Is "avoiding probate" a scam?

[RetMD21]

Here the small estate limit is $20,000.

Back a few years ago when I opened one, fee was $120...for non-small estates, $150.

About the only advantage I saw was that no creditor notice in the paper is required for small estates.

Cost the same $15 fee to close any estate back then.

I had the family come through & get whatever furniture they wanted.

Anything left went to the dump...even local charities didn't want it.

Michigan has an affidavit process for small estates w/o real estate. No charges and no court filing

 

[Which Roger]

Not mentioned yet in this thread is the economical Nolo Willmaker and Trust software. For right around $70 one can create a valid Living Trust. Some might argue you "need" a lawyer to be sure. From my experience, only the trustees see the actual full document. I recommend getting the WM software & book kit and go through the process if for nothing else, to educate yourself on some of the decisions to be made. If after doing that, you feel confident in creating a LT, go ahead and skip the attorney. If not then see the attorney with a fair amount of knowledge. The high cost of Lawyers is not "Required".

+1. This is exactly the route DW and I are taking. Educate ourselves and DIY as much as we can, then at that point decide whether or not we need professional help.

 

[Turbo29]

Irrev trust are an entirely different matter. There are many flavors and many purposes. They are a prime stomping ground for the
Dunning Kruger effect, the gist of which is that the people who know the least about a subject are the most certain of their opinions. (https://en.wikipedia.org/wiki/Dunning–Kruger_effect) Not picking on anyone in particular here but it is important to understand that "complex" is an understatement. Seek expert advice.

Not arguing that the complexity is not real. On the other hand, the Dunning-Krueger effect may not be.

The Dunning-Kruger Effect Is Probably Not Real

 

[Dash man]

+1. This is exactly the route DW and I are taking. Educate ourselves and DIY as much as we can, then at that point decide whether or not we need professional help.

You have to be careful with the do it yourself software. We were totally surprised by some things we learned in the attorney’s office that we never would have considered ourselves.

 

[OldShooter]

Not arguing that the complexity is not real. On the other hand, the Dunning-Krueger effect may not be.

The Dunning-Kruger Effect Is Probably Not Real

It's still a great story and we observe it happening here every day.

 

[jldavid47]

OHHH, and we got a step in in basis on all the stock which saved a crapload of taxes for her kids...

You also get the stepped up basis if the assets are in a living trust.

 

[Pluperfect]

I just looked up the probate fees in CA..

California is often cited as an example of a state where establishing a revocable living trust is something that should be seriously considered. But there are a lot of states that have fairly easy and cheap probate.

We have a trust - but we also have kids who aren't fully launched (college) ... If we were to be hit by a bus tomorrow, I would not want them getting their inheritance all at once at ages 19 and 21...

You can accomplish the same thing with a will by leaving the property to a trust for the benefit of the kids, with whatever conditions you want. That's a valid option for people in a state where there aren't otherwise compelling reasons to set up a revocable living trust.

My story is that my parents set up two trusts in the late 1990s. They paid several thousand dollars for the legal services and documents. This was set up to keep assets from being subject to estate taxes, which were predicted to be onerous.

I'm not really following what happened, but it's a good prompt to remind people that the revocable living trusts that are marketed with steak dinners don't do anything to avoid federal estate taxes that a properly drafted will can't do.

Irrevocable trusts can do that, but those aren't the cookie-cutter revocable living trusts that a lot of "regular" people have.

Estate is insolvent, nobody steps up as executor. State or Fed probably pays [for the funeral] in this case.

The person who arranges the funeral is responsible for paying for it, and funeral homes expect to be paid when they render the services. They take credit cards. Some will accept an assignment of an insurance policy, like the burial insurance policies you see advertised on TV; however, sometimes they're not diligent about refunding the excess of insurance proceeds over the cost of the funeral, so consumer beware.

I don't know of any situation where any government entity would pay a funeral home bill. They'll pay to dispose of unclaimed bodies, but that's an entirely different situation.

 

[SecondCor521]

I'm not really following what happened, but it's a good prompt to remind people that the revocable living trusts that are marketed with steak dinners don't do anything to avoid federal estate taxes that a properly drafted will can't do.

Irrevocable trusts can do that, but those aren't the cookie-cutter revocable living trusts that a lot of "regular" people have.

Not really relevant to the thread, but they were not RLTs, and not marketed with a steak dinner AFAIK. They were, from what I understand, an A/B credit shelter trust (this was before portability) and an ILIT. The ILIT I think was a good idea; the A/B credit shelter trust was the problematic one in the earlier story for a variety of reasons that probably aren't helpful to anyone else to lay out here.

