What level of wealth will get the attention of an estate attorney?

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Guorami
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What level of wealth will get the attention of an estate attorney?

Post by Guorami »

I am about to begin the process of finding a new attorney to revise or rewrite a trust. Some firms state explicitly on their web sites that they focus on high net worth individuals or multi-generational wealth transfer. The definition of high net worth is $1 million or more, but I have the feeling that some practices are primarily handling estates much larger than that. What is the size of estate that an attorney will consider as serious undertaking?
newbie001
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Re: What level of wealth will get the attention of an estate attorney?

Post by newbie001 »

Guorami wrote:I am about to begin the process of finding a new attorney to revise or rewrite a trust. Some firms state explicitly on their web sites that they focus on high net worth individuals or multi-generational wealth transfer. The definition of high net worth is $1 million or more, but I have the feeling that some practices are primarily handling estates much larger than that. What is the size of estate that an attorney will consider as serious undertaking?
It totally depends on the firm. At my firm, we do estate planning primarily for people with net worth above the lifetime exclusion from transfer tax (currently $5.45M) and double that level if the client is married. Of course, that's not a hard and fast rule. For example, a single person with $4M net worth at age 30 is likely to be over the $5.45M threshold at death and needs good estate planning, even accounting for inflation-related increases in the $5.45M number. I would say an estate of a married couple beyond $20-25M is significant for my firm.

Another key factor is whether your state has an estate tax; some states have a lower lifetime exclusion amount My state has no estate tax, so that makes estate planning here less complicated than in other places.
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Guorami
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Re: What level of wealth will get the attention of an estate attorney?

Post by Guorami »

Thank you for the reply, that is illuminating. Is it appropriate to ask the contact person for the firm about their typical clientele? I want to find a practice where we will fall somewhere in the median of their typical clients.
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Re: What level of wealth will get the attention of an estate attorney?

Post by Jags4186 »

I would guess any attorney would take the assignment if he's going to get paid. If you only have a $500k estate do you really want to pay someone $5-$10k to do something which has no real benefits to you?
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Re: What level of wealth will get the attention of an estate attorney?

Post by delamer »

Guorami wrote:Thank you for the reply, that is illuminating. Is it appropriate to ask the contact person for the firm about their typical clientele? I want to find a practice where we will fall somewhere in the median of their typical clients.
As a consumer, this seems like a reasonable approach. If my net worth was $2 million, I wouldn't want an attorney who specialized in clients with $500,000 nor one who specialized in clients with $10 million.

Now whether you would get a straight answer from the practice on this, I don't know -- especially if they specialized in the lower end.

Another issue is that some practices seem to focus on individuals with professional practices (MD's) or who are otherwise self-employed. That is expertise you don't need if you are wage earner.
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Guorami
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Re: What level of wealth will get the attention of an estate attorney?

Post by Guorami »

The trust is for a single beneficiary who will need substantial guidance and perhaps include some restrictions. One thing I've noticed is that attorneys specializing in estate planning understandably follow the money regionally. In California, Santa Barbara and Orange County are loaded with estate attorneys while their ranks thin considerably as you head inland. Wealth is so stratified in California that it's hard to know what amount is 'typical' for a firm to handle.
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Re: What level of wealth will get the attention of an estate attorney?

Post by FIREchief »

I don't understand why you think an estate attorney would be particularly concerned with "level of wealth." Granted, many may choose not to compete price-wise with the low cost assembly-line estate plan mills, but otherwise I would think that any reputable attorney would be willing to provide whatever a serious client needed at a fair price. :confused
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Re: What level of wealth will get the attention of an estate attorney?

Post by dognose »

If you are capable of fogging a mirror, you can gain the attention of an estate lawyer.
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Re: What level of wealth will get the attention of an estate attorney?

Post by badbreath »

I have to agree with dognose and firechief. From working in a consultancy business we would take anything big or small because the small can become big. and we would give all the same due diligence of quality of work.
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Guorami
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Re: What level of wealth will get the attention of an estate attorney?

