the decedent;

(2) The first $200,000, plus three-fourths of any balance of the intestate estate, if no descendant of the decedent survives the decedent, but a parent of the decedent survives the decedent;

(3) The first $150,000, plus one-half of any balance of the intestate estate, if all of the decedent's surviving descendants are also descendants of the surviving spouse or reciprocal beneficiary and the surviving spouse or reciprocal beneficiary has one or more surviving descendants who are not descendants of the decedent; or

(4) The first $100,000, plus one-half of any balance of the intestate estate, if one or more of the decedent's surviving descendants are not descendants of the surviving spouse or reciprocal beneficiary.

 

[donheff]

When my Mom died someone told me as long as there were no problems; no bickering relatives; there were no trust police. If someone died and you passed out the assets of the deceased and nobody kicked up a fuss then there weren't going to be any repercussions.

All well and good but it doesn't make sure your assets are distributed as you would like them to be. And, if there is a contest the state's formula will be applied. Doesn't matter if that is what you would have done anyway but what if you are estranged from your living father and wanted all the booty to go to your wife? She might discover that you are funding pop's binge drinking or whatever.

 

[gerntz]

It took months longer and cost $1K to the lawyer to go thru probate & distribute the $20K of my Mom's estate that wasn't titled in her trust than it cost ($0) to distribute the other $100K+ that was in the trust. My DW had zero costs with her Dad's trust & distributions. My take is that trusts make it easier on those that have to deal with the estate and reduces costs except for the upfront ones. Me, I don't want to put extra effort on those that have to deal with my leftovers.

 

[gerntz]

My experience is that often (usually/nearly always), the power of attorney
is not accepted by financial institutions who seem to want the POA on their own specific forms. If they accept the POA, they only seem to do it if the
person granting the POA fills out another form (forget the exact name of that form.......) which of course they would not be able to do if disabled.
I do not know if the trust experience would be any different.

This is where the lawyer who wrote the DPOA can help. Banks don't want to hear from lawyers nor want any publicity.

 

[JakeBrake]

This is where the lawyer who wrote the DPOA can help. Banks don't want to hear from lawyers nor want any publicity.

No one is legally required to accept a DPOA. This is especially true for banks with offices full of lawyers. In any case a DPOA expires immediately when the person who granted the DPOA expires.

 

[JakeBrake]

This is an interesting article about trust management.

Judge: Trustmark at fault | The Clarion-Ledger | clarionledger.com

 

[donheff]

This is an interesting article about trust management.

Judge: Trustmark at fault | The Clarion-Ledger | clarionledger.com

Summary: gramps set up a trust allowing his two kids to use income from the trust for lifestyle and invade principle for only for emergencies. The bulk was to go to the grandkids when the kids die. Grandkid sued and won when the bank (trust manager) allowed mom took out $1.7M in six months to fund her lifestyle.

Sounds like gramps was wise to put the money in a trust and limit the lifestyle use.