will or living revocable trust

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dbadalam
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will or living revocable trust

Post by dbadalam » Mon Nov 04, 2019 7:57 am

I'm married, no children and we are trying to get our financial documents in order and not sure what we need.

The house is in my name only, I do not have the deed (it was never sent to me when I paid off the mortgage). If I died, I need to make sure my spouse gets the house.

Do we need a will or a living revocable trust? Or what criteria or information is necessary to make this determination?

Other than the house, I suppose the cars and bank accounts is all that we have to worry about. If we both died, I guess our parents would get everything and our siblings would be next.

I figure I better know what we need before we hire an attorney.

thanks

HomeStretch
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Re: will or living revokable trust

Post by HomeStretch » Mon Nov 04, 2019 8:02 am

Generally a person should have a will, durable financial power of attorney, healthcare directives/power of attorney and appropriate asset/account beneficiary designations. A Trust may or may not be necessary. For best advice and assistance with preparing these, consult with an estate attorney experienced in your state.

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Sandtrap
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Re: will or living revokable trust

Post by Sandtrap » Mon Nov 04, 2019 8:13 am

dbadalam wrote:
Mon Nov 04, 2019 7:57 am
I'm married, no children and we are trying to get our financial documents in order and not sure what we need.

The house is in my name only, I do not have the deed (it was never sent to me when I paid off the mortgage). If I died, I need to make sure my spouse gets the house.

Do we need a will or a living revocable trust? Or what criteria or information is necessary to make this determination?

Other than the house, I suppose the cars and bank accounts is all that we have to worry about. If we both died, I guess our parents would get everything and our siblings would be next.

I figure I better know what we need before we hire an attorney.

thanks
Seek legal counsel to best suggest what you need.
Everyone's different.
What might sound like excellent advice from another non-lawyer person, may not be excellent advice that fits you.

j :happy
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JoeRetire
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Re: will or living revokable trust

Post by JoeRetire » Mon Nov 04, 2019 9:20 am

dbadalam wrote:
Mon Nov 04, 2019 7:57 am
Do we need a will or a living revocable trust?

I figure I better know what we need before we hire an attorney.
Each of you need a will. You may also benefit from a trust.

Your attorney will advise you.
Don't be a lemming.

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RickBoglehead
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Re: will or living revokable trust

Post by RickBoglehead » Mon Nov 04, 2019 9:24 am

You can easily go to the County and get a copy of the deed.

You can easily have a new deed created where you transfer ownership from you to yourself and your wife, or to a trust. Costs maybe $30 to transfer it (plus legal fees if you use a lawyer).

There is no need to guess as to what happens if you and your wife both pass. Your state has laws which decide this, and you can override these laws by declaring beneficiaries on your accounts. Sign onto your bank or brokerage and setup beneficiaries. If an account is not joint, you can either make it joint or make the other spouse the primary beneficiary, and then other people secondary beneficiaries.

And yes, at a minimum you need wills and POAs. Even if you setup a revocable trust, you need wills.
Avid user of forums on variety of interests-financial, home brewing, F-150, PHEV, home repair, etc. Enjoy learning & passing on knowledge. It's PRINCIPAL, not PRINCIPLE. I ADVISE you to seek ADVICE.

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dbadalam
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Re: will or living revokable trust

Post by dbadalam » Mon Nov 04, 2019 10:56 am

thanks for the replies

Our beneficiary's are set up on accounts and we will get a couple of consultations done before we make any decisions.

Big Dog
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Re: will or living revokable trust

Post by Big Dog » Mon Nov 04, 2019 10:58 am

in CA, neither is needed in your sitch. You can setup all accounts with PoD/ToD, and also your house that way. Check with your state to see if you can auto transfer your home property upon your death.

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lthenderson
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Re: will or living revocable trust

Post by lthenderson » Mon Nov 04, 2019 1:30 pm

Living trusts aren't just something a lawyer sets up one time and you never think about it again. For them to work, all assets going into the trust, need to be retitled/renamed to the trust name. I think I've heard something like well over 50% of all trusts created never get anything put into them. I'm going through this now with my mom's now irrevocable trust. Two properties she had weren't listed as being owned by the trust and therefor aren't part of the trust.

Unless you have a lot of real estate/non cash assets or simply a lot of money that you don't want publicly disclosed in a probate hearing, you probably don't need a trust. Like others, consult a good attorney in your area for specifics.

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Re: will or living revokable trust

Post by Dottie57 » Mon Nov 04, 2019 1:40 pm

Sandtrap wrote:
Mon Nov 04, 2019 8:13 am
dbadalam wrote:
Mon Nov 04, 2019 7:57 am
I'm married, no children and we are trying to get our financial documents in order and not sure what we need.

