Need a will and possibly trust - where do I start?

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red_uu
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Need a will and possibly trust - where do I start?

Postby red_uu » Thu Jan 05, 2017 4:46 pm

Hi,

I am divorced and have two kids. I own a house and a number of investments (401Ks and IRAs). So does my ex-husband.

Right now neither me nor my ex-husband have wills or any kind of trust to make transferring these assets to the kids' guardian easy if anything happens to us. We have also taken out life insurance policies that pay to the kids, but I have no idea how that works.

What are the first steps to take?

Thanks!

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CAsage
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Re: Need a will and possibly trust - where do I start?

Postby CAsage » Thu Jan 05, 2017 4:55 pm

To learn, I would recommend Nolo Press "Estate Planning Basics". Buy a copy or get from library. Then, you need a will (everyone needs a will to assign guardianship and cover any assets you forget and appoint an executor) and probably a trust for the children's long term finances. I do not think you can leave $$ to minors, and it's unwise to leave it to very young adults! You should see a lawyer to set it all up right, but it would not hurt to educate yourself a bit first so you can have critical decisions made before she/he draws up papers. It's a lot more complicated with minors than it will be when they are over 30...

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FIREchief
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Re: Need a will and possibly trust - where do I start?

Postby FIREchief » Thu Jan 05, 2017 5:03 pm

It is great that you're asking the forum at this point.

In an ideal situation:
a) educate yourself on all the basics of wills and trusts
b) spend whatever time is necessary to find a reputable lawyer
c) establish appropriate plans/documents

Unfortunately, many situations are not ideal. Here is what not to do:
a) attend a dinner seminar conducted by a flashy sounding legal firm with a nice office and expensive suits and "hand your burden (along with your check) over to them" (I actually experienced this - except of course for writing the check)
b) nothing

Trusts can be extremely beneficial or an expensive, complicated mess. You may wish to schedule an initial consultation with several local estate attorneys and then let us know what they are recommending and ask again for advice. Bruce, Gill and others have great experience in this area and often provide "free" advice that is worth much more than the price. Others of us just have practical experience and may be better able to advise on the pitfalls. Best wishes.

Dottie57
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Re: Need a will and possibly trust - where do I start?

Postby Dottie57 » Thu Jan 05, 2017 5:06 pm

I went to a highly recommended lawyer who specialized in wills and trusts. Both items were in a standard "package". I had about 5 meetings with the lawyer who provided a lot of insight into different ways to organize the end of life documents. Worth every penny.

red_uu
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Re: Need a will and possibly trust - where do I start?

Postby red_uu » Thu Jan 05, 2017 5:09 pm

Thanks for all your responses.

In a HCOL area, how much would a fairly standard will cost?

I assume that if we establish a trust, my ex and I both just direct funds to it, so only one is needed?

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dm200
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Re: Need a will and possibly trust - where do I start?

Postby dm200 » Thu Jan 05, 2017 5:21 pm

red_uu wrote:Thanks for all your responses.
In a HCOL area, how much would a fairly standard will cost?
I assume that if we establish a trust, my ex and I both just direct funds to it, so only one is needed?


No experience with your situation. Some other experiences in paying for wills, etc. - both good and bad.

My suggestions (for what they might be worth):

1. BEFORE commiting to an attorney, locate one who dealw with your situation regularly.
2. BEFORE commiting to an attorney, make sure you understand and agree with the basis for what you will be charged. Some attorneys charge based on hours expended, while others will, after an initial consultation, commit to a fixed price. I much prefer the latter.

3. In your case, I might consult a/the divorce attorney to get any relevant advice about what or what not to do.

There are several types of trusts that can be set up - one type is testamentary trust after your death (lowest cost type).

NotWhoYouThink
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Re: Need a will and possibly trust - where do I start?

Postby NotWhoYouThink » Thu Jan 05, 2017 5:25 pm

You need a will and your ex-husband needs a will. You can set up a testamentary trust which would be created at your death, and you could specify the trustee and terms of the trust. I assume your ex-husband would get custody if you die tomorrow and he is still living.

Your ex-husband can set up a testamentary trust, if he wants, with different terms and trustees. No need for you to coordinate or agree on this one. I also assume that you would get custody if your ex-husband dies tomorrow and you are still living.