Post by Guorami »

From working in a consultancy business we would take anything big or small because the small can become big. and we would give all the same due diligence of quality of work.
This had been my assumption too. But 20+ years ago I called to schedule an appointment with an attorney who had been highly recommended. As it turns out, he was a very busy senior partner and we were politely diverted to a semi-retired 'of counsel' fellow who provided a competent albeit boilerplate document. He wasn't particularly helpful with suggestions and spent too much of the billable hour on idle chit chat.

Now the small has become big, not $10 million big, but enough to provide for the beneficiary throughout her lifetime. I guess I'm wondering at what point (estate value) it is plausible to request a consultation with a partner in the firm.
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celia
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Re: What level of wealth will get the attention of an estate attorney?

Post by celia »

I don't think "partner" vs "newbie" vs "semi-retired" is the correct way to look at it. A partner may not be up-to-date or have the correct experience for what you need.

Go to a firm that specializes in estate planning. They will be more experienced in all the trust variations than a general partner at Big Law. Even a specialist who only has a year of experience could be better for you. If you are talking about a Special Needs Trust, find a lawyer who specializes in that.

Since you are looking to amend an existing trust, it would be more time-efficient if you could mark up a copy of it to focus on what you want changed or explained to you.
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Re: What level of wealth will get the attention of an estate attorney?

Post by Rodc »

Jags4186 wrote:I would guess any attorney would take the assignment if he's going to get paid. If you only have a $500k estate do you really want to pay someone $5-$10k to do something which has no real benefits to you?
My mother did this. It was not only a waste of money (my opinion, not hers) but it resulted in headaches for me to administer (though not big headaches), and had unfortunate complicating effects on her grand-kids getting college need-based aid since they are beneficiaries. This last factor alone might have been a deal breaker if she had known, but perhaps not.

If one has a very modest trust in mind, consider the modest (at best) benefits vs complications.

FWIW: my mother seemed to have two things in mind, (1) she had an irrational fear of my BIL taking the money if he could (very honest guy just had political and parenting differences with mom) and (2) she wanted to feel rich (my opinion, she would not be happy with that assessment).

So if one wants a very modest sized trust think long and hard about why, and the true cost down stream to the trustee and beneficiaries.
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Re: What level of wealth will get the attention of an estate attorney?

Post by CppCoder »

When we went to an estate planning attorney (single lawyer, not a firm), one of the first questions she asked was our net worth. She said if it was above a certain number, she wouldn't do our plan and would instead recommend a different lawyer who specialized in higher net worth estates. She also recommended that when we hit that number in the future that we have new estate documents drawn up by someone specializing in high net worth. I don't remember for certain, but I believe her magic number was the lifetime exclusion limit.
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Re: What level of wealth will get the attention of an estate attorney?

Post by Copernicus »

Guorami,

I do not understand why net worth is of any consequence in drafting a document, which has no mention of the size of the estate. It may be of consequence when implementing the directions of the document, i.e., after the estate is inherited. In California, you can have trust written by an attorney who need not be the attorney to execute it with the inheritor.
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Re: What level of wealth will get the attention of an estate attorney?

Post by Rupert »

CppCoder wrote:When we went to an estate planning attorney (single lawyer, not a firm), one of the first questions she asked was our net worth. She said if it was above a certain number, she wouldn't do our plan and would instead recommend a different lawyer who specialized in higher net worth estates. She also recommended that when we hit that number in the future that we have new estate documents drawn up by someone specializing in high net worth. I don't remember for certain, but I believe her magic number was the lifetime exclusion limit.
A lot of solo practitioners who draft wills don't know much or anything about tax law. That's why they would do what your lawyer did. It's a good lawyer who recognizes and tells you about his/her limitations in that way.
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Re: What level of wealth will get the attention of an estate attorney?

Post by LarryAllen »

As stated every firm has different levels of what's "high net worth."

