Estate Planning - Cost?

[OldShooter]

Only irrevocable trusts can effect taxes

Yeah, another thing that happens in these threads is the different kinds of trusts get conflated. Especially rev trusts "aka living trusts" and testamentary irrev trusts. Kind of like the blind men and the elephant where one poster is describing a leg "like a tree" and another is describing the tail "like a rope."

 

[imnontrad]

Good question and I am investigating this also.
But I think the cost would depend on the complexity (setting up trusts? multi-page will, etc?) and the cost of living in your area.

I have no plans to set up a living trust. First of all, a revocable trust does not protect assets in some cases and an irrevocable trust may make it difficult if situations change. I plan to have it in my will that trusts are set up in certain circumstances (grandchild under a certain age) with instructions how the asset would be disbursed. But if the grandchild has already surpassed that age, then h=there is no expense to set up a trust.

Also, remember that not all places accept a POA. Even if you have given a (General, Medical, Financial) Power of Attorney to someone if you become incapacitated, not all places honor this - including the Social Security Administration.

They have their own form. So with your general/medical/financial Powers of Attorney forms, download these and have them ready in case they are needed (filled out and appropriately signed, of course). If any of the forms need to be notarized, you may find that this is a free service of a credit union or bank where you have an account.
It is also a good idea to re-sign these every ~ 5 years because the form may have changed since you last downloaded and signed it. You may also consider having not only a primary person for POA but a secondary in case the primary person cannot or will not accept the responsibility. Also check with your state/other entities you deal with (including your bank and insurance companies) to see if they also have their own POA.
Social Security Administration - https://www.ssa.gov/forms/ssa-1696.pdf

Medicare - https://www.medicare.gov/medicar.../publicforms/cms10106.pdf
Veterans Administration - https://www.va.gov/find-forms/about-form-10-0137

Internal Revenue Service - https://www.irs.gov/forms-pubs/about-form-2848
The Internal Revenue Service may accept a Power of Attorney other than form 2848 . However, for purposes of processing such documents onto the Centralized Authorization File, a completed form 2848 must be attached.

 

[shafer9]

You are looking at the PRICE.
As others have pointed out, there can be great COST if done wrong.
Try to look at VALUE

Great advice.

 

[meleana]

I'm starting to search for local attorneys for estate planning.

Here is a quote for one of the attorneys. The estate planning package includes the following documents for $1500.

- Last Will and Testament
- Power of Attorney
- Advance Directive (Living Will)

Wanting to know from others the typical cost involved in estate planning.

Thanks

In NH last year we had a will, POA, living will, etc all done for $500. We don’t need a trust because most everything we own has a beneficiary, TOD or POD , except house and cars.

And I might add she spent a free hour with me on the phone prior to this to make sure a trust was not necessary.

AND- she had us come back in for free a few months later to redo a form because the state of NH had just updated it!

 

[baskin]

This will stuff is of course complicated by, and let me be kind here, sleazy lawyers who go out of their way to make things more complicated and hence expensive. And since they work in different states, add even some more complexity to what should be fairly straightforward FOR MOST PEOPLE. The G-Man provided a link above to an "estate planning" website that should work for 80% of us? If you go thru that website and keep asking "what about this or that," then spend the money for a lawyer review (~$2000?). If you have tons of money or tons of kids that may fight over your remains, spend the money. If you're a single, no kids, spend some time on Google. My one law professor, Mr. Larrabee stated the "best Pennsylvania will ever submitted was handwritten, simply said 'I leave everything to my wide,' and was signed and dated."

 

[Buckeye]

When my DF passed, everything was POD/TOD or Joint - including the house.

I called my estate attorney and asked whether or not we should file probate for his household stuff and she said no - just split it up. Obviously, if you have a situation where there is a lot of valuable stuff and heirs that don't get along, then that might be a different story.

In our case, at least half of the stuff ended up in a dumpster.

A friend died (in FL) in 2020 but her adult son lived in PA and COVID so I told him I would take care of everything for him. I discovered there was a simplified probate process in FL if the probate assets were under $75,000. Unfortunately, she had never done a TOD on her Vanguard mutual fund. Her son was co-owner or TOD on all the her other accounts so those were easy. After 3 tries filling out the docs correctly and submitting them to the court, I got the order that I needed to send to Vanguard so they would transfer it to her son. The final hold-up was the will not having the right info for the will witnesses. A real attorney had done the very simple will but he had screwed up documenting the correct info about the ID of the witnesses. Thank goodness he was still in business locally and sent someone to the courthouse to fix things. It was a great learning experience!

