Mom is updating her will - any “gotchas”?

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Freetime76
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Mom is updating her will - any “gotchas”?

Post by Freetime76 » Sat Jan 11, 2020 9:05 pm

Thank you in advance for any perspectives or advice. My mom and I talk openly about her finances, including estate plans. We’ve read The Good Will. I’m her executor...(mostly) glad except I know what it means. Dad’s estate was rough to do (sibling issues to the nth degree), and I’m asking for comments or any pitfalls. I’ll relay them to my mom.

She is updating her will later this month. Her intent is to provide a secure home for my sibling and hopefully some roots (single, drifting about with no job, living off a few hundred K inheritance from dad several years ago). Previously, sibling was to receive an annuity “to keep her from being homeless in her old age”. I’m a horrible daughter :shock: because I dashed that plan, explaining that an annuity can be sold for cash, and she’d have to do some kind of trust. Too complicated, and mom never liked the annuity idea in the first place-she just didn’t know what else to do at the time - so mom is saying to give her the house and let her sink or swim.

Mom is planning:
1) For her assets to be split equally between my sibling and I
2) Sibling will receive mom’s house, no mortgage, well-maintained, inexpensive to own, in an area sibling likes, judging by the fact that she stays there a lot
3) Investments and bank accounts will be dicvided to reach 50% to sibling, minus the appraisal value of the house. The investments are maybe 1.5X what the house is worth.
4) Various charities receive something
5) Some amount goes to a special family friend.

A few other details: the whole estate probably will be about $1M. No beneficiaries named on the investment or bank accounts. A relatively small amount in a life insurance policy and a rollover IRA are TOD/POD to us at 50/50. Mom has very good medical insurance and LTC insurance. Mom’s health is ok right now, but had a couple of scares, she’s in her 70s.

Are there any major issues with the investments going through probate? Most are various stocks, which mom currently pulls dividends off of. She also has some cash in bank accounts and savings bonds in a safety deposit box.

Sandwich
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Re: Mom is updating her will - any “gotchas”?

Post by Sandwich » Sat Jan 11, 2020 9:32 pm

Freetime76 wrote:
Sat Jan 11, 2020 9:05 pm
...... Her intent is to provide a secure home for my sibling and hopefully some roots (single, drifting about with no job, living off a few hundred K inheritance from dad several years ago). Previously, sibling was to receive an annuity “to keep her from being homeless in her old age”. I’m a horrible daughter :shock: because I dashed that plan, explaining that an annuity can be sold for cash, and she’d have to do some kind of trust. Too complicated, and mom never liked the annuity idea in the first place-she just didn’t know what else to do at the time - so mom is saying to give her the house and let her sink or swim.....

…. Mom is planning:
1) For her assets to be split equally between my sibling and I
2) Sibling will receive mom’s house, no mortgage, well-maintained, inexpensive to own, in an area sibling likes, judging by the fact that she stays there a lot
3) Investments and bank accounts will be dicvided to reach 50% to sibling, minus the appraisal value of the house. The investments are maybe 1.5X what the house is worth.
Questions … how old is your sibling ?

How large / old is the house ?

I mention this as there could be large expenses for property taxes and also "deferred maintenance" if the home has not been kept up as your parents have aged and your Dad has passed away.

Could your Mom's home be too large for your sibling to manage ? Would it be a more economic option to sell Mom's home after she passes and have the option of purchasing a "smaller" living unit for your single sibling ? Possibly with lower property taxes and lower overall upkeep costs.

Freetime76 wrote:
Sat Jan 11, 2020 9:05 pm
….
A few other details: the whole estate probably will be about $1M. No beneficiaries named on the investment or bank accounts. A relatively small amount in a life insurance policy and a rollover IRA are TOD/POD to us at 50/50. Mom has very good medical insurance and LTC insurance. Mom’s health is ok right now, but had a couple of scares, she’s in her 70s.

Are there any major issues with the investments going through probate? Most are various stocks, which mom currently pulls dividends off of. She also has some cash in bank accounts and savings bonds in a safety deposit box.

Does your Mom have a "Living Trust" document with her own accounts held in trust ? If not, consider setting up this type of arrangement … perhaps with you as a co-trustee and then have her investments and bank accounts titled into the name of her trust. This would provide flexibility if / when she has a health care situation in which she then needs your help to pay for Long-term care costs not covered by her LTC insurance. Your Mom may consider adding your name to a durable power of attorney … that way if a future health scare is more serious, you can access her accounts to pay for costs … act as her agent to file tax forms. etc.

Having funds in a trust with co-trustees may also avoid the situation in investments and bank accounts end up being "frozen" if you Mom passes away without another name on the account (i.e., as a co-trustee).

Is the safe deposit box in her name only or is your name on this as well ? Heard from an Elder Law attorney that there is better access if more than one name is on the safe deposit box …. as an example, if the parent dies, then the relative who is also on the account can access the box … otherwise the box and contents may have to go thru probate.

Consider consulting with an Elder Law attorney in your area.

Good luck with this process.

Carefreeap
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Re: Mom is updating her will - any “gotchas”?

Post by Carefreeap » Sat Jan 11, 2020 10:05 pm

You should research what the probate process is like for your state. I'm in CA and it can take closer to two years to go through a full probate if an estate has real property. It's one reason we use so many Living Trusts in CA.

Does your sibling have an addiction or other problem which keeps her from establishing herself? If so it might be worthwhile for you and your mom to research a Special Needs Trust. People who have addiction problems can blow through a windfall quickly and drive themselves to an early death. Spacing out their money over time may give an incentive to get some help.