Ask questions:

- What is your experience with estate planning?
- What percentage of your practice is on estate planning? (you don't want a general practitioner)
- Do you do any after death probate or trust administration? (good if they do as they know what to avoid)
- What is your most typical client in terms of wealth, assets, family? (does their typical client sound at all like you or not!?)
- You might also ask if they are a certified specialist or similar (there are different advanced credentials out there).

In 15 minutes you can find out if it's a good fit. Most, but not all, EP attorneys will give you a brief free consultation.

Good luck.
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Re: What level of wealth will get the attention of an estate attorney?

Post by bertilak »

CppCoder wrote:When we went to an estate planning attorney (single lawyer, not a firm), one of the first questions she asked was our net worth. She said if it was above a certain number, she wouldn't do our plan and would instead recommend a different lawyer who specialized in higher net worth estates. She also recommended that when we hit that number in the future that we have new estate documents drawn up by someone specializing in high net worth. I don't remember for certain, but I believe her magic number was the lifetime exclusion limit.
I had the opposite experience.

I was executor for my parent's trust and decided I wanted to talk to an estate attorney to be sure I was handling things properly. By chance the current issue of a popular state-wide magazine had a review of the state's best estate attorneys. I gave the top-rated one a call. They too asked for the total net worth. They told me their "pricing structure was not appropriate" for an estate of that size. I requested, and got, from them a recommendation for an attorney with an "appropriate pricing structure." Worked out OK at a reasonable price.
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Guorami
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Re: What level of wealth will get the attention of an estate attorney?

Post by Guorami »

Some useful replies, especially the list of questions from LarryAllen, thank you. The high lifetime estate tax exclusion (almost 11 million for a couple) has certainly reduced the need for trusts for people leaving estates to heirs who are able to manage the inheritance. However the thought of leaving even half that amount to an heir who might easily fall prey to opportunists is, frankly, terrifying. A trust crafted for such an individual would best take in to account a number of different scenarios that are best predicted by an attorney who has substantial experience dealing with similar individuals. I envision finding someone with at least 10 years of experience who has worked with many families over the years and knows what is effective and ineffective in the long term.

It makes sense that some firms focus on estates that are subject to taxation, as the primary focus is likely to be minimization of tax consequences. Those firms usually use key words such as "very high net worth clients" on the web sites to dissuade inappropriate inquiries. Five years ago we added a corporate trustee to our trust using a local attorney who was highly rated, though not by anyone we knew. Rather than just make the changes I had carefully marked in our existing trust (removing a guardian designee and adding the corporate trustee) he added whole sections of his own boilerplate terminology. It was very contentious language, many clauses threatening that beneficiaries would be cut out if they challenged any aspect of the trust. Most of his business was litigating disputes among warring family members so that was the tenor of his trust document. We ended up having the whole thing redone by the original firm, as they still had the original document on their computer.

It seems the best solution at this point is to just start calling firms and asking questions. I'll just be prepared to swallow my pride if they say something like "their pricing structure is not appropriate for our estate".
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Re: What level of wealth will get the attention of an estate attorney?

Post by afan »

I don't think this is a helpful way to look at it. You don't really care how much the average client has. You care about whether the lawyer can do a good job for you at a reasonable price.
Anyone who could write the documents for a family with $20M could do the same for a family with $1M. The job will be faster, easier and cheaper. But it still might be more than you want to pay.

The networth question tells attorneys whether they will need to include provisions to minimize estate taxes. That tax rate is high enough that it is worth going through a lot of trouble to avoid it. There are also some issues, like multigenerational planning, that only make sense when there is a lot of money at stake.

But the rest of the planning, caring for a beneficiary, asset protection, what happens in divorce, are their children from multiple marriages, taking over for the person creating the trust if they become incapacitated, are the same even for people who will not face estate taxes. You want people who know what they are doing. If they don't understand the tax laws well enough to do the planning for a high networth family, then they should not be doing the planning at all.

We have done estate planning 4 times. Twice with actuall estate planning experts, twice, mistakenly trying to save money, with people who claimed to be experts but were not. The bozos charged less than the experts, but their work was worthless.