 

[Guamaniac]

DD paid $4000 for his estate plan in California. We paid $2500 for a living trust and all the accompanying documents-POA, etc. Our attorney is a certified elder law attorney who has been quite helpful well beyond the trust.

There are only about 500 nationwide and you can find one at nelf.org.

He had us bring all our financial documents but also asked for our insurance documents as well. I guess he's had a bit of experience with these and had some recommendations on the companies we were using for life, home, auto. He strongly suggested a $1MM supplemental insurance policy based on our portfolio.

He also spent some time talking about protecting our assets from Medicaid. I don't remember all the details but he emphasized how most will/trusts lawyers don't understand the law when it comes to needing nursing home care. Especially as people are living longer and alzheimers/dementia is becoming more common.

As I understood it, most people believe you can't gift any of your estate 5 years prior receiving Medicaid assistance. Actually you can, there's just a time penalty where Medicaid will not pay for a nursing home. The strategy is to set aside this amount and gift the rest which prevents Medicaid from taking these funds.

Anyway, I only bring this up because there may be many things we don't know that a good lawyer may help us with and may be worth the cost.

We later used this attorney to update MIL's trust as she moved to be near us in assisted living from another state after her heart attack. I had been suspicious of her annuities and tried to get DW talk to her about them but I was hesitant to give advice to someone who is 90 yo about her finances. During the meeting with the attorney, after reviewing her annuities, he sat down in front of her and said "Betty, I need you to make me a promise. Promise me you will never buy another annuity." She agreed.

Recently I've been in the process of moving DD across the country to be near me in memory care. It was obvious his dementia was getting much worse and was living alone after DM's passing two years ago. My elder attorney had extensive experience with assisted living facilities and strongly recommended two plus a few that were ok and to avoid the rest. He's been very helpful.

The only down side is he really likes to talk-a lot!

 

[G-Man]

DD paid $4000 for his estate plan in California. We paid $2500 for a living trust and all the accompanying documents-POA, etc. Our attorney is a certified elder law attorney who has been quite helpful well beyond the trust.

There are only about 500 nationwide and you can find one at nelf.org.

He had us bring all our financial documents but also asked for our insurance documents as well. I guess he's had a bit of experience with these and had some recommendations on the companies we were using for life, home, auto. He strongly suggested a $1MM supplemental insurance policy based on our portfolio.

He also spent some time talking about protecting our assets from Medicaid. I don't remember all the details but he emphasized how most will/trusts lawyers don't understand the law when it comes to needing nursing home care. Especially as people are living longer and alzheimers/dementia is becoming more common.

As I understood it, most people believe you can't gift any of your estate 5 years prior receiving Medicaid assistance. Actually you can, there's just a time penalty where Medicaid will not pay for a nursing home. The strategy is to set aside this amount and gift the rest which prevents Medicaid from taking these funds.

Anyway, I only bring this up because there may be many things we don't know that a good lawyer may help us with and may be worth the cost.

We later used this attorney to update MIL's trust as she moved to be near us in assisted living from another state after her heart attack. I had been suspicious of her annuities and tried to get DW talk to her about them but I was hesitant to give advice to someone who is 90 yo about her finances. During the meeting with the attorney, after reviewing her annuities, he sat down in front of her and said "Betty, I need you to make me a promise. Promise me you will never buy another annuity." She agreed.

Recently I've been in the process of moving DD across the country to be near me in memory care. It was obvious his dementia was getting much worse and was living alone after DM's passing two years ago. My elder attorney had extensive experience with assisted living facilities and strongly recommended two plus a few that were ok and to avoid the rest. He's been very helpful.

The only down side is he really likes to talk-a lot!

Great post. Thanks

 

[G-Man]

DD paid $4000 for his estate plan in California. We paid $2500 for a living trust and all the accompanying documents-POA, etc. Our attorney is a certified elder law attorney who has been quite helpful well beyond the trust.

There are only about 500 nationwide and you can find one at nelf.org.

He had us bring all our financial documents but also asked for our insurance documents as well. I guess he's had a bit of experience with these and had some recommendations on the companies we were using for life, home, auto. He strongly suggested a $1MM supplemental insurance policy based on our portfolio.