Finally, if you're the Executor or Trustee expect constant demands from the "needy" sibling while you are settling the estate and later once the sibling blows through the money she inherits. Make sure you know how to say "No!".

Good luck!

bsteiner
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Re: Mom is updating her will - any “gotchas”?

Post by bsteiner » Sat Jan 11, 2020 10:13 pm

It's not at all complicated for your mother to leave your sister's share in trust rather than outright. That will protect her inheritance.

She might also leave your share in trust rather than outright to keep your share out of your estate for estate tax purposes and to protect it against your creditors and spouses, and Medicaid. You could have a greater degree of control over your trust that your sister will have over her trust.
Carefreeap wrote:
Sat Jan 11, 2020 10:05 pm
You should research what the probate process is like for your state. I'm in CA and it can take closer to two years to go through a full probate if an estate has real property. It's one reason we use so many Living Trusts in CA.
...
That's not typical of the other states. What state does she live in?
Carefreeap wrote:
Sat Jan 11, 2020 10:05 pm
...

Does your sibling have an addiction or other problem which keeps her from establishing herself? If so it might be worthwhile for you and your mom to research a Special Needs Trust. People who have addiction problems can blow through a windfall quickly and drive themselves to an early death. Spacing out their money over time may give an incentive to get some help.
...
The trust for the child with special needs is for the most part the same as the trust for the child without special needs. The difference is that, depending on the situation, the child with special needs may have a lesser degree of control (or no control at all) over her trust.

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Re: Mom is updating her will - any “gotchas”?

Post by Lafder » Sat Jan 11, 2020 11:31 pm

Sounds like you and I are in a similar situation. I am the financially responsible and more financially secure sibling.

My parents initially were going to set up a will and trust that would ensure the money for my sibling get handed out over time and doesn't get blown. Then my parents decided rather than have a professional trust company dole the money out over time for high fees, they would just have assets divided and distributed directly. As my mom says, "I won't be here to see it blown and I do not want to try to control from the grave." They did not want extra resentments if I got my share outright and sibling's was controlled.

I have thought that the best way to insure my sibling is cared for and has a home is to have them leave a home in trust with extra money to take care of it that my sibling can not access for any other reason, and the house can not be sold without trustee approval. But my parents just do not want me to have any stress of dealing with any of that, or dealing with paying a trust company for my sibling to fight with, or controlling from the grave.

Is there a high likelihood the home will be sold by your sister ? That puts a lot of expense and stress on your sister to keep it up, clean and fix it up and sell it. If she may live there forever, it is a nice way for her to have a paid off home that gives her less cash to blow. Of course, your sibling could not pay taxes or pull cash out and lose the home. Perhaps that chance is reduced if mom talks to her about staying in the home long term and not refinancing. It is 100% up to the sister what she does once mom is gone if the home is left to her directly. Mom could leave $ in a trust for house expenses........but mom already said she wants to just give it outright.

Mom might be sure the sibling is in agreement and wants the house, or there may be a lot of resentment about you getting more cash. The estate could be divided in half with the house in one half and sister can pick which half she wants so she feels like she is getting the winning deal and that you agree the two halves are equal?

Hopefully your mom will live another 20 plus healthy years as well as my own parents, and your sibling as well as my own will get more responsible by then :)


lafder

bsteiner
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Re: Mom is updating her will - any “gotchas”?

Post by bsteiner » Sun Jan 12, 2020 9:37 am

Lafder wrote:
Sat Jan 11, 2020 11:31 pm
Sounds like you and I are in a similar situation. I am the financially responsible and more financially secure sibling.

My parents initially were going to set up a will and trust that would ensure the money for my sibling get handed out over time and doesn't get blown. Then my parents decided rather than have a professional trust company dole the money out over time for high fees, they would just have assets divided and distributed directly. As my mom says, "I won't be here to see it blown and I do not want to try to control from the grave." They did not want extra resentments if I got my share outright and sibling's was controlled.
...
She's not helping your sibling by leaving his/her share outright.

She can reduce the resentment by leaving your share in trust as well (but allowing you to control your trust).

It's often difficult to have one child as trustee for the other child. You might find it difficult to be a trustee for your sibling and your sibling might not be comfortable with you as his/her trustee.

Sometimes there are friends and family who are appropriate to serve as trustees for the child who can't handle money. If not, then your mother may want to revisit having a bank or trust company as a trustee. They usually charge about 1% a year, a little more for small trusts and less for large ones. They'll invest the money in a reasonable way, and they'll be reasonable in deciding on distributions. While it's unlikely that your sibling would ever need to exercise it, your mother could give him/her the power to change the corporate trustee. It may be worth the cost to make sure that your sibling is protected.

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Re: Mom is updating her will - any “gotchas”?

Post by HomeStretch » Sun Jan 12, 2020 10:00 am

Your mom should consider whether leaving the house to your sister (either outright or in trust) makes sense. If large/older/expensive to upkeep), consider whether the house should be sold by the estate and a smaller/newer/cheaper home purchased for sister. She might be able to pay the maintenance/upkeep more easily. It makes sense for you to weigh-in on the arrangement as your sister could become your burden in the future if she loses the home.

My mother has a similar situation. My grandmother’s house was left to the fiscally irresponsible sibling (my aunt) in hopes she would have a home for life. My aunt could not/would not pay the taxes/upkeep. The home (formerly worth ~$150k) was eventually condemned and sold for the land value (proceeds went to back taxes). My aunt (very difficult, now broke and with serious health issues) is now back in contact with my mom as she is looking for support which my mom is unable to give. Very stressful.

