How to find reputable person for Will/Trust?

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Biotech3
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How to find reputable person for Will/Trust?

Post by Biotech3 » Thu May 10, 2018 4:34 pm

My parents recently attended a seminar put on by the local community center regarding retirement/Wills/Living trusts that a company put on. They were looking into having this prepared but I looked up the company and I don't know that they are best suited to help them with this. How do I go about looking for someone to prepare these things for my parents? They are not very financially literate and I have been helping my mom with her retirement as well as will help both my parents with setting this up.

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lthenderson
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Re: How to find reputable person for Will/Trust?

Post by lthenderson » Thu May 10, 2018 5:48 pm

For things like this, the best resource if finding friends and neighbors who are satisfied customers of a particular service, in this case lawyers who do wills and trusts. When we did ours, I asked a few trusted neighbors and they all recommended the same person so it was a no brainer at that point.

sport
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Re: How to find reputable person for Will/Trust?

Post by sport » Thu May 10, 2018 5:55 pm

I asked an attorney who does not do this type of work. He recommended one that does.

GAAP
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Re: How to find reputable person for Will/Trust?

Post by GAAP » Fri May 11, 2018 10:03 am

http://www.naepc.org/designations/estat ... h#spec/All
The estate planning professionals who appear in this searchable database - which you can search by name, zip code or state - all hold the Accredited Estate Planner® (AEP®) designation, awarded and administered by the National Association of Estate Planners & Councils (NAEPC). By selecting an estate planning professional who holds the AEP® designation, you can be sure that he or she will focus on the team concept of estate planning while incorporating the knowledge, skill, expertise, and experience of his or her professional discipline to provide you with a personal, yet comprehensive estate plan.

tibbitts
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Re: How to find reputable person for Will/Trust?

Post by tibbitts » Fri May 11, 2018 10:09 am

lthenderson wrote:
Thu May 10, 2018 5:48 pm
For things like this, the best resource if finding friends and neighbors who are satisfied customers of a particular service, in this case lawyers who do wills and trusts. When we did ours, I asked a few trusted neighbors and they all recommended the same person so it was a no brainer at that point.
That's a horrible idea. Those same friends and neighbors will all recommend Edward Jones, too.

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DaftInvestor
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Re: How to find reputable person for Will/Trust?

Post by DaftInvestor » Fri May 11, 2018 10:26 am

tibbitts wrote:
Fri May 11, 2018 10:09 am
lthenderson wrote:
Thu May 10, 2018 5:48 pm
For things like this, the best resource if finding friends and neighbors who are satisfied customers of a particular service, in this case lawyers who do wills and trusts. When we did ours, I asked a few trusted neighbors and they all recommended the same person so it was a no brainer at that point.
That's a horrible idea. Those same friends and neighbors will all recommend Edward Jones, too.
What's your alternative? Asking friends/neighbors is a great place to start - you can then vet them on the BBB.

gretah
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Re: How to find reputable person for Will/Trust?

Post by gretah » Fri May 11, 2018 10:34 am

I would ask my tax accountant to recommend an attorney who's work she has seen. Lots of smart things can be done to avoid probate, lower taxes, and other things. Accountants see some of these documents and tools in use.

In my area, the most popular estate attorney / firm does crappy work. I've seen it. But he is an excellent marketer. So I would not take the advice of friends and family.

JoinToday
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Re: How to find reputable person for Will/Trust?

Post by JoinToday » Fri May 11, 2018 10:43 am

tibbitts wrote:
Fri May 11, 2018 10:09 am
lthenderson wrote:
Thu May 10, 2018 5:48 pm
For things like this, the best resource if finding friends and neighbors who are satisfied customers of a particular service, in this case lawyers who do wills and trusts. When we did ours, I asked a few trusted neighbors and they all recommended the same person so it was a no brainer at that point.
That's a horrible idea. Those same friends and neighbors will all recommend Edward Jones, too.
What percentage of trust & estate lawyers would you estimate are in the "Edward Jones" equivalent class of lawyers?
And in general, what percentage of lawyers would you estimate are in the "Edward Jones" equivalent class of lawyers?

My first trust was written by a lawyer recommended by a lawyer friend. My second trust document was written by a lawyer recommended by a coworker. I used knowledge gained on this forum in the second trust, and it turned out much better than the first one.
I wish I had learned about index funds 25 years ago

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lthenderson
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Re: How to find reputable person for Will/Trust?

Post by lthenderson » Fri May 11, 2018 12:10 pm

tibbitts wrote:
Fri May 11, 2018 10:09 am
lthenderson wrote:
Thu May 10, 2018 5:48 pm
For things like this, the best resource if finding friends and neighbors who are satisfied customers of a particular service, in this case lawyers who do wills and trusts. When we did ours, I asked a few trusted neighbors and they all recommended the same person so it was a no brainer at that point.
That's a horrible idea. Those same friends and neighbors will all recommend Edward Jones, too.
Actually my neighbors all recommend a private investing firm in our capital city but since I know better, I never took them up on that advice. Likewise, if you know a great lawyer to begin with, you probably wouldn't waste time asking neighbors. But if you don't know where to start, asking neighbors is a great way to shorten the time you spend doing due diligence that one should do before trusting anyone with their financial assets.

afan
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Re: How to find reputable person for Will/Trust?

Post by afan » Fri May 11, 2018 1:55 pm

Try an ACTEC fellow. https://www.actec.org/fellows/directory/

ACTEC is the American College of Trusts and Estates Counsel. They are elected by current fellows on the basis of recognized expertise in the field. Many are law professors or judges. But there are enough who do client work that it is a good resource.