What you really want to know is what it will cost, whether the people know their stuff, and ideally some opinion about how well they handle clients.

"What does it cost" is easy. Just ask. Some will quote an hourly rate others will have a fee for a generating a specific set of documents. The hourly rate people should be able to give you an idea of how many hours their work might require.

For expertise, you can use the ACTEC fellow list. Estate planning attorneys say that people who are ACTEC fellows definitely are experts, but that there are people who also are highly competent who are not fellows. Since it is a recognized badge of expertise, they are not cheap. Apparently estate attorneys outside of major population centers charge much lower rates than you would pay in, say, NYC.

If you are planning on having a corporate trustee, you might ask the trust department for recommendations.
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Re: What level of wealth will get the attention of an estate attorney?

Post by EddyB »

Copernicus wrote:Guorami,

I do not understand why net worth is of any consequence in drafting a document, which has no mention of the size of the estate. It may be of consequence when implementing the directions of the document, i.e., after the estate is inherited. In California, you can have trust written by an attorney who need not be the attorney to execute it with the inheritor.
What if there are estate-planning techniques that may be beneficial to estates subject to federal and state estate taxes, but would require setup and administration costs? It would seem to me that the size of the estate is only one relevant consideration in estate planning---e.g., the composition of the estate is also significant---but that it is relevant.
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Re: What level of wealth will get the attention of an estate attorney?

Post by Meg77 »

Net worth matters when crafting an estate plan, primarily in terms of the exclusion limits. But smaller estates can be very complex (multiple divorces and remarriages with kids, disabled beneficiaries, various charitable desires) and some very large estates can be simple (single person with millions in index funds who wants it all to go to X). It makes sense that attorneys would screen for level of net worth to ensure the appropriate level of expertise is provided, but if you're paying by the hour then your net worth doesn't matter nearly as much as the scope of your job and whether you will require ongoing services.

You indicate you simply want a trust amended. That seems much more straightforward and (presumably) doesn't involve changing your entire estate plan. Any attorney who is qualified and whose hourly rates you are willing to pay will likely accept the job and do it to your satisfaction. If it's a one time job though, you may find it difficult to attract the attention of a busy senior partner or industry expert who might not need or value a few extra hours of billing for a new and one-time client.
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Re: What level of wealth will get the attention of an estate attorney?

Post by John Z »

When wife and I realized that it was time to establish an estate plan, we found a leading estate attorney in our general area who gave us an approximate cost for a straightforward trust (no divorce, step children, special needs, etc.). No talk of net worth until we got down to details and only for ensuring we had the proper plan for not only our net worth at the time but our potential net worth (vested stock options, life insurance proceeds, and possible windfall jury awards in case of both our deaths with negligence). Another words, have it set up to handle even the largest net worth you can imagine since you never know what can happen and how quickly. Rare case but winning the lottery and both getting killed on the highway going to collect the prize. True you can always make an appointment to update your estate plan but just in case you don't make it...
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Re: What level of wealth will get the attention of an estate attorney?

Post by Nova1967 »

I'm a single guy with no heirs and looked into leaving my estate (1.3M) to some charities and relatives, the Estate Attorneys I talked to wanted around 3k
I was thinking a few hundred since it's fairly simple despite the amount. I figure I could leave beneficiaries on my accounts to charities,,As stated previously why spend a large amount for somethings that will not benefit me, I have no spouse or kids
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Re: What level of wealth will get the attention of an estate attorney?

Post by Guorami »

As stated previously why spend a large amount for somethings that will not benefit me, I have no spouse or kids
No one ever wants to contemplate the time between when they lose their mental and/or physical competency and the time they take their last breath. My mother meticulously planned for the distribution of her assets but was unwilling to consider the possibility that she would lose the ability to manage her finances. When her memory started to fail, my siblings and I had to scramble to find care for her and she designated my brother as co-trustee just in the nick of time. She has now been in the memory care unit of an assisted living facility for more than 3 years, costing almost $90,000/ year. She is very fortunate to have a pension, annuities and rental income to cover her care.