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TomatoTomahto
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Re: Mom is updating her will - any “gotchas”?

Post by TomatoTomahto » Sun Jan 12, 2020 10:26 am

We have one of the kids serving as investment trustee, but have made sure that he won’t have to administer the trust. He can invest in a BH way, but I don’t want the siblings disagreeing about what’s a worthwhile withdrawal.
Okay, I get it; I won't be political or controversial. The Earth is flat.

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TomatoTomahto
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Re: Mom is updating her will - any “gotchas”?

Post by TomatoTomahto » Sun Jan 12, 2020 10:37 am

Previously, sibling was to receive an annuity “to keep her from being homeless in her old age”. I’m a horrible daughter :shock: because I dashed that plan, explaining that an annuity can be sold for cash, and she’d have to do some kind of trust. Too complicated, and mom never liked the annuity idea in the first place-she just didn’t know what else to do at the time - so mom is saying to give her the house and let her sink or swim.
Sister can sell a house almost as easily as an annuity. Trusts aren’t really that complicated. Tbh, I get your mother’s attitude (we have some relatives that wear out our patience too), but I think a trust would be better than sister selling a house poorly and then weighing on your guilt about her sinking rather than swimming.
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Freetime76
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Re: Mom is updating her will - any “gotchas”?

Post by Freetime76 » Sun Jan 12, 2020 2:59 pm

OP here: thank you for taking your time to reply!
Thank your for mentioning the living trust option. Maybe she should discuss with her attorney (never fully understood the pros and cons). I really don’t want to be the go to person for money from a trust for sibling, but mom could use a bank or other to manage the trust. As one of you pointed out, yes, I can definitely say no, No, or NO. :shock: I’d just rather not participate if not needed.

Here are answers to some of the questions above,
- my sister is 37. No substance abuse thus far, just not motivated.
- house is in Tennessee
- the house is low maintenance, in great shape, 2000 sq ft-ish, around 15 yrs old. Property tax is negligible (<$1000). Mom keeps up on it and intends to continue to do so.

- yes, I am on mom’s durable POA and advance medical directive
- my name is on mom’s safety deposit box. It’s never been clear to me what bank policy is, as to ownership of the box. When the time comes, I at least should be able to get in to retrieve her will, which is the big thing.
- I’m not on any of mom’s accounts right now. DH and I have enough to cover any short term expenses for my mom, before the estate is established (or whatever the term is).

Will write other replies individually - thanks so much.

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Freetime76
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Re: Mom is updating her will - any “gotchas”?

Post by Freetime76 » Sun Jan 12, 2020 3:09 pm

bsteiner wrote:
Sun Jan 12, 2020 9:37 am
Lafder wrote:
Sat Jan 11, 2020 11:31 pm
Sounds like you and I are in a similar situation. I am the financially responsible and more financially secure sibling.

My parents initially were going to set up a will and trust that would ensure the money for my sibling get handed out over time and doesn't get blown. Then my parents decided rather than have a professional trust company dole the money out over time for high fees, they would just have assets divided and distributed directly. As my mom says, "I won't be here to see it blown and I do not want to try to control from the grave." They did not want extra resentments if I got my share outright and sibling's was controlled.
...
She's not helping your sibling by leaving his/her share outright.

She can reduce the resentment by leaving your share in trust as well (but allowing you to control your trust).

It's often difficult to have one child as trustee for the other child. You might find it difficult to be a trustee for your sibling and your sibling might not be comfortable with you as his/her trustee.

Sometimes there are friends and family who are appropriate to serve as trustees for the child who can't handle money. If not, then your mother may want to revisit having a bank or trust company as a trustee. They usually charge about 1% a year, a little more for small trusts and less for large ones. They'll invest the money in a reasonable way, and they'll be reasonable in deciding on distributions. While it's unlikely that your sibling would ever need to exercise it, your mother could give him/her the power to change the corporate trustee. It may be worth the cost to make sure that your sibling is protected.
I hear you both. Resentment is pretty much a given, so as long as we can minimize contact, I’m happy.

Good info about the 1%, i didn’t know their fees. Thank you- will pass it on to mom.

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Re: Mom is updating her will - any “gotchas”?

Post by BarbBrooklyn » Sun Jan 12, 2020 3:12 pm

Something else to consider is how much your mom's end of life care is going to cost and if Medicaid will become involved.

NH care where I live costs 10-12K per month. Unless mom has a high 6 figure portfolio aside from the house, that is going to get drained and if Medicaid comes into play, there will be a lien on the home that will need to be repaid. There are some complicated situations in which a caregiver child can be granted lifetime privileges to the home, but upkeep still needs to be paid by someone other than the original owner, who, by virutue of being impoverished enough to qualify for Medicaid, will have no funds for taxes, insurance or upkeep.

Just something that you all should be aware of.
BarbBrooklyn | "The enemy of a good plan is the dream of a perfect plan."

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Re: Mom is updating her will - any “gotchas”?

Post by JoeRetire » Sun Jan 12, 2020 3:14 pm

Freetime76 wrote:
Sat Jan 11, 2020 9:05 pm
She is updating her will later this month.
She is using an estate attorney, right?
2) Sibling will receive mom’s house, no mortgage, well-maintained, inexpensive to own, in an area sibling likes, judging by the fact that she stays there a lot
3) Investments and bank accounts will be dicvided to reach 50% to sibling, minus the appraisal value of the house.
What does sibling think of this idea?
Very Stable Genius

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Re: Mom is updating her will - any “gotchas”?

