New Child- Steps to take (will/trust)

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schutzk21
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New Child- Steps to take (will/trust)

Post by schutzk21 » Tue Jan 14, 2020 2:36 pm

Hi All,

My wife and I welcomed our first child last year and we are in our 30's, and I would like to get some clarification on what steps we should take in regards to protecting our assets. I can't find a clear answer online in regards to whether it should be done with a will or a trust.

We don't have much in assets right now, and there is nothing out of the ordinary. My wife has a 401k, I have a ROTH IRA and a 457b. We own a condo we are still paying on. Can you please let me know what necessary steps should be taken to ensure everything is in order? Is it okay to name my daughter as a contingent beneficiary for all of our accounts? My wife and I have each other as the primary beneficiary on all of our accounts.

I really appreciate your help!

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dm200
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Re: New Child- Steps to take (will/trust)

Post by dm200 » Tue Jan 14, 2020 2:54 pm

schutzk21 wrote:
Tue Jan 14, 2020 2:36 pm
Hi All,
My wife and I welcomed our first child last year and we are in our 30's, and I would like to get some clarification on what steps we should take in regards to protecting our assets. I can't find a clear answer online in regards to whether it should be done with a will or a trust.
We don't have much in assets right now, and there is nothing out of the ordinary. My wife has a 401k, I have a ROTH IRA and a 457b. We own a condo we are still paying on. Can you please let me know what necessary steps should be taken to ensure everything is in order? Is it okay to name my daughter as a contingent beneficiary for all of our accounts? My wife and I have each other as the primary beneficiary on all of our accounts.
I really appreciate your help!
There are pros and cons of both using just wills and using trusts.

There is another discussion about these same things.

Set up a meeting with an experienced estate planning attorney and pay him/her for 30-60 minutes to review your whole situation and make recommendation(s). No - a minor child should not be named as a beneficiary. Using trusts usually costs a bit more to draft, but may offer some added benefits. Among other reasons, you should have wills (perhaps trusts) providing for your daughter in case you and your wife both die.

My wife and I, when we were in a similar situation, chose complex, disclaimer wills with testamentary trusts.

fittan
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Re: New Child- Steps to take (will/trust)

Post by fittan » Tue Jan 14, 2020 3:53 pm

It is great that you're thinking ahead but before you do so I think there are few things "more importantly" and "easy to do things" to protect your family.

1) Review your auto insurance. Increase the liabilities to match your asset (it doesn't cost much).
2) Get a umbrella policy. Say $1 million policy for like $250/year.
3) Get term life insurance for both yourself and wife.

Now to will and trust...really there are 2 big questions to ask. In a worst case where both parents pass, 1) who will take care of child (i.e. legal guardian) and 2) who will manage your $$$ for the benefit of your child.

A will helps question 1 but not question 2.

A trust (revocable living trust) helps with question 2. It consolidate (you have to do the work) all your assets into a "trust" and then designate a "trustee" to help manage your $$$. Some family makes same person guardian and trustee, some split the roles. With a "trust", you do all the homework in advance so that your "trustee" don't (when you and wife pass). For example, if "trustee" needs to withdraw cash or close your savings account, he can simply walk to bank with trust and do so immediately. Without a trust, all your assets will go through probate (i.e. the court) and judge may appoint someone else to be the executor.

Another advantage of trust is that you can control distribution of assets. Without trust, your child gets possession of all your $$$ at 18. If you have life insurance, it could be in the millions easily. With a trust you can state that when and how much they can receive.

fourwheelcycle
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Re: New Child- Steps to take (will/trust)

Post by fourwheelcycle » Tue Jan 14, 2020 4:16 pm

When my wife and I were in your situation we did nothing. We did not have our first wills prepared until our children were about six and nine. To be honest, we never even thought about wills until we were in our early forties. We each had jobs that paid enough to support our family even if one of us died, and I guess we just assumed life would remain sunny.