A trust can be used to fund your care when you are no longer able to care for yourself. You can designate in advance what arrangements you would prefer and even list the name of some small group homes or a larger continuing care facility. So often I hear people say, "I'll never move to one of those places", but most of us don't have any way to predict how our final years will play out. A few thousand dollars now can make a huge difference in how you'll spend the final years, and be a big help to those around you who want to help.
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Re: What level of wealth will get the attention of an estate attorney?

Post by daveydoo »

This is a funny business. The tricky part is when it comes to settling the estate -- that's where the money is made. My reading is that fees are benchmarked to estate size (even though, like asset managers, the work doesn't scale that way). There appear to be some alarming rule-of-thumb type guidelines used in the industry -- like billing up to 5% of the total estate in fees won't raise any regulatory eyebrows, etc., and could be considered "fair" -- that I found absolutely jaw-dropping. You can do your own math on that.

In settling a relative's estate, I worked with one attorney who would not even give me an estimate (even though everything was laid out in front of him). I mean not even within an order of magnitude. I fired him and cold-contacted a name partner in one of the major firms in town who was wonderful, sincere, and gave broad but very useful ballpark figures. As in some of the posts above, she also referred me to a more junior colleague who was ~ 60% of her hourly rate (and who may have billed more hrs, etc., but whatever). It went very smoothly and we always had our eyes on the budget.

I don't think it matters whether you're a doc or whatever, but of course if you have a closely held family business or some other large illiquid asset > $10 million, then you're going to need an expert who can help you with the estate tax planning without necessitating liquidation. That, and the federal estate tax piece seem like the major estate-size considerations, imo. O/w, I can't see why anyone would care how big or small.

But do get some idea beforehand what you're looking at, fee-wise -- I was amazed how hard this was in the one instance. I just want this: "Typically it's about this range, and low-end estimate (or example) would be this and a high-end estimate would be this." If you can't get even that level of precision, I'd suggest knocking on another door.
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Re: What level of wealth will get the attention of an estate attorney?

Post by afan »

Nova1967 wrote:I'm a single guy with no heirs and looked into leaving my estate (1.3M) to some charities and relatives, the Estate Attorneys I talked to wanted around 3k
I was thinking a few hundred since it's fairly simple despite the amount. I figure I could leave beneficiaries on my accounts to charities,,As stated previously why spend a large amount for somethings that will not benefit me, I have no spouse or kids
In your situation I would agree with you. The payoff for paying through the nose for planning is making sure the people who depend on you are taken care of.

The charities might be able to help you out if they are getting a substantial amount of money.
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Re: What level of wealth will get the attention of an estate attorney?

Post by Gill »

There's been one prominent poster noticeably absent from this discussion and would love to hear his comments. :happy
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Guorami
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Re: What level of wealth will get the attention of an estate attorney?

Post by Guorami »

The charities might be able to help you out if they are getting a substantial amount of money.
A bit of a conflict of interest to let a non-family beneficiary of your estate decide how much to spend on your care when they are the recipient of the remainder.

Well I never heard back from Fidelity after my initially favorable impression. He probably realized that the majority of funds will be unavailable for management fees until they are rolled over to an IRA from the 403B, at least 5 years. I called a different branch office and was lucky to get the branch manager answering the call. She spoke in ominous tones about selecting Fidelity as the trustee, emphasizing that I should evaluate whether that is REALLY what we want. She said Fidelity trust management will only assist with a primary residence, they won't handle rental property income or anything complex.

Looks like we'll just stick with Schwab for the non-retirement accounts and try not to die in the next 10 years.
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Re: What level of wealth will get the attention of an estate attorney?

Post by FrugalInvestor »

We used an estate attorney who is very qualified and charges a flat fee for most clients with uncomplicated estates.
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Re: What level of wealth will get the attention of an estate attorney?

Post by bsteiner »

I think that for the most part the issue is how the lawyer gets the prospective client's attention rather than the other way around.