It gets more complicate if both of you die. You can state in your will who would get custody, but if you die first his will might say someone else. Either way, you can decide about the terms of trust that your money would go to.

Is there anything in the divorce agreement that talks about wills as they pertain to alimony, child support, college funding? Can you leave all your money to your new husband and cut out the kids, or is there something in your divorce agreement that prevents that?

We set up Uncle Fred as trustee, with the money going to our kids at 25 (1/3) and 30 (remainder). We also just watched Uncle Fred, who used to be capable of rational behavior, totally mismanage an estate. Since the kids are now out of college and we think we know how they would handle a windfall, we are about to update our will and change the terms of the trust. Uncle Fred is out, the trusts will be in place because it is helpful if either of us becomes incapacitated to have a co-trustee rather than counting on Power of Attorney to manage things for us. But the kids get the money sooner.

Our actual plan is to live until the kids are retired, and give away money along the way. But right now they think if we offer them money it is a criticism of their career choices, so we stifle ourselves.

How old are the kids? Maybe custody is no longer an issue.
Last edited by NotWhoYouThink on Fri Jan 06, 2017 8:00 am, edited 1 time in total.

NotWhoYouThink
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Re: Need a will and possibly trust - where do I start?

Postby NotWhoYouThink » Fri Jan 06, 2017 7:59 am

Also you should check the beneficiary designations on your IRA and 401k, as these will override anything you put in a will.

red_uu
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Re: Need a will and possibly trust - where do I start?

Postby red_uu » Fri Jan 06, 2017 9:41 am

Thanks for all these great comments.

The children are minors, both elementary-school age. Right now all of my IRAs and 401Ks list the kids as beneficiaries - I changed that right after the divorce. If minors are beneficiaries, what happens to the money if something happens to me - does it then go to the guardian until they are 18?

I was unaware that the beneficiary designation in IRAs and 401Ks overrided what it says in a will.

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Re: Need a will and possibly trust - where do I start?

Postby Grt2bOutdoors » Fri Jan 06, 2017 10:10 am

red_uu wrote:Thanks for all these great comments.

The children are minors, both elementary-school age. Right now all of my IRAs and 401Ks list the kids as beneficiaries - I changed that right after the divorce. If minors are beneficiaries, what happens to the money if something happens to me - does it then go to the guardian until they are 18?
No, the accounts will be re-titled to say Jane Doe, deceased 1/xx/2017 FBO Jim Doe, Rollover IRA. The children will need to take RMD's based on their life expectancy. That is the ideal situation. The guardian of children can be named custodian of assets or you may name someone different, but the money still belongs to the child. If you feel you can not trust someone to do the right thing financially, you may want to consider using a bank or trust company, but they will usually require assets of $1MM plus and their fees may be 1-2% of AUM.
I was unaware that the beneficiary designation in IRAs and 401Ks overrided what it says in a will.
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chmcnm
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Re: Need a will and possibly trust - where do I start?

Postby chmcnm » Fri Jan 06, 2017 10:20 am

Fidelity will setup a trust and be the custodian if you have assets over $200k if I remember correctly. Didn't use them this time but probably in the future.

We used a lawyer to setup a trust for my parents. Very educational and worth every penny.

The beneficiaries designated on your IRA/401k typically override your will. Retirement accounts typically don't go in a trust (but can...it can be complex).
Last edited by chmcnm on Fri Jan 06, 2017 10:49 am, edited 1 time in total.

student
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Re: Need a will and possibly trust - where do I start?

Postby student » Fri Jan 06, 2017 10:31 am

Check whether your employer or your ex-husband's employer has prepaid legal as a benefit. It gives you access to a network of lawyers to do basic legal help for free. I took advantage of this. (In my case, it wasn't a free benefit, I have to pay about $20 per month.)

LarryAllen
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Re: Need a will and possibly trust - where do I start?

Postby LarryAllen » Fri Jan 06, 2017 10:34 am

I would find an experienced estate planning attorney. Someone focused on estate planning rather than someone who does estate planning along with a bunch of other areas of law. You might look for a list of certified specialists, or some such name, with your state bar. Good luck to you.

afan
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Re: Need a will and possibly trust - where do I start?

