Wills and Trusts - Things to consider?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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shg1928
Posts: 2
Joined: Sat Apr 07, 2018 9:34 am

Wills and Trusts - Things to consider?

Post by shg1928 » Sat Apr 07, 2018 11:03 am

Background: Wife is 58, I'm 60, both in good health. We both still work and plan to for several more years. We have two grown children out on their own. Financially, we are in good shape with ~$4M in retirement savings, own our primary home and have a second lake house with a mortgage. We have a will and an Irrevocable Living Trust. The will was written when the kids were little and we plan to get it updated soon. I would just like to get peoples thoughts before we visit the attorney to give us ideas on what we should consider when we update the will. I'm comfortable with our attorney that he will guide up in the best direction, but would like to be a little more knowledgeable before we meet.

Some particular questions I have are:
  • Is the irrevocable trust the best way to go given our situation?
Should we put any of our assets, e.g. homes, retirement accounts, in a trust now? If so, what's the advantage/disadvantage of doing that?
what is the best way to transfer assets to our kids upon our death to avoid as much taxation as possible and avoid any tax issues for them?

Any general comments on the "best" way to protect our estate now and upon our death would be appreciated. Thanks!

tibbitts
Posts: 7798
Joined: Tue Feb 27, 2007 6:50 pm

Re: Wills and Trusts - Things to consider?

Post by tibbitts » Sat Apr 07, 2018 12:49 pm

shg1928 wrote:
Sat Apr 07, 2018 11:03 am
Background: Wife is 58, I'm 60, both in good health. We both still work and plan to for several more years. We have two grown children out on their own. Financially, we are in good shape with ~$4M in retirement savings, own our primary home and have a second lake house with a mortgage. We have a will and an Irrevocable Living Trust. The will was written when the kids were little and we plan to get it updated soon. I would just like to get peoples thoughts before we visit the attorney to give us ideas on what we should consider when we update the will. I'm comfortable with our attorney that he will guide up in the best direction, but would like to be a little more knowledgeable before we meet.

Some particular questions I have are:
  • Is the irrevocable trust the best way to go given our situation?
Should we put any of our assets, e.g. homes, retirement accounts, in a trust now? If so, what's the advantage/disadvantage of doing that?
what is the best way to transfer assets to our kids upon our death to avoid as much taxation as possible and avoid any tax issues for them?

Any general comments on the "best" way to protect our estate now and upon our death would be appreciated. Thanks!
Although I'm a fan of d-i-y for some legal tasks, I think that irrevocable trust (which might be of various types with various objectives) takes you out of d-i-y range pretty quickly. And this being the Bogleheads forum, you're sure to get some d-i-y recommendations. But in any case, I'm not sure you'll get a response here specific enough to your situation (state, etc.), at least not without providing much more detailed information.

JBTX
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Re: Wills and Trusts - Things to consider?

Post by JBTX » Sat Apr 07, 2018 1:40 pm

Are you sure it is an irrevocable living trust vs a revocable living trust? If truly irrevocable then I doubt too many here can advise you unless one of the attorneys. Revocable living trusts are pretty common.

denovo
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Re: Wills and Trusts - Things to consider?

Post by denovo » Sat Apr 07, 2018 1:41 pm

JBTX wrote:
Sat Apr 07, 2018 1:40 pm
Are you sure it is an irrevocable living trust vs a revocable living trust? If truly irrevocable then I doubt too many here can advise you unless one of the attorneys. Revocable living trusts are pretty common.
Ya, I am guessing it's a revocable too.
"Don't trust everything you read on the Internet"- Abraham Lincoln

brandy
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Re: Wills and Trusts - Things to consider?

Post by brandy » Sat Apr 07, 2018 1:45 pm

In my state, my revocable living trust becomes irrevocable when I die.
Probably yours, too.

JBTX
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Re: Wills and Trusts - Things to consider?

Post by JBTX » Sat Apr 07, 2018 1:50 pm

brandy wrote:
Sat Apr 07, 2018 1:45 pm
In my state, my revocable living trust becomes irrevocable when I die.
Probably yours, too.
Revocables become irrevocable upon death of grantor which in this case I’d assume is husband and wife.

One disadvantage of an irrevocable trust is that once your put assets into it, you lose the step up in basis for capital gains purposes, and trusts are taxed at a higher tax rate.

tibbitts
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Re: Wills and Trusts - Things to consider?

Post by tibbitts » Sat Apr 07, 2018 3:03 pm

I don't understand the speculation: the OP said irrevocable, and I don't assume that means irrevocable only after the OP passes away. There are a variety of reasons for having irrevocable trusts, but like I said I don't believe irrevocable trusts are d-i-y turf.