Some of the large firms might not take clients who aren't high net worth (with the test for high net worth being substantially more than the figure provided by the original poster). Other than that, while many of us spend more time on higher net worth clients, we're usually willing to take on upper middle class clients.
Jags4186 wrote:I would guess any attorney would take the assignment if he's going to get paid. If you only have a $500k estate do you really want to pay someone $5-$10k to do something which has no real benefits to you?
Absent an unusual circumstance, someone worth $500,000 (including their life insurance coverage) is unlikely to want a $5,000 estate plan, so a lawyer whose estate plans are $5,000 or more might not want to meet with such a person unless there's some special reason that person might become a client.
Guorami wrote:The trust is for a single beneficiary who will need substantial guidance and perhaps include some restrictions. One thing I've noticed is that attorneys specializing in estate planning understandably follow the money regionally. In California, Santa Barbara and Orange County are loaded with estate attorneys while their ranks thin considerably as you head inland. Wealth is so stratified in California that it's hard to know what amount is 'typical' for a firm to handle.
I would expect that more of the better lawyers would be in the larger and wealthier cities since there would be more opportunity there. But there are probably some good ones in other cities as well. If you provide the name of the nearest city to you of any size, someone might have some recommendations. Of course, given modern travel and communications, you could work with someone who's not in your local area.

You might want to focus more on the choice of trustees than on the restrictions. No one knows what the future will bring, so it's usually better to select appropriate trustees and give the trustees discretion to do what's best from time to time. You might want to consider a corporate trustee. A good lawyer will have relationships with various banks and trust companies, and should be able to recommend some that would be a good fit for the amount involved.
FIREchief wrote:I don't understand why you think an estate attorney would be particularly concerned with "level of wealth." Granted, many may choose not to compete price-wise with the low cost assembly-line estate plan mills, but otherwise I would think that any reputable attorney would be willing to provide whatever a serious client needed at a fair price.
You are correct, except that if the amount involved is small enough (as determined by the prospective client), the prospective client may not be interested in it.
Guorami wrote:... 20+ years ago I called to schedule an appointment with an attorney who had been highly recommended. As it turns out, he was a very busy senior partner and we were politely diverted to a semi-retired 'of counsel' fellow who provided a competent albeit boilerplate document. He wasn't particularly helpful with suggestions and spent too much of the billable hour on idle chit chat.

Now the small has become big, not $10 million big, but enough to provide for the beneficiary throughout her lifetime. I guess I'm wondering at what point (estate value) it is plausible to request a consultation with a partner in the firm.
Except perhaps at some of the large firms, you should be able to find someone very good at well under $10 million.
celia wrote:... Go to a firm that specializes in estate planning. ... If you are talking about a Special Needs Trust, find a lawyer who specializes in that.

Since you are looking to amend an existing trust, it would be more time-efficient if you could mark up a copy of it to focus on what you want changed or explained to you.


The trust for a child (or other beneficiary) with special needs isn't all that different from the trust for the child (or other beneficiary) without special needs. The difference is that the child with special needs will probably have less control (or perhaps no control at all) over his/her trust, which means you have to give more thought to who should have control.

While it's often helpful to see the current document since it might reflect some decisions you've already made, it might not save any time. It's usually easier to draft a new Will (or since you're in California, to completely amend and restate your revocable trust) than to just amend the provisions you want to update.
Guorami wrote:... Five years ago we added a corporate trustee to our trust using a local attorney who was highly rated, though not by anyone we knew. Rather than just make the changes I had carefully marked in our existing trust (removing a guardian designee and adding the corporate trustee) he added whole sections of his own boilerplate terminology. It was very contentious language, many clauses threatening that beneficiaries would be cut out if they challenged any aspect of the trust. ....
That's called an "in terrorem" clause, whereby someone who contests the Will (or, since you're in California, the revocable trust) loses his/her benefit. It's permissible in some states (including California). In some states it's not enforceable if the challenger had a reasonable basis for the challenge. In a few states (notably Florida) it's not enforceable at all. You might include an in terrorem clause (in a state where it's permissible) if you want to cut out a child. Of course, for it to have its intended effect, you would have to leave that child enough money so that he/she has something to lose by contesting the Will (or, in your case, your revocable trust).
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Re: What level of wealth will get the attention of an estate attorney?