Another, certainly expensive, is to look at the estates and trust group of a large prominent law firm. They will certainly charge high prices, but they are likely to know what they are doing.

You can also look for people highly rated by Martindale Hubbel.

It seems there are plenty of lawyers who don't know what they are doing who are happy to do estate planning anyway.
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

Gill
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Re: How to find reputable person for Will/Trust?

Post by Gill » Fri May 11, 2018 2:08 pm

After reading the OP's post more carefully, it appears OP may not understand that the documents need to be drawn by an attorney. Were you possibly thinking there are others that are in the business of preparing estate documents?
Gill

Murgatroyd
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Re: How to find reputable person for Will/Trust?

Post by Murgatroyd » Fri May 11, 2018 3:34 pm

Sometimes you just have to interview 2 or 3 lawyers. That’s what we did. I can tell you a couple were eliminated based on how the initial phone call was handled by their offices.

JBTX
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Re: How to find reputable person for Will/Trust?

Post by JBTX » Fri May 11, 2018 6:44 pm

If it is just standard wills and living trusts likely any qualified and experienced estate planning attorney could handle it. I’d probably ask trustee friends and trusted professionals for their recommendation. You may be able via the web or other resources to find experienced professionals.

What I have found recently and didn’t know going in that as you increase complexity the attorneys may tend to do things differently depending on what they know and what they specialize in. Some will recommend revocable living trusts in most situations. Others in low probate fee states will tell you they aren’t worth the money expended to set up. If you get into special needs or elder law then there may be other considerations (such as setting up trusts to optimize Medicaid eligibility)

If you get into setting up trusts for beneficiaries, and the estate has a material amount of qualified assets (401ks and IRAs ) then sub trusts may be set up to optimize beneficiary RMDs. Some attorneys favor “conduit” trusts and others prefer “accumulation” trusts.

Ultimately it is helpful to have an idea what you want going in, then interview several and get an idea what their fee structure is.

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FIREchief
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Re: How to find reputable person for Will/Trust?

Post by FIREchief » Fri May 11, 2018 8:35 pm

JBTX wrote:
Fri May 11, 2018 6:44 pm
If you get into setting up trusts for beneficiaries, and the estate has a material amount of qualified assets (401ks and IRAs ) then sub trusts may be set up to optimize beneficiary RMDs. Some attorneys favor “conduit” trusts and others prefer “accumulation” trusts.
This is a key variable. If the estate will have a meaningful amount of qualified assets, then you need to find an attorney who will set up an accumulation trust. Most of the "trust mills" out there don't go beyond a conduit trust, which provides very little asset protection for the heirs.

I don't think it is a matter of what an attorney "favors." In my experience, the good attorneys will set up whichever is most favorable for the heirs (likely always an accumulation trust), while the not so good attorneys will only set up a conduit trust. A counduit trust is simpler and doesn't present the same IRS compliance challenges that an accumulation trust presents. Understanding and complying with the IRS rulings on accumulation trusts can provide the heirs with literally millions of dollars of additional assets (assuming the world remains imperfect and we continue to have divorces, lawsuits, etc.).
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

Chicago60
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Re: How to find reputable person for Will/Trust?

Post by Chicago60 » Sat May 12, 2018 8:43 am

Contact your local bar association and ask for a referral. Interview 3-4 of them and pick. Also, see what local attorneys write for law reviews and other publications locals on the subjects of will drafting and estate planning and you will likely find competent attorneys with experience in this area of the law. Then search to see if any of these have been sued for malpractice.

Alan S.
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Re: How to find reputable person for Will/Trust?

Post by Alan S. » Sat May 12, 2018 9:49 am

Before you have the will or trust prepared, you will need to give some serious consideration with respect to the executor/trustee of these instruments.

Of course, these decisions can be changed, and probably will be if you are relatively young, but if you are older making the proper selection when the will or trust is drafted is critical. A bad executor can seriously impair the execution of a brilliant document.

This usually comes down to a trade off between the possibly incompetent and procrastinating family member who knows all the beneficiaries vs. the impersonal professional trustee. Most people lean toward the family member (eldest child, nearest child, etc) even though an objective analysis of the family member's knowledge, experience, and performance in analogous situations might be alarming. This can be a very challenging decision, and if going with a family member, a detailed discussion with that person should be conducted. Do they want this responsibility? Are there already conflicts with the other beneficiaries? Are they willing to compromise their own desires as beneficiary with other beneficiaries?

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Re: How to find reputable person for Will/Trust?

Post by Captain kangaroo » Sat May 12, 2018 10:07 am

I had experience with US Trust inheriting a multi million dollar trust.

Horrible experience, ridiculous fees. Felt like I got scammed when all was said and done.

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Re: How to find reputable person for Will/Trust?

Post by JBTX » Sat May 12, 2018 12:38 pm

FIREchief wrote:
Fri May 11, 2018 8:35 pm
JBTX wrote:
Fri May 11, 2018 6:44 pm
If you get into setting up trusts for beneficiaries, and the estate has a material amount of qualified assets (401ks and IRAs ) then sub trusts may be set up to optimize beneficiary RMDs. Some attorneys favor “conduit” trusts and others prefer “accumulation” trusts.
This is a key variable. If the estate will have a meaningful amount of qualified assets, then you need to find an attorney who will set up an accumulation trust. Most of the "trust mills" out there don't go beyond a conduit trust, which provides very little asset protection for the heirs.