Postby afan » Fri Jan 06, 2017 10:37 am

If your divorce attorney was good, you might ask for suggestions of estate attorneys who know how to handle divorce issues. Divorce is so common that I would assume any good estate attorney should be well familiar. But there are a lot of attorneys who do estate work who are not really qualified.

If you want to be certain you have an expert, you can hire an ACTEC fellow. The American College of Trusts and Estates Counsel is a voluntary organization of such experts. Many members are judges and law professors but the practitioners who are fellows are widely recognized as tops in the field. They charge for this prominence, so it will not be cheap. The cost seems to vary widely by geography. It will cost a lot more in Manhattan, NYC than in Kansas.

It is not clear how complicated your case may be. There are certainly more things to think about than families that are still together.

One strategy might be to contact a few ACTEC fellows in your area and see what they would charge. Most will do a brief interview to make sure your needs match what they do. They can then give you an estimate of the cost (if they charge by the hour) or a flat rate based on the amount of work. That will give you an idea of what it would cost at that level.

Another strategy might be to contact the trust department of a big local bank. Tell them you need to set up a trust for your kids but first you need an attorney. Ask them for suggestions. They work with estate attorneys all the time and they know who is good and who is a disaster. They probably will not say anything bad about the disaster lawyers, but they should be able to suggest a few good people. You can try this with 2 or 3 different banks and see whether the same names come up.

Meanwhile, start doing some homework so that you have answers to the questions the lawyer will ask.

You need to appoint a guardian for the kids. I don't know how it works if you would want someone different than your ex.

You would need to decide who would be trustee to manage whatever your kids would inherit. This need not be the same person as the guardian. It need not be a bank or professional trustee. It can be a trusted family member or friend, but it is asking quite a lot, so it should be someone who you know would undertake the responsibility and do it well.

There are good reasons to have a trust as the beneficiary of the retirement accounts, but the law gets complicated and it is widely speculated that the stretch may be going away. That may be clear by the time your attorney would finish your documents. There are good reasons to have a trust hold everything that is not retirement money, different rules apply, but it is simpler than for retirement accounts.

You can design the trust so the kids get the money outright at any adult age or ages you prefer. Or you can have the money stay in trust forever. The latter approach keeps the money out of the kids hands which is better for asset protection and for estate taxes. Of course, estate taxes might be going away (and if they do, could always come back), but the asset protection might be valuable.
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bsteiner
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Re: Need a will and possibly trust - where do I start?

Postby bsteiner » Fri Jan 06, 2017 1:18 pm

red_uu wrote:... In a HCOL area, how much would a fairly standard will cost? ...


Not very much. But it will cost more if you want one that makes sense, or if you want a competent lawyer, or if you want to spend the necessary time to work out what you want it to say, or if you want a lawyer who will know the special rules for trusts that receive retirement benefits.

student wrote:Check whether your employer or your ex-husband's employer has prepaid legal as a benefit. It gives you access to a network of lawyers to do basic legal help for free. I took advantage of this. (In my case, it wasn't a free benefit, I have to pay about $20 per month.)


It may not have been worth any more than what you paid for it.

red_uu wrote:... The children are minors, both elementary-school age. Right now all of my IRAs and 401Ks list the kids as beneficiaries - I changed that right after the divorce. If minors are beneficiaries, what happens to the money if something happens to me - does it then go to the guardian until they are 18 ...


Yes. Guardianships are very cumbersome. A guardian controlling retirement benefits is even more cumbersome.

red_uu wrote:... I am divorced and have two kids. I own a house and a number of investments (401Ks and IRAs). So does my ex-husband.

Right now neither me nor my ex-husband have wills or any kind of trust to make transferring these assets to the kids' guardian easy if anything happens to us. We have also taken out life insurance policies that pay to the kids, but I have no idea how that works.

What are the first steps to take? ...


You would have a Will that leaves your estate to your children in separate trusts rather than outright. That would keep their inheritances out of their estates, and better protect their inheritances against their creditors and spouses, and Medicaid. It would also permit someone else to control the money until the children were older.