Post by celia »

bsteiner wrote:
Jags4186 wrote:I would guess any attorney would take the assignment if he's going to get paid. If you only have a $500k estate do you really want to pay someone $5-$10k to do something which has no real benefits to you?
Absent an unusual circumstance, someone worth $500,000 (including their life insurance coverage) is unlikely to want a $5,000 estate plan, so a lawyer whose estate plans are $5,000 or more might not want to meet with such a person unless there's some special reason that person might become a client.
I would say it is a combination of (projected) wealth and age. Someone who has $500K at age 30 will likely have millions by retirement.
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Guorami
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Re: What level of wealth will get the attention of an estate attorney?

Post by Guorami »

bsteiner, thank you so much for the comments. Your interview with James Lange (https://www.paytaxeslater.com/radioshow ... family.php) regarding inherited IRA's was also extremely helpful. We were told previously that the balances in our 403Bs will not be included in the trust. I don't recall any discussion of alternatives. It was frustrating at the time because our defined pension income will reduce the need to draw more than mandatory minimums from the deferred savings. It seems that finding an estate attorney comfortable with the technicalities of language needed to have the inherited IRA left to the trust will be a good litmus test for the experience we are seeking for the drafting of our new trust.

We may try to find a new attorney at the firm we originally visited (in Santa Barbara) or the cities of Irvine and Newport Beach in Orange County. Although those areas have a large population of ultra high net worth individuals it should be possible to find someone appropriate for us.
bsteiner
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Re: What level of wealth will get the attention of an estate attorney?

Post by bsteiner »

Guorami wrote:bsteiner, thank you so much for the comments. Your interview with James Lange (https://www.paytaxeslater.com/radioshow ... family.php) regarding inherited IRA's was also extremely helpful. We were told previously that the balances in our 403Bs will not be included in the trust. I don't recall any discussion of alternatives. It was frustrating at the time because our defined pension income will reduce the need to draw more than mandatory minimums from the deferred savings. It seems that finding an estate attorney comfortable with the technicalities of language needed to have the inherited IRA left to the trust will be a good litmus test for the experience we are seeking for the drafting of our new trust. ....
What is "the trust?"

Like any other assets, you can leave your retirement benefits to your beneficiaries in trust rather than outright. As you know from the radio show, there are some special rules for trusts that receive retirement benefits in order to qualify for the stretch. See my article on this in the March 2004 issue of BNA Tax Management's Estates, Gifts & Trusts Journal: http://www.elderlawanswers.com/Document ... nefits.pdf. So each beneficiary will probably end up with two trusts, one for his/her share of your retirement benefits and one for his/her share of your other assets.
NotWhoYouThink
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Re: What level of wealth will get the attention of an estate attorney?

Post by NotWhoYouThink »

So each beneficiary will probably end up with two trusts, one for his/her share of your retirement benefits and one for his/her share of your other assets.
And both trusts will have management costs that will outrage and infuriate the beneficiary.
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FIREchief
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Re: What level of wealth will get the attention of an estate attorney?

Post by FIREchief »

Guorami wrote:
We may try to find a new attorney at the firm we originally visited (in Santa Barbara) or the cities of Irvine and Newport Beach in Orange County. Although those areas have a large population of ultra high net worth individuals it should be possible to find someone appropriate for us.
Guorami - you may wish to check out the following link. I have absolutely zero experience with this firm, but am aware that Phil Kavesh's name comes up a lot in discussions of qualified retirement plan trusts (I think he produces and distributes training for estate attorneys in the realm of IRA trusts). Looks like his practice is in the geographical area that you are describing above.

http://www.kaveshlaw.com/index.php
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
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FIREchief
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Re: What level of wealth will get the attention of an estate attorney?