Post by Northern Flicker » Sun Jan 12, 2020 3:17 pm

Relying on Bogleheads and not seeking advice of an attorney would be a gotcha.
Index fund investor since 1987.

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TomatoTomahto
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Re: Mom is updating her will - any “gotchas”?

Post by TomatoTomahto » Sun Jan 12, 2020 3:37 pm

Northern Flicker wrote:
Sun Jan 12, 2020 3:17 pm
Relying on Bogleheads and not seeking advice of an attorney would be a gotcha.
Yes, although there are some BH posters (for example, bsteiner) who are as knowledgeable as any attorney can be, you still need an attorney that you’ve retained.
Okay, I get it; I won't be political or controversial. The Earth is flat.

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Re: Mom is updating her will - any “gotchas”?

Post by Jags4186 » Sun Jan 12, 2020 3:51 pm

I feel like it would be much simpler and fairer for the family friend and charities to receive X and then everything else split 50/50. At the time of death your sibling can buy you out of your half of the house if he or she wants to.

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Freetime76
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Re: Mom is updating her will - any “gotchas”?

Post by Freetime76 » Sun Jan 12, 2020 4:03 pm

HomeStretch wrote:
Sun Jan 12, 2020 10:00 am
Your mom should consider whether leaving the house to your sister (either outright or in trust) makes sense. If large/older/expensive to upkeep), consider whether the house should be sold by the estate and a smaller/newer/cheaper home purchased for sister. She might be able to pay the maintenance/upkeep more easily. It makes sense for you to weigh-in on the arrangement as your sister could become your burden in the future if she loses the home.

My mother has a similar situation. My grandmother’s house was left to the fiscally irresponsible sibling (my aunt) in hopes she would have a home for life. My aunt could not/would not pay the taxes/upkeep. The home (formerly worth ~$150k) was eventually condemned and sold for the land value (proceeds went to back taxes). My aunt (very difficult, now broke and with serious health issues) is now back in contact with my mom as she is looking for support which my mom is unable to give. Very stressful.
Thank you for sharing this story about your grandmother’s house. I get it, in fact DH said I should expect to have her show up eventually.

Id guess this is exactly the scenario my mom wants to avoid, imho, by magically making my sister see the light of working for a living and getting her act together....by giving her a place to live and a crack at stability. Then it’s on her (sister’s) shoulders, mom won’t be there to be bothered by it. Not logical, I know.

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Freetime76
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Re: Mom is updating her will - any “gotchas”?

Post by Freetime76 » Sun Jan 12, 2020 4:16 pm

Lafder wrote:
Sat Jan 11, 2020 11:31 pm
Sounds like you and I are in a similar situation. I am the financially responsible and more financially secure sibling.

My parents initially were going to set up a will and trust that would ensure the money for my sibling get handed out over time and doesn't get blown. Then my parents decided rather than have a professional trust company dole the money out over time for high fees, they would just have assets divided and distributed directly. As my mom says, "I won't be here to see it blown and I do not want to try to control from the grave." They did not want extra resentments if I got my share outright and sibling's was controlled.

I have thought that the best way to insure my sibling is cared for and has a home is to have them leave a home in trust with extra money to take care of it that my sibling can not access for any other reason, and the house can not be sold without trustee approval. But my parents just do not want me to have any stress of dealing with any of that, or dealing with paying a trust company for my sibling to fight with, or controlling from the grave.

Wow, this sounds like a dinner table conversation we had over Christmas. This is *exactly* mom’s p.o.v. “Fixing” it for my sister got complicated very quickly, especially because a temper tantrum likely would ensue, rendering the house vacant and unused, instead of it being a gift as intended.

Is there a high likelihood the home will be sold by your sister ? That puts a lot of expense and stress on your sister to keep it up, clean and fix it up and sell it. If she may live there forever, it is a nice way for her to have a paid off home that gives her less cash to blow. Of course, your sibling could not pay taxes or pull cash out and lose the home. Perhaps that chance is reduced if mom talks to her about staying in the home long term and not refinancing. It is 100% up to the sister what she does once mom is gone if the home is left to her directly. Mom could leave $ in a trust for house expenses........but mom already said she wants to just give it outright.

My guess is the house would be kept and lived in, if it was explained as mom wanted her to have the house...If she opted to sell, it might not be a bad thing for her to have the experience (plus inertia tends to prevent selling). It is understood that it could all be sold.

Mom might be sure the sibling is in agreement and wants the house, or there may be a lot of resentment about you getting more cash. The estate could be divided in half with the house in one half and sister can pick which half she wants so she feels like she is getting the winning deal and that you agree the two halves are equal?

. I haven’t had any luck getting mom to discuss any of this with sister, ever. Mom does not like confrontation, and sister has a very bad temper. I often thought of telling my sister what’s going on - as incentive to grow up - but I absolutely do not want to take away my mom’s power like that...if it was just numbers, it would be easy :wink:

Hopefully your mom will live another 20 plus healthy years as well as my own parents, and your sibling as well as my own will get more responsible by then :)


lafder
Cheers to the last bit - yes!! :sharebeer

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Freetime76
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Re: Mom is updating her will - any “gotchas”?

Post by Freetime76 » Sun Jan 12, 2020 4:18 pm

BarbBrooklyn wrote:
Sun Jan 12, 2020 3:12 pm
Something else to consider is how much your mom's end of life care is going to cost and if Medicaid will become involved.