He also spent some time talking about protecting our assets from Medicaid. I don't remember all the details but he emphasized how most will/trusts lawyers don't understand the law when it comes to needing nursing home care. Especially as people are living longer and alzheimers/dementia is becoming more common.

As I understood it, most people believe you can't gift any of your estate 5 years prior receiving Medicaid assistance. Actually you can, there's just a time penalty where Medicaid will not pay for a nursing home. The strategy is to set aside this amount and gift the rest which prevents Medicaid from taking these funds.

Anyway, I only bring this up because there may be many things we don't know that a good lawyer may help us with and may be worth the cost.

We later used this attorney to update MIL's trust as she moved to be near us in assisted living from another state after her heart attack. I had been suspicious of her annuities and tried to get DW talk to her about them but I was hesitant to give advice to someone who is 90 yo about her finances. During the meeting with the attorney, after reviewing her annuities, he sat down in front of her and said "Betty, I need you to make me a promise. Promise me you will never buy another annuity." She agreed.

Recently I've been in the process of moving DD across the country to be near me in memory care. It was obvious his dementia was getting much worse and was living alone after DM's passing two years ago. My elder attorney had extensive experience with assisted living facilities and strongly recommended two plus a few that were ok and to avoid the rest. He's been very helpful.

The only down side is he really likes to talk-a lot!

What is the best method to transfer a house and land to someone to avoid paying a lot of taxes?

 

[KarenF]

We did a trust, wills, advanced directives, POAs and putting our house in the trust for $2500. We moved to a new state and the trust was ok but the wills and advanced directives had to be redone. That cost $900.

 

[Sunset]

What is the best method to transfer a house and land to someone to avoid paying a lot of taxes?

Die.

 

[Sunset]

This question raises an issue that I almost decided to comment on earlier:

All of these various schemes come with maintenance overhead and risks. As financial situation and family things change, some of the various designations need to change too. If still in possession of marbles, one has to remember to make the changes and be sure the list of designations gets checked once in a while. No longer have your marbles, then the erroneous designation(s) can no longer be changed -- as @gromit points out. Changes where marble levels are uncertain are subject to court challenges too. The classic example is the ex-wife who is still the beneficiary of deceased hubby's work-provided life insurance.

Not to say that the schemes are inherently bad, but they are much less "fire and forget" than a well-written estate plan is.

Even a well-written estate plan needs to be updated.

I know a guy mid 90's , who again has to update his trust as many folks named in it have died....

 

[Sunset]

....
An Irrevocable Intentionally defective grantor trust is a great example of a trust you can create to sell your assets to and received a stream of income. It is defective for tax purposes, but the income you receive is paying yourself so it is not taxed, since you are the tax payer for the trust. Boy, some would like to destroy this loop hole, but many wealthy folks enjoy gifting their heirs into such a trust. All of your rentals can be gifted, but you do not loose the income. The trust owns the rentals and pays you for them. The trust collects the rents and you still pay tax on the rents, but you get cash out from the sale. How many low cost estate planners will advise you on this structure?

This sounds interesting, but I'm not understanding how you get cash out from the sale, since all the money in the trust comes from the trust creator (you).
I suppose the trust could mortgage the properties for cash and use that to pay out, and over the years with repeated mortgage and pay episodes it would be able to pay out.

 

[yclipse]

Two points from a lawyer about mathjak107's experience with the "only child" issue:

1. No court would ever refuse to follow the "my child Beth" directive, even if Beth had five siblings. The title company was wrong.

More importantly:

2. No one should ever try to refinance real estate that she thinks she inherited under a will until the will has been probated and the executor of the estate has in fact distributed the real estate to her. Only then can she establish that the unquestioned owner of the land in her own name.

 

[mathjak107]

Two points from a lawyer about mathjak107's experience with the "only child" issue:

1. No court would ever refuse to follow the "my child Beth" directive, even if Beth had five siblings. The title company was wrong.

More importantly:

2. No one should ever try to refinance real estate that she thinks she inherited under a will until the will has been probated and the executor of the estate has in fact distributed the real estate to her. Only then can she establish that the unquestioned owner of the land in her own name.

The real estate was already probated and in my ex wife’s name for a decade .

It was the title company that rejected the will not the court and they certainly could reject anything they are not comfortable with which they did.