Post by FIREchief »

NotWhoYouThink wrote:
So each beneficiary will probably end up with two trusts, one for his/her share of your retirement benefits and one for his/her share of your other assets.
And both trusts will have management costs that will outrage and infuriate the beneficiary.
Valid concern, but this is only true if the grantor and/or beneficiary allow it to happen. Bruce's recommendation is very consistent with everything I have learned in this area, and I think he is recommending the best course of action. If the bulk of assets are in qualified retirement plans, then the trust holding the remaining assets can be very simple, cheap and require no professional administration.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
bsteiner
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Re: What level of wealth will get the attention of an estate attorney?

Post by bsteiner »

NotWhoYouThink wrote:
So each beneficiary will probably end up with two trusts, one for his/her share of your retirement benefits and one for his/her share of your other assets.
And both trusts will have management costs that will outrage and infuriate the beneficiary.
As a practical matter, each child (or other beneficiary) for whom you're providing in trust rather than outright needs to have separate trusts for the retirement benefits and the other assets. That's so as not to subject the other assets to the special requirements for trusts that receive retirement benefits.

There are two exceptions. If the beneficiary's share of the retirement benefits is too small to warrant administering a trust, then you might leave the retirement benefits outright and the other assets in trust. If the beneficiary's share of the other assets is too small to warrant administering a trust, then you might subject those assets to the requirements for a trust that receives retirement benefits.

However, some corporate trustees will aggregate related trusts for the purpose of calculating their commissions (fees).
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Guorami
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Re: What level of wealth will get the attention of an estate attorney?

Post by Guorami »

And both trusts will have management costs that will outrage and infuriate the beneficiary.
This may be true for anyone on these boards gathering information. The hard part is anticipating the needs and qualifications of a beneficiary, and sometimes a corporate trustee is the only option that makes sense. I had an extremely productive phone conversation with a trust officer from the bank we have named as successor trustee. It's convinced me that this bank has the level of personal service and flexibility that will be needed for the beneficiary in question. They also assured me that the law firm we originally chose to create our trust is one of the best in town, which is a relief.

I was able to have a somewhat intelligent conversation with the trust officer thanks to everything I've learned on these boards. Crafting a trust(s) definitely favors the prepared mind. Our mistake the first time was not asking the right questions nor fully understanding the finished product. It's going to take significant additional reading (thanks for the link bsteiner) to prepare for our next meeting with an attorney.
NotWhoYouThink
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Re: What level of wealth will get the attention of an estate attorney?

Post by NotWhoYouThink »

Crafting a trust(s) definitely favors the prepared mind. Our mistake the first time was not asking the right questions nor fully understanding the finished product. It's going to take significant additional reading (thanks for the link bsteiner) to prepare for our next meeting with an attorney.
This aspect may be under-emphasized on this board. I see advice to go to the attorney's office and state what you want, and the attorney can make it happen. But that advice starts with the assumption that you know and have thought through your options and know what you want, or you can think through things while sitting in the attorney's office.
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FrugalInvestor
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Re: What level of wealth will get the attention of an estate attorney?

Post by FrugalInvestor »

NotWhoYouThink wrote:
Crafting a trust(s) definitely favors the prepared mind. Our mistake the first time was not asking the right questions nor fully understanding the finished product. It's going to take significant additional reading (thanks for the link bsteiner) to prepare for our next meeting with an attorney.
This aspect may be under-emphasized on this board. I see advice to go to the attorney's office and state what you want, and the attorney can make it happen. But that advice starts with the assumption that you know and have thought through your options and know what you want, or you can think through things while sitting in the attorney's office.
A good estate attorney will help you think this out including asking questions (a questionnaire), probing your answers, providing options, making suggestions and giving you time on your own to think it out and discuss with your spouse. That's how it worked for us anyway.

We did go in with some general ideas. Many of those stayed the same and some changed through the process.
Have a plan, stay the course and simplify. Then ignore the noise!
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