NH care where I live costs 10-12K per month. Unless mom has a high 6 figure portfolio aside from the house, that is going to get drained and if Medicaid comes into play, there will be a lien on the home that will need to be repaid. There are some complicated situations in which a caregiver child can be granted lifetime privileges to the home, but upkeep still needs to be paid by someone other than the original owner, who, by virutue of being impoverished enough to qualify for Medicaid, will have no funds for taxes, insurance or upkeep.

Just something that you all should be aware of.

Thank you, will pass it on.

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Freetime76
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Re: Mom is updating her will - any “gotchas”?

Post by Freetime76 » Sun Jan 12, 2020 4:22 pm

So to redirect slightly: is it correct that there is no real difference in leaving investment account stock and mutual funds to be probated (through the will) vs direct to a named beneficiary as transfer on death? Other than maybe a small gain or loss while part of the estate, which has to be reported. The value is <1M.

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Freetime76
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Re: Mom is updating her will - any “gotchas”?

Post by Freetime76 » Sun Jan 12, 2020 4:24 pm

TomatoTomahto wrote:
Sun Jan 12, 2020 3:37 pm
Northern Flicker wrote:
Sun Jan 12, 2020 3:17 pm
Relying on Bogleheads and not seeking advice of an attorney would be a gotcha.
Yes, although there are some BH posters (for example, bsteiner) who are as knowledgeable as any attorney can be, you still need an attorney that you’ve retained.
:wink: Got it. She’s doing that. Her attorney works with folks far wealthier and with more drama than our family. :wink:
It’s just that she wants her ducks in a row as much as possible beforehand, especially to know what to ask.

Broken Man 1999
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Re: Mom is updating her will - any “gotchas”?

Post by Broken Man 1999 » Sun Jan 12, 2020 4:35 pm

Good luck to you as this plays out.

The burdens of "responsible" children are not light.

I know this first hand.

Still, one needs to do the best they can when entrusted to make decisions for others. It is often a stressful, thankless job.

If your mother wants you to be a part of this, hopefully she will give you the tools to use.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

senex
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Re: Mom is updating her will - any “gotchas”?

Post by senex » Sun Jan 12, 2020 11:06 pm

Freetime76 wrote:
Sun Jan 12, 2020 4:22 pm
So to redirect slightly: is it correct that there is no real difference in leaving investment account stock and mutual funds to be probated (through the will) vs direct to a named beneficiary as transfer on death? Other than maybe a small gain or loss while part of the estate, which has to be reported. The value is <1M.
If beneficiaries are setup correctly, it can work. It’s tricky in your case because you want to offset home value.

Simple case: say sister gets 150k house, and brokerage is 450k today: how do you setup brokerage beneficiaries? If all to you, you get too much. If 50/50, sis gets too much (225k brokerage + house). If brokerage even allows an uneven split (not sure who does), and you pick 67/33 (to be even today), then any change in house or acct value can make it uneven.

The benefic option works best if each and every asset is split 50/50.

I’ve found that attorneys don’t like the beneficiary route because the probate “one big pot of money” concept simplifies taxes, creditors, and equitable distribution, and minimizes surprises and paperwork mistakes. They are familiar with probate and it costs them nothing.

Verses some non-attorneys like the beneficiary route because it is fast, cheap, easy, not public record, and for simple cases can be “good enough.”

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Re: Mom is updating her will - any “gotchas”?

Post by texasdiver » Mon Jan 13, 2020 12:18 am

Your mother may live another 20 years. Women in their 90s are not unusual. Who knows what her finances and living circumstances will be by then.

Seems much simpler just to spit the estate 50/50. If there is still a house at that point your sister can buy out your half, or choose not to.

I don’t really understand all the hand-holding for a 37 year old who might well be in her 50s by the time all this gets settled.

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Re: Mom is updating her will - any “gotchas”?

Post by celia » Mon Jan 13, 2020 1:38 am

Will mom be going over her options with a lawyer? The lawyer will ask several question that your mom may not have considered, such as:
1. How does she want her assets split if the house is worth more than half the estate or the only thing left in the estate?

2. What does she want for sibling if you died before mom or sibling?

3. if sibling dies first?

4. If mom outlives both of you?

These are the obvious first things to consider. Your mom should at least get a consultation so she can consider things not yet thought about (one of the three of you becomes disabled/Alzheimers, divorced, has a financial disaster (lawsuit), grandkids arrive, etc)

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Re: Mom is updating her will - any “gotchas”?

Post by Luckywon » Mon Jan 13, 2020 2:57 am

Given what you have said about your sibling, I would strongly advise that you not agree to be executor of the estate. You're in Tennessee, but I can hear the alarm bells here in California.

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Re: Mom is updating her will - any “gotchas”?

Post by 4nursebee » Mon Jan 13, 2020 6:31 am

Read Condon book beyond the grave

I liked parts about proactive discussions in advance had some irresponsible people grow up and change their lives.
4nursebee

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nisiprius
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Re: Mom is updating her will - any “gotchas”?

Post by nisiprius » Mon Jan 13, 2020 7:03 am

Warning, I'm not a lawyer and this is based on friends' stories; comments by lawyers welcome.

An important thing about wills is that there is only one original of a will, and that original is special. That's the one the inheritors need to find. This can be extremely important in some states. What that means is that the original will should be not be hidden away in any "safe" place. It should be in an extremely obvious place. All inheritors should be told about it. Moreover, it should be one of the first places they'd look if they forget. Until I heard the stories, my thinking about this was all wrong.