 

[pb4uski]

For the young wife and me, probate will not be an issue when the first of us dies, because we don't have any children, and all of our assets that can be jointly owned (house, cars, bank accounts) are jointly owned. The only things that are individually owned are retirement accounts and insurance policies, and, in each case, we are the beneficiary of the other's account/policy. Whoever is the survivor, however, will need estate planning services to direct the money to where they want it to go after they die.

I could say the same, even with kids/heirs, the surviving spouse will get everything via joint ownership or beneficiary designations, but what if you both die simultaneously? It happens. A work colleague of mine lost both parents in a single bus accident.

 

[pb4uski]

But how much you pay can be a huge difference... paying later was much cheaper for my mom...


OHHH, and we got a step in in basis on all the stock which saved a crapload of taxes for her kids...

You generally get step up in basis either way.

 

[pb4uski]

Not mentioned yet in this thread is the economical Nolo Willmaker and Trust software. For right around $70 one can create a valid Living Trust. Some might argue you "need" a lawyer to be sure. From my experience, only the trustees see the actual full document. I recommend getting the WM software & book kit and go through the process if for nothing else, to educate yourself on some of the decisions to be made. If after doing that, you feel confident in creating a LT, go ahead and skip the attorney. If not then see the attorney with a fair amount of knowledge. The high cost of Lawyers is not "Required".

+1 our living trusts and will we're all done on Willmaker. We have a very simple situation.

 

[Souschef]

I could say the same, even with kids/heirs, the surviving spouse will get everything via joint ownership or beneficiary designations, but what if you both die simultaneously? It happens. A work colleague of mine lost both parents in a single bus accident.

We have our TOD's set up with successor beneficiaries.

 

[MarieIG]

I could say the same, even with kids/heirs, the surviving spouse will get everything via joint ownership or beneficiary designations, but what if you both die simultaneously? It happens. A work colleague of mine lost both parents in a single bus accident.

Back in the day - we used to include a clause which required the spouse to survive the testator by thirty days. . .

 

[SecondCor521]

I could say the same, even with kids/heirs, the surviving spouse will get everything via joint ownership or beneficiary designations, but what if you both die simultaneously? It happens. A work colleague of mine lost both parents in a single bus accident.

Another issue might be if the surviving spouse is not capable of rewriting their estate planning documents due to dementia, illness, general loss of mental acuity, grief, being busy or forgetful, or any number of things.

If those scenarios are not thought out ahead of time and provided for, then in a simple "All to wife" will probably ends up worthless and the second estate would follow state intestacy laws.

It's a tradeoff though. Spending time and effort and money to put something into place now could be wasted if you're going to change your mind before you die, or if the scenario never actually happens. But putting into place reasonably decent plans for reasonably likely and impactful scenarios is probably worth some effort. At least think about it, I would say.

 

[CRLLS]

Another issue might be if the surviving spouse is not capable of rewriting their estate planning documents due to dementia, illness, general loss of mental acuity, grief, being busy or forgetful, or any number of things.

If those scenarios are not thought out ahead of time and provided for, then in a simple "All to wife" will probably ends up worthless and the second estate would follow state intestacy laws.

It's a tradeoff though. Spending time and effort and money to put something into place now could be wasted if you're going to change your mind before you die, or if the scenario never actually happens. But putting into place reasonably decent plans for reasonably likely and impactful scenarios is probably worth some effort. At least think about it, I would say.

I don't think so. Spending the time now is not "wasted". And it doesn't have to be a lot of dollars to do it now as I mentioned earlier. Just because you make a trust and/or a will doesn't mean they are unchangeable. Amendments and codicils can be written. A new will can be written that voids the first. Life changes and so can these documents. Nothing was wasted with life insurance even if later, it is cancelled. It provided some, well, "insurance" for the time they are in place.

 

[PatrickA5]

Not mentioned yet in this thread is the economical Nolo Willmaker and Trust software. For right around $70 one can create a valid Living Trust. Some might argue you "need" a lawyer to be sure. From my experience, only the trustees see the actual full document. I recommend getting the WM software & book kit and go through the process if for nothing else, to educate yourself on some of the decisions to be made. If after doing that, you feel confident in creating a LT, go ahead and skip the attorney. If not then see the attorney with a fair amount of knowledge. The high cost of Lawyers is not "Required".

We did both. I bought Willmaker and read several books about wills and trusts just to become more knowledgeable. When I went to the lawyer sales pitches, I was able to ask a few questions that I wouldn't have known to ask without studying first.