Unless you want to sue them the ball is in their court and they run the closing

 

[G-Man]

What is the best method to transfer a house and land to someone to avoid paying a lot of taxes?

Transfer while the person is living. Example. Mother to daughter transfer of mother's home and land to daughter.

 

[OldShooter]

Transfer while the person is living. Example. Mother to daughter transfer of mother's home and land to daughter.

Thereby losing the step-up. Almost always a bad idea.

 

[jebmke]

Thereby losing the step-up. Almost always a bad idea.

Indeed; yet, done surprisingly often.

 

[Cobra9777]

Make sure your state accepts tod accounts from brokerages .

For the longest time I had no idea ny didn’t accept tod accounts on my fidelity account .

Ny changed their laws so now they are okay but everyone needs to check their own state

It looks like Texas and Louisiana are the only states left, according to Nolo: https://www.nolo.com/legal-encyclopedia/free-books/avoid-probate-book/chapter3-2.html

I live in Texas and was a little concerned when I read this. I did some online research and found lots of conflicting information. So I sent a secure message to Fidelity PCG. Here's the relevant portion of the response I received:

I confirm Texas is eligible for the TOD designation.

Fidelity offers a TOD account registration to nonretirement mutual fund or brokerage clients in every state but Louisiana. Eligible accounts include:

- Individual
- Joint Tenants with Right of Survivorship
- Joint Tenants by Entirety
- 529 college savings plans
- Cash management accounts

The TOD registration recognizes the designation of beneficiaries on non-retirement accounts and allows the transfer of assets directly to those beneficiaries without waiting for probate of wills and estates.

There seem to be a lot of websites (like the nolo link) that erroneously mention Texas. It's true that, like Louisiana, Texas has not adopted the Uniform Transfer-on-Death Securities Registration Act. But unlike Louisiana, Texas allows TOD registration for securities and brokerage accounts under a separate statute, similar to TOD on real estate and motor vehicles in Texas. For whatever reason, Texas objects to certain other aspects of the national Act.

 

[CRLLS]

I am a fan and user of Nolo products. I get why others prefer to use an estate specialist. I will say that after seeing DW deal with her mother's documents (requiring important defects being corrected beforehand) and ultimately being co-executor and co-trustee, it is as important or possibly more important to name competent people to execute the documents. Especially when dealing with a Small Estate Affidavit. So much is handled without any oversight. Mistakes, or even intentional variance from written intentions can be made.

The bottom line is we won't know if we made good or bad documents, or even if those documents were followed as written. We will be gone.

 

[OldShooter]

Indeed; yet, done surprisingly often.

Yes. DW saw it all the time in the megabank trusts & estates department where she was an SVP. Very sad and nothing to be done about it. Typically these transfers were made by people doing their own "estate planning" without benefit of professional advice.

 

[Souschef]

The real estate was already probated and in my ex wife’s name for a decade .

It was the title company that rejected the will not the court and they certainly could reject anything they are not comfortable with which they did.

Unless you want to sue them the ball is in their court and they run the closing

I had a problem with a title company when we bought our last house. They wanted a signed statement from my ex that none of the funds came from her.
Solution: we changed title companies

 

[OldShooter]

Even a well-written estate plan needs to be updated.

I know a guy mid 90's , who again has to update his trust as many folks named in it have died....

True enough. Families change. Laws change. Finances change, ... But a well-done estate plan can anticipate and deal with far more possibilities that one can deal with in beneficiary designations of any kind. IOW, less chance for a future event to derail the train.

We seem to update our plan every 3 or 4 years for one reason or another. Currently we are building a house, so we own three of them. The plan had to be updated to say how the under-construction house would be dealt with if necessary and there were tax implications involved.

 

[G-Man]

Yes. DW saw it all the time in the megabank trusts & estates department where she was an SVP. Very sad and nothing to be done about it. Typically these transfers were made by people doing their own "estate planning" without benefit of professional advice.

What are some better options?

Reading more about the step-up basis.

https://smartasset.com/financial-ad...law that applies to,gains taxes on that basis.

Thanks

 

[OldShooter]

What are some better options? ...

That is really a question for experts not SGOTI. I know that games can be played to exploit the tax shelter on sale of a principal residence, maybe by selling at market price to the kids. The games are easier if the total estate is well below the federal death tax threshold. There is also something called a "life estate" that I know nothing about.

DW spent most of her career in the megabank trusts & estates business, but we hire experts for our estate planning and updating.