Imagine that the departed died alone and was first found by cops doing a well-being check, who took the body to the medical examiner's and put a police seal on the residence. They have allowed you, the closest relative to enter the room for sixty minutes for the sole purpose of looking for a will and life insurance. The clock is ticking; you have sixty minutes. Will you succeed?

See, the thing is that a will is not valuable to thieves, and if it gets lost or damaged it's not a very big deal--you just go to a lawyer, maybe the one that drew it up and has the copy, and have it done again.

In some states, there may be big Trouble (with-a-capital-T-and-that-rhymes-with-P-and-that-stands-for-Probate) if the original cannot be produced--not even if the copy is a photocopy with original inked signatures of all witnesses. The website of one Nevada law firm explains
The traditional reason that Courts either refuse to admit a will copy or admit it only after extra procedures is that a traditional and accepted way to revoke a will is to physically destroy it. There is no requirement that all copies be destroyed in order to revoke the will. Therefore, the absence of an original will raises the suspicion that the original will was revoked by deliberate destruction.
That same site says
If only a copy of the will is available, the Court will accept it provided that notice was given to all intestate heirs (relatives who would inherit in the absence of a will) and no one challenges it,
which, though perfectly logical, is emphatically not true in all states. The process for admitting a lost will to probate can be difficult, expensive, and uncertain of success.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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Re: Mom is updating her will - any “gotchas”?

Post by LFS1234 » Mon Jan 13, 2020 11:03 am

texasdiver wrote:
Mon Jan 13, 2020 12:18 am
Your mother may live another 20 years. Women in their 90s are not unusual. Who knows what her finances and living circumstances will be by then.

Seems much simpler just to spit the estate 50/50. If there is still a house at that point your sister can buy out your half, or choose not to.
+1

An acquaintance's will had provisions of the type OP is now discussing. One kid was to get the house, the other kids were to get other assets.

One day, she had a stroke and became mentally incapacitated, although her physical health was otherwise fine. There was no other good choice than to sell her house, which was expensive to maintain and in which she no longer could live, in order to raise funds for her care. So there went the one kid's inheritance. After a number of years, she died and the remaining assets were divided amongst the other heirs in accordance with the arrangements she had made, so the other kids got something, but the one that she had intended to get the house, got nothing.

In any case, it is unlikely that the OP's mother's house really would be the ideal place for the sibling to live. Better to sell the house and make other arrangements, unless one of the siblings, when the time comes, wishes to purchase the house from the estate.

+1 also regarding the suggestion to read Condon's book, "Beyond the Grave".

Regarding the "original will" situation that Nisiprius points out, it is true that there can only be one original and that it must be findable by the right person. However, it should not be left in a place where a housecleaner might throw it away, or where a disgruntled descendant may destroy it in the hopes of getting a better deal. Things happen. Many people have their estate attorney keep the sole original. There is nothing wrong about keeping photocopies of the original, noting on the photocopies where the original can be found, and leaving the photocopies in a semi-safe place at home or in the hands of suitable trusted persons.

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Re: Mom is updating her will - any “gotchas”?

Post by not4me » Mon Jan 13, 2020 4:15 pm

Freetime76 wrote:
Sun Jan 12, 2020 2:59 pm

- I’m not on any of mom’s accounts right now. DH and I have enough to cover any short term expenses for my mom, before the estate is established (or whatever the term is).
I would be careful with this, especially since you anticipate possible difficulty with sibling. (btw, since sibling created problems with Dad's estate, that might be an indication of areas that lawyer needs to pay special attention to addressing). These things are difficult to consider & certainly if we speculate on worst case scenarios. But, there may be several weeks/months, before she dies in which she can't write checks & is incurring extra expense. Then, there may be several months before estate settled in which there will be funeral expenses, house utilities/insurance/etc while estate being worked through. In theory, these can be recovered from the estate. Which gets to my next point...

So to redirect slightly: is it correct that there is no real difference in leaving investment account stock and mutual funds to be probated (through the will) vs direct to a named beneficiary as transfer on death? Other than maybe a small gain or loss while part of the estate, which has to be reported. The value is <1M.
My understanding is that for case of a direct beneficiary they are liable for taxes due upon death, regardless of when the transfer of assets occurs. I'm assuming you have no desire to transfer anything in-kind in either scenario; in other words, in both cases, the assets are sold & only cash is distributed. That may be the 'small gain/loss' you refer to. Again, hard to predict how long estate may be open if someone contesting.

But, the real concern I'd have is the amount of liquid assets that are not passed directly. To illustrate, say the will says sibling gets the house (based on appraisal) while investment account, life ins, IRA are all passed directly. Will further says these charities/friends get $x. What if there are insufficient funds at this point other than the house to meet those obligations, let alone compensate you for what you "advanced"? In that case, the house would have to be sold presumably & will needs to not be silent on how that is split.

May not be clear on the scenario, but hope you get that the amount of liquid assets is a consideration

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Re: Mom is updating her will - any “gotchas”?

Post by Northern Flicker » Mon Jan 13, 2020 7:43 pm

TomatoTomahto wrote:
Sun Jan 12, 2020 3:37 pm
Northern Flicker wrote:
Sun Jan 12, 2020 3:17 pm
Relying on Bogleheads and not seeking advice of an attorney would be a gotcha.
Yes, although there are some BH posters (for example, bsteiner) who are as knowledgeable as any attorney can be, you still need an attorney that you’ve retained.
Tremendously knowledgeable, but advice still should come from an attorney licensed in the state of residence.
Index fund investor since 1987.

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Re: Mom is updating her will - any “gotchas”?