You would then change the beneficiary designations for your life insurance and retirement benefits to leave them to your children's trusts.

Each child would actually have two trusts, one for his/her share of your retirement benefits and one for his/her share of your other assets. The reasons for this are somewhat technical, but a competent trusts and estates lawyer should be able to do this as a routine matter. Both sets of trusts would be in your Will.

However, if the retirement benefits are small, and neither child has a major disability, you could leave the retirement benefits to custodians for them under the Uniform Transfers to Minors Act, and take the risk that they handle the money unwisely when the custodianships end at age 18 or 21 or 25 (depending on the state), to avoid the effort to create and administer small trusts. They would still have the rest of their inheritance in trust.

You'll have to select executors, trustees and guardians (in case your ex-husband dies first). If your assets go to your children in trust rather than outright, the guardians won't receive any assets, but they'll still be guardians of the person (in other words, they'll get to decide where the children live, etc. until they're 18)

You'll have to decide at what age each child should get to control his/her trust. For this purpose, control means the right to become a trustee, the power to remove and replace his/her co-trustee (provided the replacement trustee is not a close relative or subordinate employee), and the power to appoint (give or leave) the trust assets to anyone he/she wants (other than the child or his/her estate or creditors).

Unless you expect your estate to be large enough to pay estate taxes (over $5,490,000 at present), all of this should be a routine matter for any competent trusts and estates lawyer.

Your ex-husband could do the same thing. After neither of you is living, the trustees of your children's trusts under your Will and the trustees of your children's trusts under your ex-husband's Will may be able to combine the trusts for administrative convenience.

If you're in California (or another state where probating a Will is difficult), then you would do this in a revocable trust instead of a Will.

NotWhoYouThink wrote:... We set up Uncle Fred as trustee, with the money going to our kids at 25 (1/3) and 30 (remainder). ...


Instead of mandating distributions at 25 and 30, you could have provided that each child would get control (as discussed above) at 25 or 30. That way, the trust assets wouldn't be included in the child's estate for estate tax purposes, and would have been better protected against his/her creditors and spouses, and Medicaid. The original poster said she is divorced, so she would probably be concerned about protecting assets against spouses.
Last edited by bsteiner on Fri Jan 06, 2017 4:58 pm, edited 1 time in total.

afan
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Re: Need a will and possibly trust - where do I start?

Postby afan » Fri Jan 06, 2017 3:49 pm

red_uu

As you may have gathered, bsteiner is an expert estate planning attorney. As you can see from his reply, there are a lot of things to consider so you want people who know what they are doing. I have done estate planning with a less expensive attorney who did not know what he was doing. That forced me to pay even more money later to an expert, first to undo some of the mess attorney #1 created, then do everything right.

I am NOT an expert, so I don't know how much complexity the kids post divorce creates, but you want someone for whom this is no mystery.

I don't know what those legal plans are good for, but I would be amazed if any competent estate planning attorney would participate. Certainly not at that price. They have a lot of expertise and the laws, regulations and court judgments keep changing, so the experts have to spend a lot of their time keeping on top of their field. The ones who do this are worth the price. The ones who do not are dangerous. If you die prematurely you want your kids taken care of. Don't risk that while trying to save a few bucks on the estate planning.
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dm200
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Re: Need a will and possibly trust - where do I start?

Postby dm200 » Fri Jan 06, 2017 3:55 pm

red_uu wrote:Thanks for all these great comments.
The children are minors, both elementary-school age. Right now all of my IRAs and 401Ks list the kids as beneficiaries - I changed that right after the divorce. If minors are beneficiaries, what happens to the money if something happens to me - does it then go to the guardian until they are 18?
I was unaware that the beneficiary designation in IRAs and 401Ks overrided what it says in a will.


When we had minor child(ren), our estate planning attorney said very strongly "DO NOT MAKE MINORS BENEFICIARIES". We did wills with testamentary trusts. He then advised to make the spouse (in our case) primary beneficiary and the secondary beneficiary "trust under my will".

It seems to me that you need to provide for (at least) three situations: 1. Your death (and your ex still alive); 2. Your ex's death while you are alive (his dovuments); 3. Both parents' death.