I don't think it is a matter of what an attorney "favors." In my experience, the good attorneys will set up whichever is most favorable for the heirs (likely always an accumulation trust), while the not so good attorneys will only set up a conduit trust. A counduit trust is simpler and doesn't present the same IRS compliance challenges that an accumulation trust presents. Understanding and complying with the IRS rulings on accumulation trusts can provide the heirs with literally millions of dollars of additional assets (assuming the world remains imperfect and we continue to have divorces, lawsuits, etc.).
I had no knowledge of this subject until you brought it up, so I have you to thank for pointing it out! Not to derail the thread, but I went back in my trusts and they are in fact conduit. It is pretty clear from the language and a subsequent conversation with my attorney confirmed it. When I discussed it with him a week or so ago, he said he uses conduit trusts mainly because it is guaranteed to pass IRS see through provisions muster, and while a accumulation trust will likely be OK, it isn't hasn't been officially "blessed" in all cases. I can see some logic to that. By their nature, the point of an estate plan is risk aversion and contingency planning, and avoiding the remote risk that the IRS were to disallow such accumlation trusts doesn't seem totally unreasonable.

I asked about the downside of conduit trusts, and the fact that distributions become unprotected from creditors, and also in a special needs situation that in qualified SNT trusts with very large balances (7 figure +) the distributions could be larger than the beneficiaries annual spend, and having assets left over could disqualify them from benefits like SSI. He said what you could do to partially avoid that is upon distribution, have trustee move any potentially unspent (or unlikely to be unspent) money over to the non qualified trust (the presumption is that in cases, like ours, that a non qualified trust would have been also set up for non qualified assets). Now that may not avoid a particular creditor claim, if the claim is active/in force when the distribution takes place, but it could protect it from future claims.

I guess the question is, given all that, it seems like the downsides of the conduit trusts are minimized. Thoughts? Again, I don't what to derail this thread too much.

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Re: How to find reputable person for Will/Trust?

Post by afan » Sat May 12, 2018 1:27 pm

I don't know how well that would work. I thought, could be wrong, that the distributions from the conduit trust had to go to a person, not to a trust. If they had to go to a person, I don't know you would then get the money into an irrevocable trust with that person as beneficiary.

I have heard of a design that creates an accumulation trust with a "switch" that could convert it to conduit if the IRS puts a stop to the accumulation method. I would love to hear from people who know whether this works.
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FIREchief
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Re: How to find reputable person for Will/Trust?

Post by FIREchief » Sat May 12, 2018 4:09 pm

JBTX wrote:
Sat May 12, 2018 12:38 pm
FIREchief wrote:
Fri May 11, 2018 8:35 pm
JBTX wrote:
Fri May 11, 2018 6:44 pm
If you get into setting up trusts for beneficiaries, and the estate has a material amount of qualified assets (401ks and IRAs ) then sub trusts may be set up to optimize beneficiary RMDs. Some attorneys favor “conduit” trusts and others prefer “accumulation” trusts.
This is a key variable. If the estate will have a meaningful amount of qualified assets, then you need to find an attorney who will set up an accumulation trust. Most of the "trust mills" out there don't go beyond a conduit trust, which provides very little asset protection for the heirs.

I don't think it is a matter of what an attorney "favors." In my experience, the good attorneys will set up whichever is most favorable for the heirs (likely always an accumulation trust), while the not so good attorneys will only set up a conduit trust. A counduit trust is simpler and doesn't present the same IRS compliance challenges that an accumulation trust presents. Understanding and complying with the IRS rulings on accumulation trusts can provide the heirs with literally millions of dollars of additional assets (assuming the world remains imperfect and we continue to have divorces, lawsuits, etc.).
I had no knowledge of this subject until you brought it up, so I have you to thank for pointing it out! Not to derail the thread, but I went back in my trusts and they are in fact conduit. It is pretty clear from the language and a subsequent conversation with my attorney confirmed it. When I discussed it with him a week or so ago, he said he uses conduit trusts mainly because it is guaranteed to pass IRS see through provisions muster, and while a accumulation trust will likely be OK, it isn't hasn't been officially "blessed" in all cases. I can see some logic to that. By their nature, the point of an estate plan is risk aversion and contingency planning, and avoiding the remote risk that the IRS were to disallow such accumlation trusts doesn't seem totally unreasonable.

I asked about the downside of conduit trusts, and the fact that distributions become unprotected from creditors, and also in a special needs situation that in qualified SNT trusts with very large balances (7 figure +) the distributions could be larger than the beneficiaries annual spend, and having assets left over could disqualify them from benefits like SSI. He said what you could do to partially avoid that is upon distribution, have trustee move any potentially unspent (or unlikely to be unspent) money over to the non qualified trust (the presumption is that in cases, like ours, that a non qualified trust would have been also set up for non qualified assets). Now that may not avoid a particular creditor claim, if the claim is active/in force when the distribution takes place, but it could protect it from future claims.

I guess the question is, given all that, it seems like the downsides of the conduit trusts are minimized. Thoughts? Again, I don't what to derail this thread too much.
While the IRS has never published an official policy on accumulation trusts, they have accepted them in several Personal Letter Rulings, which provides a reasonable basis for attorneys to draft accumulation trusts with the expectation that the IRS will not reject them. Many who have taken the time to research and understand this have embraced accumulation trusts for the asset protection and potential tax benefits they may provide. I am convinced that the single most important variable in this is the quality of the attorney who is selected to draft the trust. I have personally met with at least two estate planning law firms who clearly demonstrated to me that they were clueless on this topic. They both had really nice offices and long lists of professional credentials, but they barely "spoke" conduit trusts (their boilerplates included conduit trust language, but the attorney's in both cases gave me either incomplete or blatantly incorrect answers to associated questions).
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

JBTX
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Re: How to find reputable person for Will/Trust?