When we did our first wills we went to an experienced local estate attorney and did whatever he advised. What he advised was wills for each of us, both establishing trusts to benefit our spouse for their lifetime if one of us died first, with the balance going to our children when the surviving spouse died. If we both died, our wills named my parents to raise our children, with all of our savings and insurance proceeds going to a single trust to benefit our children, with my father as the sole trustee of the trust, and any remaining funds going to our children in equal shares when they reached age 26.

I should note we probably did not have enough savings and insurance to raise our children and send them to college when we were in our early forties, so my father would have been on the hook to make up the difference. He probably could have done that if none of my siblings relied on him to raise their children, but as it turned out we never died and our children now have children of their own.

I have advised our own children they do not need to do their first wills until they have decided who they would want to raise their children if they and their spouse should die, and that person or couple has agreed to do so. As far as I know, neither of our children and their spouses have done their first wills, even though they both have young children.

Of course, if the willing person or couple you designate to raise your child/children cannot afford to do so without help from you, you need to do some financial planning and buy enough term insurance to make the financial equation work if you and your spouse both die before your children are on their own.

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RickBoglehead
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Re: New Child- Steps to take (will/trust)

Post by RickBoglehead » Tue Jan 14, 2020 4:21 pm

fourwheelcycle wrote:
Tue Jan 14, 2020 4:16 pm

I have advised our own children they do not need to do their first wills until they have decided who they would want to raise their children if they and their spouse should die, and that person or couple has agreed to do so.
I'd submit that this is really bad advice.
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.

ThankYouJack
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Re: New Child- Steps to take (will/trust)

Post by ThankYouJack » Tue Jan 14, 2020 4:34 pm

I would set up a will to specify your legal guardians, power of attorney, medical directive, executor and have things in writing like your assets and liabilities in a legal document that's easy to find.

For the trust part, if you want to keep things simple, you could do a trust under will. That's what we did and met with an attorney for about 90 minutes. I think the total cost was $500 or so for both so it wasn't that much.

As far as naming the beneficiaries, I would ask your lawyer what you should do. Mine was very specific with how I worded the Trust as a beneficiary. He said that can often cause headaches when the wording is off.
Last edited by ThankYouJack on Tue Jan 14, 2020 4:56 pm, edited 1 time in total.

UnLearnYourself
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Re: New Child- Steps to take (will/trust)

Post by UnLearnYourself » Tue Jan 14, 2020 4:53 pm

I'm 38 with an 11 month old baby and and baby #2 already on the way at the end of April...and once again the Bogleheads have given me something important to think about.

UnLearnYourself
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Re: New Child- Steps to take (will/trust)

Post by UnLearnYourself » Tue Jan 14, 2020 4:58 pm

ThankYouJack wrote:
Tue Jan 14, 2020 4:34 pm
I would set up a will to specify your legal guardians, power of attorney, medical directive, executor and have things in writing like your assets and liabilities in a legal document that's easy to find.

For the trust part, if you want to keep things simple, you could do a trust under will. That's what we did and met with an attorney for about 90 minutes. I think the total cost was $500 or so for both so it wasn't that much.

As far as naming the beneficiaries, I would ask your lawyer what you should do. Mine was very specific with how I worded the Trust as a beneficiary. He said that can often cause headaches when the wording is off.
Curious what should one expect to pay for a recommendation like this?

- attorney fees?
- filing, processing, etc fees?

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dm200
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Re: New Child- Steps to take (will/trust)

Post by dm200 » Tue Jan 14, 2020 5:07 pm

RickBoglehead wrote:
Tue Jan 14, 2020 4:21 pm
fourwheelcycle wrote:
Tue Jan 14, 2020 4:16 pm
I have advised our own children they do not need to do their first wills until they have decided who they would want to raise their children if they and their spouse should die, and that person or couple has agreed to do so.
I'd submit that this is really bad advice.
Yes - I agree.

In my opinion, naming guardians for children is one of the least important matters to put in your will.