In the ideal case, if you and the ex are cooperative and in agreement about 1-3, then that makes things less complex (and less expensive). It seems to me that each of your documents should ne coordinated and complementary.

Depending on advice of attorney(s), if this were my situation, because death(s) are unlikely, I would not spend the time, effort and higher expense of setting up trust(s) now, but leave that expense for after your death (chances are will never happen). In my opinion, your (and the ex's) documents should also provide for what is to happen if child(ren) are older. That is probably much different.

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dm200
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Re: Need a will and possibly trust - where do I start?

Postby dm200 » Fri Jan 06, 2017 3:59 pm

afan wrote:red_uu
As you may have gathered, bsteiner is an expert estate planning attorney. As you can see from his reply, there are a lot of things to consider so you want people who know what they are doing. I have done estate planning with a less expensive attorney who did not know what he was doing. That forced me to pay even more money later to an expert, first to undo some of the mess attorney #1 created, then do everything right.
I am NOT an expert, so I don't know how much complexity the kids post divorce creates, but you want someone for whom this is no mystery.
I don't know what those legal plans are good for, but I would be amazed if any competent estate planning attorney would participate. Certainly not at that price. They have a lot of expertise and the laws, regulations and court judgments keep changing, so the experts have to spend a lot of their time keeping on top of their field. The ones who do this are worth the price. The ones who do not are dangerous. If you die prematurely you want your kids taken care of. Don't risk that while trying to save a few bucks on the estate planning.


Absolutely. We had to do the same thing years ago with our wills. Fortunately, neither us us died. In my opinion, getting a price "bargain" is a very, very bad idea. You BOTH want it done right.

red_uu
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Re: Need a will and possibly trust - where do I start?

Postby red_uu » Fri Jan 06, 2017 4:03 pm

OP here, thank you for all your input! Lots to take in.

I will definitely not skimp on seeking good counsel. It sounds like the way to go is to try to coordinate getting a will done with my ex - maybe do at the same time so we know we have both covered all the bases.

afan
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Re: Need a will and possibly trust - where do I start?

Postby afan » Fri Jan 06, 2017 4:07 pm

It sounds complicated and expensive, but please force yourself to get on this now.

I have an in-law who got divorced several years ago and found it so traumatic that only years later could she get up the courage to deal with laws and lawyers again. She updated her beneficiary designations, I think, but is still gradually working on her will. Fortunately, nothing has happened to her health, but she has been running a risk of leaving substantial assets all to be handled by state intestacy laws. At least her kids are grown and there are no guardian issues.
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Re: Need a will and possibly trust - where do I start?

Postby mamarachel » Fri Jan 06, 2017 4:50 pm

dm200 wrote:
red_uu wrote:
Depending on advice of attorney(s), if this were my situation, because death(s) are unlikely, I would not spend the time, effort and higher expense of setting up trust(s) now, but leave that expense for after your death (chances are will never happen). In my opinion, your (and the ex's) documents should also provide for what is to happen if child(ren) are older. That is probably much different.


Piggybacking on this comment as we are planning some documents now...

Our attorney is recommending this approach for us, as our total net worth isn't large enough afford the fees associated with establishing trusts today. We, of course, can revisit. Right now our liquid assets are ~50K, Home Equity ~200K, + retirement accounts <1M. We have about 1.5M in life insurance currently with primary beneficiaries to each other "I love you" style, secondary split evenly between the 2 kids. We are late 30s and our children are under age 10.

My understanding from our price quotation for the estate work is that our will(s) would provide for the establishment of the trusts to be a container for our assets only upon our deaths. As most of our net worth is in retirement accounts I'm concerned we didn't hear about creating trusts for those separately.

We have chosen to nominate different custodial guardianship from financial guardianship. The people able to physically care for our children aren't financially savvy but the people we trust with money are too elderly to care for young children. Our back-up financial guardian if the named person dies or is unwilling or unable to be the financial guardian would be a paid advisor (not-selected, or named; only to be established after our deaths).

So now I'm confused that maybe what we've been quoted isn't what we need and I'd like to be sure we are buying the correct products and structuring them carefully.