Swampy
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Re: Wills and Trusts - Things to consider?

Post by Swampy » Sat Apr 07, 2018 3:32 pm

shg1928 wrote:
Sat Apr 07, 2018 11:03 am
Background: Wife is 58, I'm 60, both in good health. We both still work and plan to for several more years. We have two grown children out on their own. Financially, we are in good shape with ~$4M in retirement savings, own our primary home and have a second lake house with a mortgage. We have a will and an Irrevocable Living Trust. The will was written when the kids were little and we plan to get it updated soon. I would just like to get peoples thoughts before we visit the attorney to give us ideas on what we should consider when we update the will. I'm comfortable with our attorney that he will guide up in the best direction, but would like to be a little more knowledgeable before we meet.

Some particular questions I have are:
  • Is the irrevocable trust the best way to go given our situation?
Should we put any of our assets, e.g. homes, retirement accounts, in a trust now? If so, what's the advantage/disadvantage of doing that?
what is the best way to transfer assets to our kids upon our death to avoid as much taxation as possible and avoid any tax issues for them?

Any general comments on the "best" way to protect our estate now and upon our death would be appreciated. Thanks!
Our experience is less than positive.

After setting up a revocable trust, Special Needs Trust and guardianship for our severely disabled child, we found out the "reasonable" fees are subject to interpretation. The attorney has taken this as an opportunity to legally pillage and plunder by charging egregious fees. I was charged for 6 hours of professional time to renew the annual guardianship paperwork for the court. After that, I did it myself (and I am not a lawyer) in under 2 hours the following year and less than an hour the year after that at NO charge. I am glad we found out while still alive.

Currently, we are looking for another attorney, but have found out they are like 'financial advisors.' They make sure they get their cut each and every year, whether or not they have provided any worthwhile service, leaving their clients poorer for the experience. In our case, we absolutely dread the prospect of funds running out for our special needs adult child who may potentially live another 60 years. We planned on leaving a substantial amount in the Special Needs Trust but have discovered (thank God, early enough) that the lion's share would be eaten up by this avaricious attorney!

As mentioned, we are looking around, but there appears to be an unwritten code of silence and complete lack of transparency regarding ongoing fees - at least in our area. Our requests are simple and not detailed, yet we encounter the 'weasel clause' time and again allowing attorneys to be able overcharge for the service provided.
If you fail to plan, you plan to fail. | Failure is not an option. | If I have seen further, it is because I was carried on the shoulders of giants.

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FIREchief
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Re: Wills and Trusts - Things to consider?

Post by FIREchief » Sat Apr 07, 2018 3:49 pm

tibbitts wrote:
Sat Apr 07, 2018 3:03 pm
I don't understand the speculation: the OP said irrevocable, and I don't assume that means irrevocable only after the OP passes away. There are a variety of reasons for having irrevocable trusts, but like I said I don't believe irrevocable trusts are d-i-y turf.
The requests for clarification seem appropriate and it would nice if the OP would confirm.
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: Wills and Trusts - Things to consider?

Post by FIREchief » Sat Apr 07, 2018 3:52 pm

shg1928 wrote:
Sat Apr 07, 2018 11:03 am
Should we put any of our assets, e.g. homes, retirement accounts, in a trust now? If so, what's the advantage/disadvantage of doing that?
what is the best way to transfer assets to our kids upon our death to avoid as much taxation as possible and avoid any tax issues for them?
It generally makes little sense to transfer qualified retirement accounts into a trust while the owner is still living. If pre-tax, this would consitute a taxable event, and there would be no further tax deferral benefits.

Have you "funded" your existing trust with anything to this point?
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

chmcnm
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Re: Wills and Trusts - Things to consider?

Post by chmcnm » Sat Apr 07, 2018 3:54 pm

IANL but trusts typically count as assets for college financial aid. If your kids have a high salary it's probably a non issue. If not, lets say 2 kids per sibling so 4 grandkids attending college. Private schools can run $300k for an undergraduate degree. Multiply by 4 kids so $1.2M potential aid lost.

We setup an irrevocable trust. It's not DIY. It cost a few thousand dollars. Knowing what I know now I'm not sure we would go that route. Kind of a pain. You can always start gifting them money now to invest in their own name. If I remember correctly, retirement accounts typically don't go into an irrevocable trust.

Derby
Posts: 112
Joined: Tue Sep 09, 2014 1:56 am

Re: Wills and Trusts - Things to consider?

Post by Derby » Sat Apr 07, 2018 6:41 pm

If you are looking to educate yourselves, try Nolo Press's Will and Trust publications. Even if you don't DIY it, you will learn what questions to ask.
Carpe Diem.

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