The house is in my name only, I do not have the deed (it was never sent to me when I paid off the mortgage). If I died, I need to make sure my spouse gets the house.

Do we need a will or a living revocable trust? Or what criteria or information is necessary to make this determination?

Other than the house, I suppose the cars and bank accounts is all that we have to worry about. If we both died, I guess our parents would get everything and our siblings would be next.

I figure I better know what we need before we hire an attorney.

thanks
Seek legal counsel to best suggest what you need.
Everyone's different.
What might sound like excellent advice from another non-lawyer person, may not be excellent advice that fits you.

j :happy
+1

bsteiner
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Re: will or living revocable trust

Post by bsteiner » Mon Nov 04, 2019 1:56 pm

dbadalam wrote:
Mon Nov 04, 2019 7:57 am
...
Do we need a will or a living revocable trust? Or what criteria or information is necessary to make this determination?...
What state are you in?

There are usually many more important issues to consider than this.

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LilyFleur
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Re: will or living revocable trust

Post by LilyFleur » Mon Nov 04, 2019 2:26 pm

Does your state provide the option of a Transfer On Death deed to your house? My estate is uncomplicated, with a condo, 401k, bank accounts, and a car. Both my car and condo have Transfer on Death deeds so that my heirs would avoid probate. Also, they are the beneficiaries on my bank account and checking accounts. For all the rest of it (writing the will, power of attorney for health and financial, etc.), I used the Nolo press will-writing software. I did take some of the paperwork to my credit union to be notarized.

HomeStretch
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Re: will or living revokable trust

Post by HomeStretch » Mon Nov 04, 2019 2:32 pm

dbadalam wrote:
Mon Nov 04, 2019 10:56 am
thanks for the replies

Our beneficiary's are set up on accounts and we will get a couple of consultations done before we make any decisions.
You should review these with your attorney to make sure nothing conflicts with your bequests per your wills as the beneficiary designations override your wills.

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celia
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Re: will or living revocable trust

Post by celia » Mon Nov 04, 2019 4:03 pm

If you live in a community property state, you likely would want all your non-retirement accounts and house owned jointly. This is because the asset gets a step-up in value at the time one of you dies. When the second person dies, the assets get another step up in value.

But, while widowed (only one of you left), the survivor can sell the asset soon after the first death and not have to pay taxes on that much of gains since the date of the first death. Be sure your lawyer takes this into account if you currently or ever lived in a community property state.

inbox788
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Re: will or living revocable trust

Post by inbox788 » Thu Nov 07, 2019 1:57 am

celia wrote:
Mon Nov 04, 2019 4:03 pm
If you live in a community property state, you likely would want all your non-retirement accounts and house owned jointly. This is because the asset gets a step-up in value at the time one of you dies. When the second person dies, the assets get another step up in value.

But, while widowed (only one of you left), the survivor can sell the asset soon after the first death and not have to pay taxes on that much of gains since the date of the first death. Be sure your lawyer takes this into account if you currently or ever lived in a community property state.
What's the simplest way to document and figure out this step-up value? An appraisal on the home? And is a recent brokerage statement sufficient, or does it have to be the date on the certificate?

I thought joint property only got half a step up basis. Also, my wife and I have individual brokerage accounts (opened after marriage); would that cause a problem? Should they be re titled as joint accounts and is that all there is to it?

FWIW, I've been going through beneficiaries, and I'm finding more than I expected. Several places make it easy online to specify a primary and sometimes even a secondary beneficiary. So I'm making all the financial accounts POD or TOD. California a few years back started allowing TOD for primary home, so I'm investigating that that route now. The plan is for each parent to TOD to sole adult child. I understand Community Property WROS is supposed to transfer to spouse, but I'm trying to figure out if it makes sense for each parent to TOD directly to child instead, if ultimately the child will inherit the property when both parents pass away. How does that change cost basis, capital gains, home sale tax exemption, and property tax?

https://edmundvincentlaw.com/blog/compl ... eath-deeds

With just a few financial accounts and a home property, plus a couple of cars, that can mostly be taken care of this way, I'm not seeing much compelling reason for a living trust. What would go in it? And same thing when it comes to the will, since anything listed on the will that already had a beneficiary will only cause needless confusion. There's not much else I see one would need to put in the will other than some physical items and guardianship if you have kids, but still, a will is required, so just make a simple one.

NewMoneyMustBeSmart
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Re: will or living revocable trust

Post by NewMoneyMustBeSmart » Thu Nov 07, 2019 8:55 am

dbadalam wrote:
Mon Nov 04, 2019 7:57 am
I'm married, no children and we are trying to get our financial documents in order and not sure what we need.