Post by JBTX » Sat May 12, 2018 5:28 pm

afan wrote:
Sat May 12, 2018 1:27 pm
I don't know how well that would work. I thought, could be wrong, that the distributions from the conduit trust had to go to a person, not to a trust. If they had to go to a person, I don't know you would then get the money into an irrevocable trust with that person as beneficiary.
I have no idea, but is there any reason why distributed money to a person could not be redirected to another non qualified trust? I suppose the reason one may do that is if they were concerned about future asset claims against the beneficiary. Is it really worth the effort, I don’t know. My gut reaction is that the probability of a claim against a beneficiary is relatively small, and the RMD percent is pretty low, so maybe there is a 5% chance (hypothetically) of a claim against a 4% RMD. In the scheme of things that doesn’t seem like the end of the world.

I have heard of a design that creates an accumulation trust with a "switch" that could convert it to conduit if the IRS puts a stop to the accumulation method. I would love to hear from people who know whether this works.
That is the interesting thing about all this. Presumably this is all a bunch of legal language , perhaps ingenious, perhaps not, that you don’t really know if it stands up until it is tested.

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FIREchief
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Re: How to find reputable person for Will/Trust?

Post by FIREchief » Sat May 12, 2018 5:50 pm

JBTX wrote:
Sat May 12, 2018 5:28 pm
afan wrote:
Sat May 12, 2018 1:27 pm
I don't know how well that would work. I thought, could be wrong, that the distributions from the conduit trust had to go to a person, not to a trust. If they had to go to a person, I don't know you would then get the money into an irrevocable trust with that person as beneficiary.
I have no idea, but is there any reason why distributed money to a person could not be redirected to another non qualified trust? I suppose the reason one may do that is if they were concerned about future asset claims against the beneficiary. Is it really worth the effort, I don’t know.


I believe that afan is correct about this. In order for the qualified conduit trust to stretch the inherited IRA dollars, it can only pay out to primary beneficiaries who are "individuals" in the eyes of the IRS. It can't pay out to an unqualified trust. Once the dollars are paid to an individual, they can't (unfortunately) just tuck them back into another trust for which they are the beneficiary. They could likely use them to fund an irrevocable trust for the benefit of somebody else, but the funds would not be protected at the point they are first paid out. See my signature.
My gut reaction is that the probability of a claim against a beneficiary is relatively small, and the RMD percent is pretty low, so maybe there is a 5% chance (hypothetically) of a claim against a 4% RMD. In the scheme of things that doesn’t seem like the end of the world.
Unfortunately, marriages these days have around a 50% chance of failure.
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: How to find reputable person for Will/Trust?

Post by FIREchief » Sat May 12, 2018 6:02 pm

JBTX wrote:
Sat May 12, 2018 5:28 pm
That is the interesting thing about all this. Presumably this is all a bunch of legal language , perhaps ingenious, perhaps not, that you don’t really know if it stands up until it is tested.
Accumulation trusts have been tested numerous times, and the IRS has been consistent in accepting them under certain conditions. There are recognized authorities in the legal community, and as long as an attorney drafting an accumulation trust has educated themselves sufficiently, it is more a matter of them just doing it correctly. It is possible, as a consumer, to educate one's self on this as well; but it will take an investment of time and about $100 to buy the right book.

In an extreme situation, the Grantor of a trust could request a PLR (personal letter ruling) from the IRS for their own specific trust. I believe that this would cost over $10K in IRS fees as well as the legal fees for a supporting estate attorney. I've never heard of this being done, because the IRS has been consistent in allowing accumulation trusts that meet certain criteria. That said, if a person was going to leave several million in a qualified trust, it would likely be worth spending $15,000 to assure asset protection for several million if they had significant concerns about IRS acceptance. As I understand it, a PLR is binding on the IRS for the specific inidividual tax situation for which it was issued. Please see my signature.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

afan
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Re: How to find reputable person for Will/Trust?

Post by afan » Sat May 12, 2018 6:37 pm

I have no intention of seeking a Private Letter Ruling. Years ago, when I initially set up the relatively simple estate plan we needed at the time, I was lucky enough to be directed to a true expert. He said that PLR's only make sense when the circumstances prevent you from accomplishing your goals in a standard way and you have to get into undefined territory> Then you would need the PLR.

The IRS is explicit that a PLR, although interesting to other people, is only binding for the specific person and conditions described. They say that they could issue a set of PLR's approving, say, accumulation trusts, then one day start challenging them all.

It worries me somewhat that the IRS has not issued rules for accumulation trusts as it has for conduits. I don't know whether this is because the amount of staff time required is not justified by the number of times it comes up- the hopeful view. But could it reflect an internal debate and hostility toward the maneuver that is not resolved at the Service, but could at any moment make them go away?

For the case of taking the distributions from the conduit trust and directing it into another trust, I was mainly thinking about someone like a special needs beneficiary, where the distributions from the trust might endanger other benefits for which the person might be eligible. In that case, I suspect that having received the money would be the event that could make them ineligible and what they did with it thereafter would not matter.