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dm200
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Re: New Child- Steps to take (will/trust)

Post by dm200 » Tue Jan 14, 2020 5:10 pm

UnLearnYourself wrote:
Tue Jan 14, 2020 4:58 pm
ThankYouJack wrote:
Tue Jan 14, 2020 4:34 pm
I would set up a will to specify your legal guardians, power of attorney, medical directive, executor and have things in writing like your assets and liabilities in a legal document that's easy to find.
For the trust part, if you want to keep things simple, you could do a trust under will. That's what we did and met with an attorney for about 90 minutes. I think the total cost was $500 or so for both so it wasn't that much.
As far as naming the beneficiaries, I would ask your lawyer what you should do. Mine was very specific with how I worded the Trust as a beneficiary. He said that can often cause headaches when the wording is off.
Curious what should one expect to pay for a recommendation like this?
- attorney fees?
- filing, processing, etc fees?
Yes - so was ours. He gave up a sheet of instructions with the exact wording. It has been many decades since we did ours - so I don't remember what we paid - considerably more than $500 though. We paid a fixed fee to the attorney for all the work.

senex
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Re: New Child- Steps to take (will/trust)

Post by senex » Tue Jan 14, 2020 5:11 pm

fittan wrote:
Tue Jan 14, 2020 3:53 pm
Now to will and trust...really there are 2 big questions to ask. In a worst case where both parents pass, 1) who will take care of child (i.e. legal guardian) and 2) who will manage your $$$ for the benefit of your child.

A will helps question 1 but not question 2.
Nope. A testamentary trust (a trust described/created by your will) is a common way to handle question 2.

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dm200
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Re: New Child- Steps to take (will/trust)

Post by dm200 » Tue Jan 14, 2020 5:13 pm

When my wife and I were in your situation we did nothing. We did not have our first wills prepared until our children were about six and nine. To be honest, we never even thought about wills until we were in our early forties. We each had jobs that paid enough to support our family even if one of us died, and I guess we just assumed life would remain sunny.
Back then, I think my wife and I were unusual. We went to an attorney not long before we were married and had him draft wills for both of us - that even provided the basics for if/when we had children. Shortly after the wedding, we signed and executed the wills.

ThankYouJack
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Re: New Child- Steps to take (will/trust)

Post by ThankYouJack » Tue Jan 14, 2020 5:14 pm

UnLearnYourself wrote:
Tue Jan 14, 2020 4:58 pm
ThankYouJack wrote:
Tue Jan 14, 2020 4:34 pm
I would set up a will to specify your legal guardians, power of attorney, medical directive, executor and have things in writing like your assets and liabilities in a legal document that's easy to find.

For the trust part, if you want to keep things simple, you could do a trust under will. That's what we did and met with an attorney for about 90 minutes. I think the total cost was $500 or so for both so it wasn't that much.

As far as naming the beneficiaries, I would ask your lawyer what you should do. Mine was very specific with how I worded the Trust as a beneficiary. He said that can often cause headaches when the wording is off.
Curious what should one expect to pay for a recommendation like this?

- attorney fees?
- filing, processing, etc fees?
Mine was a flat fee, but I'm sure it varies quite a bit by region and attorney.

As far as finding one, I would ask around. You probably want to get a half decent estate attorney, even if most of your stuff is cookie cutter (like mine pretty much was). My credit union partnered with an attorney and was offering a deal. His firm gets a bunch of clients that way. I was happy with the process and feel better having gone with an attorney, have it filed at his office and a copy in my safe, etc.

I don't know much about the space so I'll let others chime in. I know there's a couple estate attorneys on here who often provide a lot of advice.

