Wills, Trusts and Estate Planning

[daylatedollarshort]

We have trusts, wills, power of attorney and health care directives and just had them updated.

We also went through most of the retirement accounts and updated the beneficiaries. We still have a few of those left to review, but the main dollar ones should be current.

[brett]

Our tax accountant goes through a list just about every year after our tax discussion. It includes items like insurance, wills, POA's, change in executors etc....all the usual items that are very easy to ignore.

[packrat44]

Like the Fram filter ad states- "You can pay me now or you can pay later."

With a trust you get to choose the attorney (our cost 10 years ago was $2K) or let the courts pick an attorney when a will goes through probate. When you set up a trust you know what it is going to cost, you set the terms you want, you can maximize what is past to your beneficiaries, distribution is quick, no one can challenge your direction, it does not go on public display. When the court assigns an attorney there is no concern about racking up high expenses. Any number of people can challenge a will delaying distribution, running up legal fees, having proceeds end up in the hands of those other than who you intended, and non-tax efficient.

If you have little in assets and do not intend on acquiring much, go with a will. Otherwise a trust is hard to beat.

[growing_older]

Quote:

The only problem is that it irritates me to spend money on this crap.

In my situation, POD plus beneficiary designations plus a will (good state for probate) seems sufficient. Which doesn't stop lawyers from suggesting expensive trusts. But even with my somewhat simple situation, as life circumstances have changed I've had to update and redo the will several times. One of the lawyer's selling points was that you could spend the money now but know that everything is set for when you die, but I think that's only if there are no material change in your personal situation. It's not guaranteed that if you spend $5,000 to get a fancy trust that that will be the end of it. If life situaiton changes, you may need another one, and so on.

[reubenray]

The DW and I have been discussing getting a will. We have no kids and what we don't spend we plan on leaving to a select few neices/nephews. Of course she will get mine $$ and I will get her $$.

What would we actually need to do?

When both of my parents got sick my brother talked them into a will, but it was not done with a lawyer. Prior to them both passing away six weeks apart last year they moved as much $$ as possible into their checking account with my older brother having access. This simplified a lot, but we still had to deal with the house and one IRA account. When we went to a lawyer about the rest he stated that the will we had was not legal.

[zjoe]

Quote:

Originally Posted by packrat44 Like the Fram filter ad states- "You can pay me now or you can pay later." With a trust you get to choose the attorney (our cost 10 years ago was $2K) or let the courts pick an attorney when a will goes through probate. When you set up a trust you know what it is going to cost, you set the terms you want, you can maximize what is past to your beneficiaries, distribution is quick, no one can challenge your direction, it does not go on public display. When the court assigns an attorney there is no concern about racking up high expenses. Any number of people can challenge a will delaying distribution, running up legal fees, having proceeds end up in the hands of those other than who you intended, and non-tax efficient. If you have little in assets and do not intend on acquiring much, go with a will. Otherwise a trust is hard to beat.

You can suggest an attorney for your heirs or they can select their own. It is fairly unusual for the court to appoint an attorney unless there is no will. Depending on the state you may not even need an attorney. Chances are if there are unhappy family members they will find a way to make trouble trust or not.

[zjoe]

Quote:

Originally Posted by reubenray The DW and I have been discussing getting a will. We have no kids and what we don't spend we plan on leaving to a select few neices/nephews. Of course she will get mine $$ and I will get her $$. What would we actually need to do? When both of my parents got sick my brother talked them into a will, but it was not done with a lawyer. Prior to them both passing away six weeks apart last year they moved as much $$ as possible into their checking account with my older brother having access. This simplified a lot, but we still had to deal with the house and one IRA account. When we went to a lawyer about the rest he stated that the will we had was not legal.

If you are doing a DIY will you have to pay close attention to the rules of your state about how it must be witnessed etc.

[MichaelB]

Quote:

Originally Posted by zjoe You can suggest an attorney for your heirs or they can select their own. It is fairly unusual for the court to appoint an attorney unless there is no will. Depending on the state you may not even need an attorney. Chances are if there are unhappy family members they will find a way to make trouble trust or not.

Unhappy family members can make trouble, but with a trust, they won't be able to alter the distribution of assets after the trust founder departs.

[Corporate ORphan]

We had a lawyer do a will years ago when our nephew was a minor. We gave his brother control of the money but none of the assets. (We left all the money to one nephew who has mild autism figuring the "normal" nieces and nephews didn't need it as much. We have no kids.) Now that he is an adult we'd like to let him have control but we'd prefer not to spend the money on a lawyer again. Anyone know if we change it ourselves?