If we limit it to someone who did not have ongoing creditors at the time, there might be more options. I suppose they could set up an asset protection trust, domestic or foreign, and still have access to the money under certain circumstance. But bsteiner has said that even the, less expensive, domestic asset protection trust only makes sense if one has a very large amount of money (many millions) to protect. It also only makes sense if the risks cannot be insured or contracted away. If we are talking about a trust to be funded by RMD's the amount of money in the retirement asset would have to be huge for the annual required withdrawals to be large enough to justify such a trust. Or so I gather.

I get the appeal of the accumulation trust, but I wonder whether some of the estate planning attorneys who avoid them do so not out of ignorance, but due to concern about their reliability.

One can read Choate's book, but if you are not an expert in this area I would still not assume you understood all the issues. It is written for estate planning attorneys and I don't know how much she leaves out, assuming the reader would know the more obvious stuff that would go right past a layperson.
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

Gill
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Re: How to find reputable person for Will/Trust?

Post by Gill » Sat May 12, 2018 6:43 pm

Anyone notice the OP has vanished? I still think, based on the OP’s question, that she doesn’t realized an attorney’s services are needed.
Gill

afan
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Re: How to find reputable person for Will/Trust?

Post by afan » Sat May 12, 2018 7:56 pm

I had assumed "the company" in the OP was a law firm doing a seminar to get clients. What other entity would do that? Is there a business in prospecting for clients at a seminar, then referring the people to lawyers for a fee?
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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Re: How to find reputable person for Will/Trust?

Post by Gill » Sat May 12, 2018 8:40 pm

afan wrote:
Sat May 12, 2018 7:56 pm
I had assumed "the company" in the OP was a law firm doing a seminar to get clients. What other entity would do that? Is there a business in prospecting for clients at a seminar, then referring the people to lawyers for a fee?
Often brokerage firms, banks and financial planners put on that kind of seminar. It is illegal and unethical for a lawyer to pay fees for client referrals.
Gill

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FIREchief
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Re: How to find reputable person for Will/Trust?

Post by FIREchief » Sat May 12, 2018 11:43 pm

Gill wrote:
Sat May 12, 2018 8:40 pm
afan wrote:
Sat May 12, 2018 7:56 pm
I had assumed "the company" in the OP was a law firm doing a seminar to get clients. What other entity would do that? Is there a business in prospecting for clients at a seminar, then referring the people to lawyers for a fee?
Often brokerage firms, banks and financial planners put on that kind of seminar. It is illegal and unethical for a lawyer to pay fees for client referrals.
Gill
I've been to two free dinner seminars where the financial planning company brings up estate planning as part of the presentation. They tend to have somebody already on their "team." In one case, it happened to be a lawyer I had previously met with and wrote off as totally unqualified. :shock:
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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Re: How to find reputable person for Will/Trust?

Post by afan » Sun May 13, 2018 9:50 am

Then the lawyer's involvement was part of mutual back scratching with no money changing hands among the team?
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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Re: How to find reputable person for Will/Trust?

Post by bsteiner » Sun May 13, 2018 10:02 am

There is no litmus test or easy answer. Several people have suggested one credential or another. There are good lawyers with each of these credentials (and others not mentioned in this thread), but there are also lawyers with each of these credentials whom I would prefer to have an an adversary than as co-counsel.

Probably the best you can do is ask around, get some names, and then check their bios and their firms' websites. Speaking for the American Bar Association or a state bar association seminar counts for more than speaking at a senior center. Writing for a peer-reviewed professional journal counts for more than writing for a small weekly newspaper. Check the ratings on martindale.hubbell. They're peer reviewed and there's no grade inflation. A lawyer who wants a rating gives them the names of several dozen lawyers in the same field. Martindale e-mails those lawyers, but it's anonymous. In other words, they'll send me the names of several dozen lawyers to rate, one of which is the one who gave them my name, but I won't know which one gave them my name.

You could also ask in this forum if you're willing to provide your location (in other words, the nearest city of any size).
afan wrote:
Sat May 12, 2018 1:27 pm
...
I have heard of a design that creates an accumulation trust with a "switch" that could convert it to conduit if the IRS puts a stop to the accumulation method. I would love to hear from people who know whether this works.
It's the other way around. A marketing-oriented lawyer came up with a design where you start with a conduit trust, but someone has a 9-month window to opt to turn it into an accumulation trust. I don't think this makes any sense. To begin with, I think conduit trusts rarely make sense, for the reasons others have pointed out, so this design requires extra work. There's also the risk that the deadline is missed.

There are many otherwise good lawyers who don't understand trusts as beneficiaries of retirement benefits.
FIREchief wrote:
Sat May 12, 2018 6:02 pm
,,,
the Grantor of a trust could request a PLR (personal letter ruling) from the IRS for their own specific trust. I believe that this would cost over $10K in IRS fees as well as the legal fees for a supporting estate attorney. I've never heard of this being done, because the IRS has been consistent in allowing accumulation trusts that meet certain criteria. That said, if a person was going to leave several million in a qualified trust, it would likely be worth spending $15,000 to assure asset protection for several million if they had significant concerns about IRS acceptance. As I understand it, a PLR is binding on the IRS for the specific inidividual tax situation for which it was issued. ....


The IRS hasn't issued very much guidance on this other than in private letter rulings.

In any event, I don't think the IRS will issue a private letter ruling on this if the IRA owner is living.

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Re: How to find reputable person for Will/Trust?