In the end, we went to an estate lawyer who charged us $500 for his/hers wills, DPOAs, living wills, etc. We did pay her another $100 to set up the house TOD deed. She agreed that the way things are set up now, we didn't need a trust and everything "should" work out without any need for probate. Obviously, things can change and a trust might be needed in the future.

I did use Willmaker to prepare my SIL's will. She's single, no kids, and basically has nothing but a small house and a car. I knew she would never go to a lawyer to prepare a will and decided to just do one for her. I also prepared a DPOA and Living Will for her giving my wife agent authority. We took it to her bank and had everything witnessed/notorized as needed.

 

[KM]

Not mentioned yet in this thread is the economical Nolo Willmaker and Trust software. For right around $70 one can create a valid Living Trust. Some might argue you "need" a lawyer to be sure. From my experience, only the trustees see the actual full document. I recommend getting the WM software & book kit and go through the process if for nothing else, to educate yourself on some of the decisions to be made. If after doing that, you feel confident in creating a LT, go ahead and skip the attorney. If not then see the attorney with a fair amount of knowledge. The high cost of Lawyers is not "Required".

This is exactly what we did.

We already have a will, but we own 3 properties in 2 different states. When we die, we didn’t want the kids to have to carry/maintain properties while waiting for probate. We also have a good chunk of change in joint account with Vanguard that doesn’t allow a TOD/POD [emoji849]. So if we died together in an accident, the kids would have 3 properties to maintain without access to a lot of the money.

Putting the three properties and our joint account in the trust solved the issue. Not sure I would have been comfortable doing a complex trust, but for us we own everything together and want the kids to split everything evenly. So it really was pretty easy to create.

Everything else has beneficiaries except our vehicles. Those would have to go through probate, but that’s pretty trivial.

I believe we used NOLO Trust software. They are pretty good about suggesting “contact a lawyer if….” but those are the more complex cases. Their basic forms worked fine for us.

 

[Sunset]

Back in the day - we used to include a clause which required the spouse to survive the testator by thirty days. . .

The last Will we dealt with had this clause for ALL the beneficiaries.... limited time to bump off other beneficiaries was one view

 

[Pluperfect]

We already have a will, but we own 3 properties in 2 different states. When we die, we didn’t want the kids to have to carry/maintain properties while waiting for probate.

And the will would have to be probated in each state where you own real property, which can be an argument in favor of revocable living trusts when people own real property in multiple states.

Another issue might be if the surviving spouse is not capable of rewriting their estate planning documents due to dementia, illness, general loss of mental acuity, grief, being busy or forgetful, or any number of things.

If those scenarios are not thought out ahead of time and provided for, then in a simple "All to wife" will probably ends up worthless and the second estate would follow state intestacy laws.

Assuming we're using the typical hypothetical situation of the husband dying first...

I don't see how an "all to wife" will would end up worthless if the wife is still living--all the property goes to the wife, as intended.

And the wife doesn't necessarily need to rewrite her estate plan just because her husband dies. The will she already has is valid, and any decent will (presumably including ones done by a person using a form) has provisions for pre-deceasing beneficiaries; in her case, her husband predeceases her and the provisions in her will for "if my husband does not survive me..." kick in when she dies. There would be no intestacy, unless somehow every single possible beneficiary predeceases her, which is exceedingly unlikely if it's a competently drafted will, which would drill down to several levels of possibilities.

Of course if she decides she wants to do something different from what's in the will she made when she was married, she does have to rewrite it. But it could very well be that she still wants what she wanted back then (like how it's divided among her children, or giving it all to charity after she and her husband are both dead). If that's the case, she doesn't need a new will, and her subsequent dementia or grief or busy-ness doesn't matter.

 

[OldShooter]

... You can accomplish the same thing with a will by leaving the property to a trust for the benefit of the kids, with whatever conditions you want. That's a valid option for people in a state where there aren't otherwise compelling reasons to set up a revocable living trust.

Yes. People conflating rev trust with irrev/testamentary/etc. trust may not get this. Testamentary trusts can be created from the estate, at least ours are.

I could say the same, even with kids/heirs, the surviving spouse will get everything via joint ownership or beneficiary designations, but what if you both die simultaneously? It happens. A work colleague of mine lost both parents in a single bus accident.

I think the broader read of @pb4's post is that there are a lot of "what-ifs" that can be difficult and time intensive to contemplate and to change in PODs as circumstances change. A good estate attorney is expert at this stuff. Marriages, divorces, spendthrifts, health problems, lawsuits, ... the list is endless.

Back in the day - we used to include a clause which required the spouse to survive the testator by thirty days. . .