Post by Lafder » Mon Jan 13, 2020 11:25 pm

My understanding is that a TOD/POD account goes to the beneficiary upon showing a death certificate to the fiduciary.

This is relatively fast once they verify it is real. It could be on the order of weeks. These accounts would not be covered by the will because the TOD/POD takes precedence.

Probate seems to take at the minimum months, and we have probably all seen probate take over a year...........

I prefer POD/TOD when available to simplify. It is possible probate is still needed for part of the estate.

BSteiner thank you for the comments my parents could leave to 2 trusts, me being my own trustee, and my brother having a professional trustee. We talked about it. As it is, their assets are in one trust and I am the trustee when they pass or are incapacitated. With the instructions to settle the estate and divide assets equally. My brother is intelligent and would study the papers in detail. My parents care more about him not feeling bad for being treated differently, and not wanting to pay fees. My brother won't end up homeless. But......he will spend any inheritance much faster than I will. As would many people. I will steer him here and hope for the best. Paying off his maxed out mortgage with any inheritance will help him the most and I will surely suggest it.

I agree with the idea of a will or trust that says divide the estate. Your sister may appreciate the house more if she thinks she is choosing it than she has to take it in lieu of cash.

lafder

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Freetime76
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Re: Mom is updating her will - any “gotchas”?

Post by Freetime76 » Tue Jan 14, 2020 8:40 am

celia wrote:
Mon Jan 13, 2020 1:38 am
Will mom be going over her options with a lawyer? The lawyer will ask several question that your mom may not have considered, such as:
1. How does she want her assets split if the house is worth more than half the estate or the only thing left in the estate?

2. What does she want for sibling if you died before mom or sibling?

3. if sibling dies first?

4. If mom outlives both of you?

These are the obvious first things to consider. Your mom should at least get a consultation so she can consider things not yet thought about (one of the three of you becomes disabled/Alzheimers, divorced, has a financial disaster (lawsuit), grandkids arrive, etc)
My mother said thank you for the questions! You and others are bringing up some eventualities she hadn’t thought through yet.

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Freetime76
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Re: Mom is updating her will - any “gotchas”?

Post by Freetime76 » Tue Jan 14, 2020 8:41 am

Northern Flicker wrote:
Mon Jan 13, 2020 7:43 pm
TomatoTomahto wrote:
Sun Jan 12, 2020 3:37 pm
Northern Flicker wrote:
Sun Jan 12, 2020 3:17 pm
Relying on Bogleheads and not seeking advice of an attorney would be a gotcha.
Yes, although there are some BH posters (for example, bsteiner) who are as knowledgeable as any attorney can be, you still need an attorney that you’ve retained.
Tremendously knowledgeable, but advice still should come from an attorney licensed in the state of residence.
She has one :wink: he sounds excellent.
ETA: I think she’s trying to get this done quickly, which means thinking it through in advance as much as she can.

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Re: Mom is updating her will - any “gotchas”?

Post by mrlan » Tue Jan 14, 2020 8:50 am

texasdiver wrote:
Mon Jan 13, 2020 12:18 am
I don’t really understand all the hand-holding for a 37 year old who might well be in her 50s by the time all this gets settled.
Mental illness. Substance abuse. Physical disability.

Unless you have a close family member with one or more of these conditions, it’s hard to understand these situations.

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Freetime76
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Re: Mom is updating her will - any “gotchas”?

Post by Freetime76 » Tue Jan 14, 2020 9:10 am

not4me wrote:
Mon Jan 13, 2020 4:15 pm
Freetime76 wrote:
Sun Jan 12, 2020 2:59 pm

- I’m not on any of mom’s accounts right now. DH and I have enough to cover any short term expenses for my mom, before the estate is established (or whatever the term is).
I would be careful with this, especially since you anticipate possible difficulty with sibling. (btw, since sibling created problems with Dad's estate, that might be an indication of areas that lawyer needs to pay special attention to addressing). These things are difficult to consider & certainly if we speculate on worst case scenarios. But, there may be several weeks/months, before she dies in which she can't write checks & is incurring extra expense. Then, there may be several months before estate settled in which there will be funeral expenses, house utilities/insurance/etc while estate being worked through. In theory, these can be recovered from the estate. Which gets to my next point...

So to redirect slightly: is it correct that there is no real difference in leaving investment account stock and mutual funds to be probated (through the will) vs direct to a named beneficiary as transfer on death? Other than maybe a small gain or loss while part of the estate, which has to be reported. The value is <1M.
My understanding is that for case of a direct beneficiary they are liable for taxes due upon death, regardless of when the transfer of assets occurs. I'm assuming you have no desire to transfer anything in-kind in either scenario; in other words, in both cases, the assets are sold & only cash is distributed. That may be the 'small gain/loss' you refer to. Again, hard to predict how long estate may be open if someone contesting.

But, the real concern I'd have is the amount of liquid assets that are not passed directly. To illustrate, say the will says sibling gets the house (based on appraisal) while investment account, life ins, IRA are all passed directly. Will further says these charities/friends get $x. What if there are insufficient funds at this point other than the house to meet those obligations, let alone compensate you for what you "advanced"? In that case, the house would have to be sold presumably & will needs to not be silent on how that is split.

May not be clear on the scenario, but hope you get that the amount of liquid assets is a consideration
Thank you for the advice.
1. I’m on mom’s POA, and it’s active now. I we understand correctly, then I can take care of her finances if she isn’t able to, including paying bills or selling assets/investments if needed to pay her bills.