Post by Gill » Sun May 13, 2018 10:09 am

afan wrote:
Sun May 13, 2018 9:50 am
Then the lawyer's involvement was part of mutual back scratching with no money changing hands among the team?
That should be the case unless the lawyer wishes to risk disbarment.
Gill

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Re: How to find reputable person for Will/Trust?

Post by JBTX » Sun May 13, 2018 11:48 am

afan wrote:
Sat May 12, 2018 6:37 pm
I have no intention of seeking a Private Letter Ruling. Years ago, when I initially set up the relatively simple estate plan we needed at the time, I was lucky enough to be directed to a true expert. He said that PLR's only make sense when the circumstances prevent you from accomplishing your goals in a standard way and you have to get into undefined territory> Then you would need the PLR.

The IRS is explicit that a PLR, although interesting to other people, is only binding for the specific person and conditions described. They say that they could issue a set of PLR's approving, say, accumulation trusts, then one day start challenging them all.

It worries me somewhat that the IRS has not issued rules for accumulation trusts as it has for conduits. I don't know whether this is because the amount of staff time required is not justified by the number of times it comes up- the hopeful view. But could it reflect an internal debate and hostility toward the maneuver that is not resolved at the Service, but could at any moment make them go away?

For the case of taking the distributions from the conduit trust and directing it into another trust, I was mainly thinking about someone like a special needs beneficiary, where the distributions from the trust might endanger other benefits for which the person might be eligible. In that case, I suspect that having received the money would be the event that could make them ineligible and what they did with it thereafter would not matter.

If we limit it to someone who did not have ongoing creditors at the time, there might be more options. I suppose they could set up an asset protection trust, domestic or foreign, and still have access to the money under certain circumstance. But bsteiner has said that even the, less expensive, domestic asset protection trust only makes sense if one has a very large amount of money (many millions) to protect. It also only makes sense if the risks cannot be insured or contracted away. If we are talking about a trust to be funded by RMD's the amount of money in the retirement asset would have to be huge for the annual required withdrawals to be large enough to justify such a trust. Or so I gather.

I get the appeal of the accumulation trust, but I wonder whether some of the estate planning attorneys who avoid them do so not out of ignorance, but due to concern about their reliability.

One can read Choate's book, but if you are not an expert in this area I would still not assume you understood all the issues. It is written for estate planning attorneys and I don't know how much she leaves out, assuming the reader would know the more obvious stuff that would go right past a layperson.
As to conduit trust distributions, I was interpreting that it was 2 step process. First the distribution to beneficiary, then moving it to another trust. Perhaps that is a ridiculous idea or not doable. I have no idea.

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Re: How to find reputable person for Will/Trust?

Post by afan » Sun May 13, 2018 2:51 pm

It is certainly doable. The problem is what moving it into a trust accomplishes. In general it is difficult for people to establish trusts for themselves as beneficiaries and maintain asset protection. The domestic and foreign asset protection trusts try to do this with lawyers debating how well they work. But for them to work at all, if the money comes from a beneficiary of the trust that person cannot have unpaid debts at the time (oversimplification, but that is the general idea). If a beneficiary is qualifying for special needs but then gets a lot of money, that would put their government benefits at risk, no matter whether they kept the money in their own name or put it into a trust.

At least, I think that is what would happen.

If the person had no debts that assets in their own name could not cover, then they could certainly put the extra money into a trust- in effect they could give it away. But having given it away there would be limits on their ability to later use that money. This gets into the complex area of asset protection trusts. They get discussed occasionally here, but only a few commenters are attorneys with any experience.

If the goal is to have retirement account RMDs go to the benefit of the beneficiary but with the beneficiary never owning the money, then an accumulation trust is the way to go. Just recognize that
1. You need estate attorneys who know what they are doing
2. There is some risk that the IRS may shut down or further complicate the accumulation trust route.
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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Re: How to find reputable person for Will/Trust?

Post by afan » Sun May 13, 2018 3:36 pm

bsteiner wrote:
Sun May 13, 2018 10:02 am

It's the other way around. A marketing-oriented lawyer came up with a design where you start with a conduit trust, but someone has a 9-month window to opt to turn it into an accumulation trust. I don't think this makes any sense. To begin with, I think conduit trusts rarely make sense, for the reasons others have pointed out, so this design requires extra work. There's also the risk that the deadline is missed.
Interesting. It has been presented as the ability to go from accumulation to conduit or conduit to accumulation. But you knew that. I gather PLR 200537044 concerned conduit to accumulation.

If the switch can only be made within 9 months of the retirement account owner's death then it does not seem particularly useful. If one could do it at any later point, that might be an advantage. It also assumes that the people around after the death understand the need to make this decision and do it in a timely fashion. Seems to be asking a lot.
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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Re: How to find reputable person for Will/Trust?

Post by FIREchief » Sun May 13, 2018 3:43 pm

afan wrote:
Sun May 13, 2018 2:51 pm
2. There is some risk that the IRS may shut down or further complicate the accumulation trust route.
I'm not sure what the IRS's motivation would be to eliminate accumulation trusts. The only real federal tax advantage that I am aware of is for keeping
extremely large amounts of assets out of the primary beneficiary's estate. This likely applies in only a miniscule number of cases, since even the ultra wealthy likely don't have most of their wealth in qualified retirement assets. In all other cases, the accumulation trust may only serve to increase taxes paid, as funds retained within the trust will quickly pay federal taxes at higher rates than the beneficiaries would pay on distributions.
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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Re: How to find reputable person for Will/Trust?