We have in our package
Last Will & Testament
POA - Medical
POA - Assets
Advanced Directive

within the Will should be language saying "create these trusts under these rules".

Is that what you are discussing?

We were told that creating the trusts now would complicate our taxes and be expensive and the likelihood we both die is low and our assets are low. I'm concerned with the kids receiving the life insurance as a lump sum. I guess I thought there was no way that sum of money would be given to minor children. Now I'm thinking I need to point the life insurance into the trust with the non-retirement assets AND direct that separate trusts are established for the retirement assets. Is that correct?

We are in WA, no state estate tax.

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Re: Need a will and possibly trust - where do I start?

Postby red_uu » Fri Jan 06, 2017 4:57 pm

mamarachel wrote:
dm200 wrote:
red_uu wrote:
Depending on advice of attorney(s), if this were my situation, because death(s) are unlikely, I would not spend the time, effort and higher expense of setting up trust(s) now, but leave that expense for after your death (chances are will never happen). In my opinion, your (and the ex's) documents should also provide for what is to happen if child(ren) are older. That is probably much different.


Piggybacking on this comment as we are planning some documents now...

Our attorney is recommending this approach for us, as our total net worth isn't large enough afford the fees associated with establishing trusts today. We, of course, can revisit. Right now our liquid assets are ~50K, Home Equity ~200K, + retirement accounts <1M. We have about 1.5M in life insurance currently with primary beneficiaries to each other "I love you" style, secondary split evenly between the 2 kids. We are late 30s and our children are under age 10.

My understanding from our price quotation for the estate work is that our will(s) would provide for the establishment of the trusts to be a container for our assets only upon our deaths. As most of our net worth is in retirement accounts I'm concerned we didn't hear about creating trusts for those separately.

We have chosen to nominate different custodial guardianship from financial guardianship. The people able to physically care for our children aren't financially savvy but the people we trust with money are too elderly to care for young children. Our back-up financial guardian if the named person dies or is unwilling or unable to be the financial guardian would be a paid advisor (not-selected, or named; only to be established after our deaths).

So now I'm confused that maybe what we've been quoted isn't what we need and I'd like to be sure we are buying the correct products and structuring them carefully.

We have in our package
Last Will & Testament
POA - Medical
POA - Assets
Advanced Directive

within the Will should be language saying "create these trusts under these rules".

Is that what you are discussing?

We were told that creating the trusts now would complicate our taxes and be expensive and the likelihood we both die is low and our assets are low. I'm concerned with the kids receiving the life insurance as a lump sum. I guess I thought there was no way that sum of money would be given to minor children. Now I'm thinking I need to point the life insurance into the trust with the non-retirement assets AND direct that separate trusts are established for the retirement assets. Is that correct?

We are in WA, no state estate tax.


OP here - someone mentioned above that retirement accounts are not placed in trusts?

I am in a similar situation in that most of my assets are in retirement accounts. I am still unsure whether a trust is necessary. Need to talk to a professional. :)

mamarachel
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Re: Need a will and possibly trust - where do I start?

Postby mamarachel » Fri Jan 06, 2017 5:08 pm

bsteiner wrote:You would have a Will that leaves your estate to your children in separate trusts rather than outright. That would keep their inheritances out of their estates, and better protect their inheritances against their creditors and spouses, and Medicaid. It would also permit someone else to control the money until the children were older.

You would then change the beneficiary designations for your life insurance and retirement benefits to leave them to your children's trusts.

Each child would actually have two trusts, one for his/her share of your retirement benefits and one for his/her share of your other assets. The reasons for this are somewhat technical, but a competent trusts and estates lawyer should be able to do this as a routine matter. Both sets of trusts would be in your Will.

However, if the retirement benefits are small, and neither child has a major disability, you could leave the retirement benefits to custodians for them under the Uniform Transfers to Minors Act, and take the risk that they handle the money unwisely when the custodianships end at age 18 or 21 or 25 (depending on the state), to avoid the effort to create and administer small trusts. They would still have the rest of their inheritance in trust.


red_uu wrote:OP here - someone mentioned above that retirement accounts are not placed in trusts?