2. The attorney added a few things to mom’s current will, covering if the will is contested or if a beneficiary cannot be located (we are not sure where my sister lives when she isn’t at my mom’s house... or what I would use as a mailing address).

3. Good point! A different poster’s BH thread had the advice to use percentages instead of exact amounts. Maybe that would be a better way to go - I.e. 5% of the estate to be split equally between x y and z.

Everything was so simple until my dad dies, and his instruction to “split it all 50/50” became incredibly difficult somehow - resulting in all this (and half the time I can’t believe we’re even having this conversation...all worrying about my dear sibling who obviously has no problems :D )

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Freetime76
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Re: Mom is updating her will - any “gotchas”?

Post by Freetime76 » Tue Jan 14, 2020 9:11 am

FYI - my mother was able to pull up this thread to read on her senior phone (as she calls her jitterbug), so she said to write thank you to all for the help.

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Re: Mom is updating her will - any “gotchas”?

Post by Freetime76 » Tue Jan 14, 2020 10:32 am

mrlan wrote:
Tue Jan 14, 2020 8:50 am
texasdiver wrote:
Mon Jan 13, 2020 12:18 am
I don’t really understand all the hand-holding for a 37 year old who might well be in her 50s by the time all this gets settled.
Mental illness. Substance abuse. Physical disability.

Unless you have a close family member with one or more of these conditions, it’s hard to understand these situations.
I’d like to add a bit of depth to this explanation, to clarify my personal thoughts and in case it helps someone else. :wink: To our knowledge, this is a case of failure to launch rather than legitimate illness. Thankfully, no substance abuse so far.

I think my mom is trying to do is walk the fine line between help and hurt. Passing on her financials (legacy, even if not in the millions) is a potential boost to her kids. It helps me have some extra retirement and gives my sister a level of security that she doesn’t have and isn’t bothering to obtain for herself.

A better scenario might be if my sister woke up and had a fantastic epiphany that having a purpose in life -whether her own family, paid employment, a constructive use of her time to support herself- would be a positive thing, and that there is satisfaction in building your own legacy and means to help others. Absent that, dumping a bunch of money in her lap likely will harm her, based on the past 5 years of living on what she’s received from our dad. [Mom is utterly mystified as to “why she doesn’t just get a job”....maybe because, why bother? She can do what she wants without one...until her dollars run out. Just my opinion.] So, if she receives straight up money from my mom, and lets say burns through it until she’s 60 or 65, now she’s in a very different situation. It’s a waste. Mom hates waste.

We think about boring things, such as: where will I live when I’m not able to work? How will I support my needs? What lifestyle do I want to be able to have? So, it’s bothering my mom that one of her kids will have no social security, no pensions, no investment income if she continues to spend through what she has. Mom has the means to try to do something to help, when she won’t be there to physically help in person anymore, so...what does that look like? [My mom is nicer than I am - I wouldn’t give her squat right now, and would say so to encourage her to get her act together. No doubt knowing she will receive something from mom is flavoring her current behaviors. :D Anyway, my mom refers to state programs like Medicaid if sister really can’t support herself. DH expects her to show up on our doorstep one day.]

So on some level, you’re right - why bother agonizing over it.

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Re: Mom is updating her will - any “gotchas”?

Post by celia » Tue Jan 14, 2020 1:08 pm

Freetime76 wrote:
Tue Jan 14, 2020 10:32 am
Anyway, my mom refers to state programs like Medicaid if sister really can’t support herself.
Even Medicaid expects you to work unless you're mentally or physically disabled.


So why doesn't one/both of you ask her why she doesn't work? Ask her what's she's going to do for income when she is mom's age.

In the meantime, mom should start verbalizing that she is leaving her estate to charity and start talking about a few of them (not all in one conversation, of course, but consistently, over time). You can join in with it being fine with you. Your mom can even have a simple will made out to that effect but then have the "real will" signed a few days later. The only problem with that is if the "real will" is ever lost.

That's what I would do.

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Re: Mom is updating her will - any “gotchas”?

Post by Freetime76 » Thu Jan 16, 2020 8:14 am

celia wrote:
Tue Jan 14, 2020 1:08 pm
Freetime76 wrote:
Tue Jan 14, 2020 10:32 am
Anyway, my mom refers to state programs like Medicaid if sister really can’t support herself.
Even Medicaid expects you to work unless you're mentally or physically disabled.


So why doesn't one/both of you ask her why she doesn't work? Ask her what's she's going to do for income when she is mom's age.

In the meantime, mom should start verbalizing that she is leaving her estate to charity and start talking about a few of them (not all in one conversation, of course, but consistently, over time). You can join in with it being fine with you. Your mom can even have a simple will made out to that effect but then have the "real will" signed a few days later. The only problem with that is if the "real will" is ever lost.

That's what I would do.
I like this plan :D

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Re: Mom is updating her will - any “gotchas”?

Post by texasdiver » Thu Jan 16, 2020 8:16 pm

If your mother can't control and motive your sister TODAY while she is alive and has the bully pulpit available, and a mother's ability to manipulate. Then I seriously doubt she will have more success in death. I think that's a fools errand. Your sister can easily sell the house, let it decay, cash in an annuity, or basically evade any sideboards your mother might want to establish.

I don't think you really gain anything by trying to set up some complicated process where she gets the house and you get the cash. Especially because who knows what your mother's living circumstances and finances will be in 10-15 years if she is still alive. The will might be completely obsolete if your mother moves on to some sort of assisted living center for an extended period.

If your mother wants the estate split 50/50 then just split it 50/50 and be done with it.

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