The house is in my name only, I do not have the deed (it was never sent to me when I paid off the mortgage). If I died, I need to make sure my spouse gets the house.

Do we need a will or a living revocable trust? Or what criteria or information is necessary to make this determination?

Other than the house, I suppose the cars and bank accounts is all that we have to worry about. If we both died, I guess our parents would get everything and our siblings would be next.

I figure I better know what we need before we hire an attorney.

thanks
My opinion is: If you expect to have over $500k net worth in the next 10 years, you need:

1. Medical Power of Attorney (in my situation, my wife gets to decide what to do with me medically)
2. Living Will / Directive (instructions for wife/others if I'm having significant medical problems)
3. Power of Attorney for Asset Managemnt (in my situation, if I'm incapacitated wife can do things in my name)
4. Revocable Trust (this will make things easier when I die, to avoid probate, and spawns irrevocable trusts for kids when my wife and I die)
5. Will (What happens to my stuff if I have not put it into the trust, which I should have, who gets the kids)

An estate attorney should charge $1250-$5k to do the above. Shop around. Most but not all are good enough. It's mostly relationship for me.

After you get the above done, you can probably change it with brief consultations w/ an attorney.

I sleep much better having the above done.

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celia
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Re: will or living revocable trust

Post by celia » Thu Nov 07, 2019 9:05 pm

inbox788 wrote:
Thu Nov 07, 2019 1:57 am
celia wrote:
Mon Nov 04, 2019 4:03 pm
If you live in a community property state, you likely would want all your non-retirement accounts and house owned jointly. This is because the asset gets a step-up in value at the time one of you dies. When the second person dies, the assets get another step up in value.

But, while widowed (only one of you left), the survivor can sell the asset soon after the first death and not have to pay taxes on that much of gains since the date of the first death. Be sure your lawyer takes this into account if you currently or ever lived in a community property state.
What's the simplest way to document and figure out this step-up value? An appraisal on the home? And is a recent brokerage statement sufficient, or does it have to be the date on the certificate?
For real estate, the survivor/heir would need to get a formal appraisal. For investments, after you send in the death certificate and paperwork for changing ownership on the accounts, the custodian should re-set the cost basis using historic information for the date of death. Sometimes the survivor will forget to request that or the custodian might forget to re-set it, so the survivor needs to check that it was done.
I thought joint property only got half a step up basis.
In a community property state, all jointly owned assets and the solo assets of the deceased will get a full step up in value. In other states, jointly owned assets will get half of the step up and solo assets of the deceased will get a full step up. [Retirement accounts are different since they don't have a cost basis. They are taxed when the money goes in (Roth) or when it comes out (tax-deferred).]
Also, my wife and I have individual brokerage accounts (opened after marriage); would that cause a problem? Should they be re titled as joint accounts and is that all there is to it?
You probably need to consider why those accounts were opened separately. Possibly you each have different beneficiaries, a trust that impacts one (or both) of you, or a need to keep some money separate.
FWIW, I've been going through beneficiaries, and I'm finding more than I expected. Several places make it easy online to specify a primary and sometimes even a secondary beneficiary. So I'm making all the financial accounts POD or TOD. California a few years back started allowing TOD for primary home, so I'm investigating that that route now. The plan is for each parent to TOD to sole adult child. I understand Community Property WROS is supposed to transfer to spouse, but I'm trying to figure out if it makes sense for each parent to TOD directly to child instead, if ultimately the child will inherit the property when both parents pass away. How does that change cost basis, capital gains, home sale tax exemption, and property tax?
The problem with leaving half a house or account to a non-spouse is that the surviving spouse might need to sell the assets for their own living expenses, but they no longer own the whole asset. In addition, it is possible for the non-spouse heir to run up debt or lose a lawsuit and thus neither your spouse or child would then own it. Or the non-spouse heir could die or divorce before your spouse dies and leave their share to their own spouse.
With just a few financial accounts and a home property, plus a couple of cars, that can mostly be taken care of this way, I'm not seeing much compelling reason for a living trust. What would go in it? And same thing when it comes to the will, since anything listed on the will that already had a beneficiary will only cause needless confusion. There's not much else I see one would need to put in the will other than some physical items and guardianship if you have kids, but still, a will is required, so just make a simple one.
Major advantages of trusts are that you can assure that the asset(s) are kept for the beneficiary you desire (instead of going to a child's ex or the surviving spouse's next spouse). It is also easier for the trustee to manage your assets should you and/or your spouse become incapacitated but are still living.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

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