I am in a similar situation in that most of my assets are in retirement accounts. I am still unsure whether a trust is necessary. Need to talk to a professional. :)


I read bsteiner's message as saying the retirement assets need to be directed into a separate trust, so 4 would be created for 2 children.

One trust would contain retirement accounts and the other would contain "the rest", including life insurance - per child.

afan
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Re: Need a will and possibly trust - where do I start?

Postby afan » Fri Jan 06, 2017 5:19 pm

Bsteiner will tell you that, in most states, there is little to gain from establishing trusts in life, rather than in your will. We have created and funded living trusts since, in addition to somewhat simplifying estate settlement at death, we have found when helping others that the trust is far better than powers of attorney for taking over for someone who can no longer manage their assets.

I think bsteiner has said that the drafting for creating trusts now, vs writing a will that includes the trusts is similar in time and therefore in costs.

You make the trust beneficiary of the retirement assets. you do not put the retirement assets in trust. Making the trust beneficiary has several advantages over simply leaving the money directly to minor children. Once the kids are grown there are still asset protection advantages of having the retirement money go to the kids in trust. Right now the kids could stretch out the required distributions from the retirement plan over their lifetimes. There are threats that this may go away. If it does, then they would have to take it all out relatively quickly, perhaps 5 years. That would expose all the assets. By leaving the money to a trust with them as beneficiary, the trustee can accumulate the money distributed from the retirement plan, maintain the asset protection and still spend it on the kids as needed.

If your estate attorney does not know his/her way around these issues, then you need to find someone else.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

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Peter Foley
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Re: Need a will and possibly trust - where do I start?

Postby Peter Foley » Fri Jan 06, 2017 5:46 pm

red_uu wrote:

The children are minors, both elementary-school age. Right now all of my IRAs and 401Ks list the kids as beneficiaries - I changed that right after the divorce.


Well done. This is actually where you start for financial issues. Start with beneficiary designations and continue on to add payable on death to any bank accounts and transfer on death to any brokerage accounts. You may not have to do anything with the later two if you addressed these account issues when you were divorced. Guardians for your minor children and for their money is also a top priority - to be addressed in your will.

As indicated, if you go the trust route some of the beneficiary and payable designations will change. What I'm basically saying is don't leave things in limbo for a few months while you become educated and then follow up with an attorney and a trust.

JGoneRiding
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Re: Need a will and possibly trust - where do I start?

Postby JGoneRiding » Sat Jan 07, 2017 10:46 pm

mamarachel wrote:
We are in WA, no state estate tax.


I am not a lawyer but unless it changed again recently wa HAS had an estate tax. I belive last time i looked it up it was 3.4 million. But if course there is constant discussion of doing away with them. Since its unlikely i will ever hit that number I was never concerned.

I didnt read the whole thing http://dor.wa.gov/Content/FindTaxesAndR ... state.aspx

It concerns me if your attorney thinks there is no tax regardless just saying

afan
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Re: Need a will and possibly trust - where do I start?

Postby afan » Sun Jan 08, 2017 8:38 am

To be fair, the OP may have meant "no state estate tax FOR US", due to the size of the estate.
We don't know how to beat the market on a risk-adjusted basis, and we don't know anyone that does know either | --Swedroe | We assume that markets are efficient, that prices are right | --Fama

mamarachel
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Re: Need a will and possibly trust - where do I start?

Postby mamarachel » Mon Jan 09, 2017 2:23 pm

JGoneRiding wrote:
I am not a lawyer but unless it changed again recently wa HAS had an estate tax. I belive last time i looked it up it was 3.4 million. But if course there is constant discussion of doing away with them. Since its unlikely i will ever hit that number I was never concerned.

I didnt read the whole thing http://dor.wa.gov/Content/FindTaxesAndR ... state.aspx

It concerns me if your attorney thinks there is no tax regardless just saying
\

afan wrote:To be fair, the OP may have meant "no state estate tax FOR US", due to the size of the estate.


This.

At this time, our estate does not exceed the exclusion amount. Correct me if I'm wrong but estate is only taxable over the exclusion-amount, correct? Tax implications could change down the road as we accumulate wealth. We'd address it at that time. We would also address, as necessary, any changes in tax legislation.

We aren't going to pay for the attorney to structure a what-if scenario today.


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