Post by bsteiner » Sun May 13, 2018 3:53 pm

afan wrote:
Sun May 13, 2018 2:51 pm
...
If the goal is to have retirement account RMDs go to the benefit of the beneficiary but with the beneficiary never owning the money, then an accumulation trust is the way to go. Just recognize that
1. You need estate attorneys who know what they are doing
2. There is some risk that the IRS may shut down or further complicate the accumulation trust route.
No one knows what the future will bring. But I'm not concerned about this. The IRS' concern is making sure that distributions have to be paid out over the life expectancy of the oldest person who could ever receive any of the IRA benefits. That's why in PLR 200228025 (trusts for grandchilldren to age 30, remainder to a person age 67) they counted the 67-year-old, and just a few weeks later in PLR 200235038 (trusts for children, child could appoint in favor of anyone in the world who wasn't older than the oldest child) the IRS looked to the oldest child.
afan wrote:
Sun May 13, 2018 3:36 pm
bsteiner wrote:
Sun May 13, 2018 10:02 am

It's the other way around. A marketing-oriented lawyer came up with a design where you start with a conduit trust, but someone has a 9-month window to opt to turn it into an accumulation trust. I don't think this makes any sense. To begin with, I think conduit trusts rarely make sense, for the reasons others have pointed out, so this design requires extra work. There's also the risk that the deadline is missed.
Interesting. It has been presented as the ability to go from accumulation to conduit or conduit to accumulation. But you knew that. I gather PLR 200537044 concerned conduit to accumulation.

If the switch can only be made within 9 months of the retirement account owner's death then it does not seem particularly useful. If one could do it at any later point, that might be an advantage. It also assumes that the people around after the death understand the need to make this decision and do it in a timely fashion. Seems to be asking a lot.
I agree that this makes no sense. It's a marketing gimmick by a marketing-oriented lawyer.
FIREchief wrote:
Sun May 13, 2018 3:43 pm
afan wrote:
Sun May 13, 2018 2:51 pm
2. There is some risk that the IRS may shut down or further complicate the accumulation trust route.
I'm not sure what the IRS's motivation would be to eliminate accumulation trusts. The only real federal tax advantage that I am aware of is for keeping extremely large amounts of assets out of the primary beneficiary's estate. This likely applies in only a miniscule number of cases, since even the ultra wealthy likely don't have most of their wealth in qualified retirement assets. In all other cases, the accumulation trust may only serve to increase taxes paid, as funds retained within the trust will quickly pay federal taxes at higher rates than the beneficiaries would pay on distributions.
The rules regarding required distributions are income tax rules. The IRS people who deal with them don't consider estate planning and may not be familiar with estate planning.

You are correct that, with a few exceptions (such as Mitt Romney who disclosed that he has a very large IRA), retirement benefits are often a large percentage of the total assets of upper middle class people, but not for the very wealthy. The very wealthy often leave their IRAs to charity.

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Re: How to find reputable person for Will/Trust?

Post by JBTX » Sun May 13, 2018 6:10 pm

bsteiner wrote:
Sun May 13, 2018 3:53 pm
afan wrote:
Sun May 13, 2018 2:51 pm
...
If the goal is to have retirement account RMDs go to the benefit of the beneficiary but with the beneficiary never owning the money, then an accumulation trust is the way to go. Just recognize that
1. You need estate attorneys who know what they are doing
2. There is some risk that the IRS may shut down or further complicate the accumulation trust route.
No one knows what the future will bring. But I'm not concerned about this. The IRS' concern is making sure that distributions have to be paid out over the life expectancy of the oldest person who could ever receive any of the IRA benefits. That's why in PLR 200228025 (trusts for grandchilldren to age 30, remainder to a person age 67) they counted the 67-year-old, and just a few weeks later in PLR 200235038 (trusts for children, child could appoint in favor of anyone in the world who wasn't older than the oldest child) the IRS looked to the oldest child.
afan wrote:
Sun May 13, 2018 3:36 pm
bsteiner wrote:
Sun May 13, 2018 10:02 am

It's the other way around. A marketing-oriented lawyer came up with a design where you start with a conduit trust, but someone has a 9-month window to opt to turn it into an accumulation trust. I don't think this makes any sense. To begin with, I think conduit trusts rarely make sense, for the reasons others have pointed out, so this design requires extra work. There's also the risk that the deadline is missed.
Interesting. It has been presented as the ability to go from accumulation to conduit or conduit to accumulation. But you knew that. I gather PLR 200537044 concerned conduit to accumulation.

If the switch can only be made within 9 months of the retirement account owner's death then it does not seem particularly useful. If one could do it at any later point, that might be an advantage. It also assumes that the people around after the death understand the need to make this decision and do it in a timely fashion. Seems to be asking a lot.
I agree that this makes no sense. It's a marketing gimmick by a marketing-oriented lawyer.
FIREchief wrote:
Sun May 13, 2018 3:43 pm
afan wrote:
Sun May 13, 2018 2:51 pm
2. There is some risk that the IRS may shut down or further complicate the accumulation trust route.
I'm not sure what the IRS's motivation would be to eliminate accumulation trusts. The only real federal tax advantage that I am aware of is for keeping extremely large amounts of assets out of the primary beneficiary's estate. This likely applies in only a miniscule number of cases, since even the ultra wealthy likely don't have most of their wealth in qualified retirement assets. In all other cases, the accumulation trust may only serve to increase taxes paid, as funds retained within the trust will quickly pay federal taxes at higher rates than the beneficiaries would pay on distributions.
The rules regarding required distributions are income tax rules. The IRS people who deal with them don't consider estate planning and may not be familiar with estate planning.