[Brat]

Write a codicil to the will but make sure that it is properly signed and witnessed. If your nephew could be on SSI a special needs trust should be considered. In many situations you don't need to prepare your own special needs trust, there are pooled trusts. Legal Services Network

[imoldernu]

We have a DIY will.
A word of caution on trust.
Personal situation of which I am aware:
Single individual engineered a will with a "trusted" attorney to benefit members of his family back in the early 1990's. The attorney was affiliated with bank. For two years, the will was stalled and the assets were "invested" in the bank at less than 3%, at the same time that MM CD's were earning in excess of 7%. Net loss of over $100K. Nothing could be done, as the attorney brought up minor issues of tax liability, unknown debts etc. Certainly not common, but a possibility.
Caveat emptor.

[Brat]

Absolutely know your trust options.

[Corporate ORphan]

Quote:

Originally Posted by Brat Write a codicil to the will but make sure that it is properly signed and witnessed. If your nephew could be on SSI a special needs trust should be considered. In many situations you don't need to prepare your own special needs trust, there are pooled trusts. Legal Services Network

ANy ideas where to find the proper form for a codicil? I googled it but found the references confusing. Are there good DIY sites others have used for this type of thing? I guess I was hoping to just "change or amend it" so that his brother is leftout and then have it notarized. Thanks!

[Brat]

I hesitate to indorse internet resources but here are examples I found: http://myplanwithcoh.org/downloads/COH_codicil.pdf and another I actually like better Example Document for Codicil because it is so specific.

There were several others. My search term was: example of codicil to will

[zjoe]

Quote:

Originally Posted by Corporate ORphan We had a lawyer do a will years ago when our nephew was a minor. We gave his brother control of the money but none of the assets. (We left all the money to one nephew who has mild autism figuring the "normal" nieces and nephews didn't need it as much. We have no kids.) Now that he is an adult we'd like to let him have control but we'd prefer not to spend the money on a lawyer again. Anyone know if we change it ourselves?

I would be very careful about this. In many cases, if a disabled person inherits money directly s/he may be disqualified from certain state programs until that money is spent down. The advice you received from Brat about looking into a special needs trust is well founded.

Then in more unsolicited advice, I'd encourage you to rethink your position regarding your "normal" nieces and nephews. They may be just a bad accident away from a disability themselves. Moreover, if any of them happen to be the sibling the disabled child, I can assure you that they've probably spent much of their life playing second fiddle as most of the family time/energy/money has been spent on the disabled sibling. If you are dead set against splitting it evenly, I'd at the very least encourage you at least to give them some amount. The last thing you want is to create/add to tension/hurt feelings.

[farmerEd]

>>It's not just the size of the estate. It is to avoid probate. A probated estate can easily stretch out WELL over a year.

Wish this was true; my wife's parents both died three years ago - they did everything 'right' - wills, POA and everything was in a trust - and their stated goal when they set this all up (with an expensive attorney and accountant) was for exactly that stated reason - to make it painless as possible to distribute assets quickly, and avoid probate. Three years later the estate is still not resolved, and the executors (2 of the 5 siblings) refuse to give any information willingly.

As far as I can tell, there are no 'problems' in the trust, just executors taking their dam time (and paying themselves by the hour for it)

So, besides 'doing everything right', how can you make things go faster when the time comes? I am thinking more in terms of when the wife and I set things up for our own kids? Is paying a lawyer/accountant to act as the executor an important part of the equation?

[zjoe]

An attorney/accountant can run up the bill just as quickly as a family member and given their professional fees my guess is in most cases appointing an attorney/account will not lead to superior results.

I would appoint a family member you trust to do it quickly. You may also indicate a sum certain that the executor is to be paid so as not to encourage bill padding and perhaps in the will offer certain incentives to close the estate quickly.

[meierlde]

Quote:

Originally Posted by zjoe An attorney/accountant can run up the bill just as quickly as a family member and given their professional fees my guess is in most cases appointing an attorney/account will not lead to superior results. I would appoint a family member you trust to do it quickly. You may also indicate a sum certain that the executor is to be paid so as not to encourage bill padding and perhaps in the will offer certain incentives to close the estate quickly.

An alternative if the executor is someone who will inherit is to provide that the executor should serve without fee. If someone is going to inherit in that case it is in their interest to wrap it up quickly. Doing my parents estate it was about 9-12 months, partly due due dates on the inventory etc. Of course if the estate has income unless the income is distributed, it results in higher taxes as the income rates on estates have lower thresholds than personal taxes.
In the cases cites was there property to be sold? That could delay things, although if one wants to one can always have an auction of property, both real and personal, there are companies everywhere that do this for a fee.