Made me laugh. What if the spouse doesn't obey? In our plan, it is specified that in a common disaster one of the spouses (DW, IIRC) is assumed to have survived long enough for the estate planning gears to mesh and operate as planned. A few milliseconds I suppose. I never asked about the details.

 

[MarieIG]

Yes. People conflating rev trust with irrev/testamentary/etc. trust may not get this. Testamentary trusts can be created from the estate, at least ours are.

I think the broader read of @pb4's post is that there are a lot of "what-ifs" that can be difficult and time intensive to contemplate and to change in PODs as circumstances change. A good estate attorney is expert at this stuff. Marriages, divorces, spendthrifts, health problems, lawsuits, ... the list is endless.

Made me laugh. What if the spouse doesn't obey? In our plan, it is specified that in a common disaster one of the spouses (DW, IIRC) is assumed to have survived long enough for the estate planning gears to mesh and operate as planned. A few milliseconds I suppose. I never asked about the details.

The wills were drafted to preserve separate estates for tax purposes in the event of a common disaster. Yes, if one spouse refused to cooperate by lingering on the benefit would be lost.

 

[SecondCor521]

I wrote:

Another issue might be if the surviving spouse is not capable of rewriting their estate planning documents due to dementia, illness, general loss of mental acuity, grief, being busy or forgetful, or any number of things.

If those scenarios are not thought out ahead of time and provided for, then in a simple "All to wife" will probably ends up worthless and the second estate would follow state intestacy laws.

It's a tradeoff though. Spending time and effort and money to put something into place now could be wasted if you're going to change your mind before you die, or if the scenario never actually happens. But putting into place reasonably decent plans for reasonably likely and impactful scenarios is probably worth some effort. At least think about it, I would say.

Weasel wording emphasis added.

I don't think so. Spending the time now is not "wasted". And it doesn't have to be a lot of dollars to do it now as I mentioned earlier. Just because you make a trust and/or a will doesn't mean they are unchangeable. Amendments and codicils can be written. A new will can be written that voids the first. Life changes and so can these documents. Nothing was wasted with life insurance even if later, it is cancelled. It provided some, well, "insurance" for the time they are in place.

I didn't say it was wasted, I said that it could be wasted under certain circumstances - see above bolded weasel wording.

The amount of dollars spent is a function of the hourly rate of the lawyer, the number of scenarios contemplated, and the complexity of the plans addressing the scenarios.

I'm well aware of wills and codicils being changeable. I'll be executing my third will sometime in the next year or so due to changing circumstances and evolving preferences.

Assuming we're using the typical hypothetical situation of the husband dying first...

I don't see how an "all to wife" will would end up worthless if the wife is still living--all the property goes to the wife, as intended.

You misunderstood what I wrote. I was referring to an "All to wife" (or in the standard case, "All to husband") type will when the second person dies, not the first. 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.

And the wife doesn't necessarily need to rewrite her estate plan just because her husband dies. The will she already has is valid, and any decent will (presumably including ones done by a person using a form) has provisions for pre-deceasing beneficiaries; in her case, her husband predeceases her and the provisions in her will for "if my husband does not survive me..." kick in when she dies. There would be no intestacy, unless somehow every single possible beneficiary predeceases her, which is exceedingly unlikely if it's a competently drafted will, which would drill down to several levels of possibilities.

Yes, I know all that. 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.

Of course if she decides she wants to do something different from what's in the will she made when she was married, she does have to rewrite it. But it could very well be that she still wants what she wanted back then (like how it's divided among her children, or giving it all to charity after she and her husband are both dead). If that's the case, she doesn't need a new will, and her subsequent dementia or grief or busy-ness doesn't matter.

Yes, I know. I was referring to a scenario where her wishes changed but she doesn't have the mental capacity or energy or whatever to change it. This scenario might be more common if her will is a decade or two old.

 

[OldShooter]

... The amount of dollars spent is a function of the hourly rate of the lawyer, the number of scenarios contemplated, and the complexity of the plans addressing the scenarios. ...

Agree with most of your points, but I would add that "acceptable amount of dollars spent" should be considered based on the size and the complexity of the estate. Most of us got here because we are cheapskates to one degree or another and we tend to look at things in dollars. But, really, in this case the appropriate view is as a percentage. I don't think that any of our estate plans have ever even approached 1% of our estate value.

 

[Texas Proud]

You generally get step up in basis either way.

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

 

[SecondAttempt]

A trust also cannot be self managed so there’s that.

You can manage your own trust, if fact that is the way it is usually done for a revocable living trust.