You are correct that, with a few exceptions (such as Mitt Romney who disclosed that he has a very large IRA), retirement benefits are often a large percentage of the total assets of upper middle class people, but not for the very wealthy. The very wealthy often leave their IRAs to charity.
In researching conduit vs accumulation for special needs trusts (other thread) i stumbled upon this site that purports to have a “toggle switch” between conduit and accumulation.

http://ultimateestateplanner.com/2016/1 ... umulation/

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Re: How to find reputable person for Will/Trust?

Post by FIREchief » Sun May 13, 2018 7:13 pm

JBTX wrote:
Sun May 13, 2018 6:10 pm
In researching conduit vs accumulation for special needs trusts (other thread) i stumbled upon this site that purports to have a “toggle switch” between conduit and accumulation.

http://ultimateestateplanner.com/2016/1 ... umulation/
I think this is what we've been discussing. The article seems to be inaccurate and incomplete in several areas:

a) It seems to suggest that a conduit trust is a better mechanism than an accumulation trust for stretching out IRA payouts. This is only true if the successor beneficiaries are older than the primary beneficiary or not individuals. In the very common situation where a grantor wished to name their children as primary beneficiaries, and their issue as successor beneficiaries; then there is no benefit with a conduit trust.

b) It mentions that the toggle can be switched only for a limited time, but it doesn't spell out the timeframe. I believe Bruce or afan already mentioned a 9 month deadline. That provides little or no advantage in my opinion. That beneficiary has the rest of their lives to be sued or divorced (perhaps several times, and especially if they have a large pool of "target" assets).
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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Re: How to find reputable person for Will/Trust?

Post by Biotech3 » Sun May 13, 2018 7:28 pm

Hi All,

Thanks so much for the responses. My parents have never used a lawyer for anything that I can think of in their lives. Additionally, they do not really have any close family/friends/neighbors that they can or would feel comfortable asking for a will/trust lawyer.

This only was brought up because and started having this discussion looking into will/trust planning when my parents went to this free presentation. I do not think it would be overly complicated as they do not have a huge amount of assets and only have a few accounts. I think they just want something simple in place and for relatively cheap. It is only my sister and I that would potentially be in a will or trust.

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Re: How to find reputable person for Will/Trust?

Post by helloeveryone » Sun May 13, 2018 7:34 pm

Biotech3 wrote:
Thu May 10, 2018 4:34 pm
My parents recently attended a seminar put on by the local community center regarding retirement/Wills/Living trusts that a company put on. They were looking into having this prepared but I looked up the company and I don't know that they are best suited to help them with this. How do I go about looking for someone to prepare these things for my parents? They are not very financially literate and I have been helping my mom with her retirement as well as will help both my parents with setting this up.
I would search for a lawyer that specializes in estate planning. This is actually very important so it’s great that they attended a seminar and want to take action. For us one of our friend’s dad was a lawyer. We asked who he would recommend for estate planning and he had a colleague in town who legal practice focused on estate planning.

That lawyer helped with a will, financial POA, medical POA, DNR, and outlined what happens to our children if we both die. Doing all this gave us tremendous peace of mind because we experienced what happens when someone gets sick/hospitalized then passes away months later without all the above taken care of.

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Re: How to find reputable person for Will/Trust?

Post by bsteiner » Sun May 13, 2018 8:32 pm

FIREchief wrote:
Sun May 13, 2018 7:13 pm
JBTX wrote:
Sun May 13, 2018 6:10 pm
In researching conduit vs accumulation for special needs trusts (other thread) i stumbled upon this site that purports to have a “toggle switch” between conduit and accumulation.

http://ultimateestateplanner.com/2016/1 ... umulation/
I think this is what we've been discussing. The article seems to be inaccurate and incomplete in several areas:

a) It seems to suggest that a conduit trust is a better mechanism than an accumulation trust for stretching out IRA payouts. This is only true if the successor beneficiaries are older than the primary beneficiary or not individuals. In the very common situation where a grantor wished to name their children as primary beneficiaries, and their issue as successor beneficiaries; then there is no benefit with a conduit trust.

b) It mentions that the toggle can be switched only for a limited time, but it doesn't spell out the timeframe. I believe Bruce or afan already mentioned a 9 month deadline. That provides little or no advantage in my opinion. That beneficiary has the rest of their lives to be sued or divorced (perhaps several times, and especially if they have a large pool of "target" assets).
That's where it comes from. It's a marketing gimmick.

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Re: How to find reputable person for Will/Trust?

Post by afan » Tue May 15, 2018 9:18 am

Given how hard it can be to reliably find an expert estate planning attorney, I would hate to leave my heirs in a situation where there was something complicated they had to do during a limited time frame, buried somewhere in a mass of legalese.

The heirs might not realize there was a decision to make and I suspect there are plenty of attorneys who could help settle an estate, but far fewer operating at bsteiner's level who would fully understand what had to be done.

(Bruce will probably say that this is not that complicated and lots of estate planning experts would handle it just fine. The challenge for those of us who are not lawyers is finding someone who does know what they are doing. This would have been set up by a testator who wanted to get the most options and control of the retirement money, but the heirs typically would not have been involved.)

If it were done correctly, one would end up with an accumulation trust, which could have been the design in the first place.
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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