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dm200
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Re: New Child- Steps to take (will/trust)

Post by dm200 » Tue Jan 14, 2020 5:14 pm

senex wrote:
Tue Jan 14, 2020 5:11 pm
fittan wrote:
Tue Jan 14, 2020 3:53 pm
Now to will and trust...really there are 2 big questions to ask. In a worst case where both parents pass, 1) who will take care of child (i.e. legal guardian) and 2) who will manage your $$$ for the benefit of your child.
A will helps question 1 but not question 2.
Nope. A testamentary trust (a trust described/created by your will) is a common way to handle question 2.
Yes - I agree. Our wills with testamentary trusts handled #2.

apple44
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Re: New Child- Steps to take (will/trust)

Post by apple44 » Tue Jan 14, 2020 6:04 pm

Maybe a stupid question:
Suppose my spouse and I pass away and we only have one child, why do you need a will/trust? Wouldn't all of our property go to our child by law? As to who takes care of the child and who manages the money, wouldn't it be the closest relative alive, which is my mother? If the law takes care of all of this already, why do you need a will/trust? Suppose only one of us passes away, then the other person will take care of the child and the money by operation of law, right? So again why a will/trust?

senex
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Re: New Child- Steps to take (will/trust)

Post by senex » Tue Jan 14, 2020 6:45 pm

apple44 wrote:
Tue Jan 14, 2020 6:04 pm
Maybe a stupid question:
Suppose my spouse and I pass away and we only have one child, why do you need a will/trust? Wouldn't all of our property go to our child by law? As to who takes care of the child and who manages the money, wouldn't it be the closest relative alive, which is my mother? If the law takes care of all of this already, why do you need a will/trust? Suppose only one of us passes away, then the other person will take care of the child and the money by operation of law, right? So again why a will/trust?
Not a dumb question. It's hard to find good, succinct info on estate issues (hence so many questions here).

The reason is that the law may not say what you expect. For instance, if you have a living Mom & sister, which is the "closest" ?
In some states, if you are married and die without a will, your spouse will not get everything, which surprises some people.
etc.

And, laws can change over time, or you can move to a new state (with different laws), etc.

A will allows you to put your actual wishes in writing, instead of relying on some changing body of law that you may not know/understand.

bluebolt
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Re: New Child- Steps to take (will/trust)

Post by bluebolt » Tue Jan 14, 2020 6:59 pm

senex wrote:
Tue Jan 14, 2020 6:45 pm
apple44 wrote:
Tue Jan 14, 2020 6:04 pm
Maybe a stupid question:
Suppose my spouse and I pass away and we only have one child, why do you need a will/trust? Wouldn't all of our property go to our child by law? As to who takes care of the child and who manages the money, wouldn't it be the closest relative alive, which is my mother? If the law takes care of all of this already, why do you need a will/trust? Suppose only one of us passes away, then the other person will take care of the child and the money by operation of law, right? So again why a will/trust?
Not a dumb question. It's hard to find good, succinct info on estate issues (hence so many questions here).

The reason is that the law may not say what you expect. For instance, if you have a living Mom & sister, which is the "closest" ?
In some states, if you are married and die without a will, your spouse will not get everything, which surprises some people.
etc.

And, laws can change over time, or you can move to a new state (with different laws), etc.

A will allows you to put your actual wishes in writing, instead of relying on some changing body of law that you may not know/understand.
And, not only can the law change, but the people who you'd expect/want to be your guardian(s) may not be around either.

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Re: New Child- Steps to take (will/trust)

Post by Yooper » Tue Jan 14, 2020 9:55 pm

dm200 wrote:
Tue Jan 14, 2020 5:07 pm
RickBoglehead wrote:
Tue Jan 14, 2020 4:21 pm
fourwheelcycle wrote:
Tue Jan 14, 2020 4:16 pm
I have advised our own children they do not need to do their first wills until they have decided who they would want to raise their children if they and their spouse should die, and that person or couple has agreed to do so.
I'd submit that this is really bad advice.
Yes - I agree.

In my opinion, naming guardians for children is one of the least important matters to put in your will.
Well, you know what they say about opinions (grin).

For me, it's the single most important part of my will - who raises my children if my wife and I are out of the picture. Disposition of finances I can easily do online with a few keystrokes via primary and contingent beneficiaries. But in the grand scheme of life that doesn't matter to me. Money or no money, I want to be sure that that my most important "assets", my children, have the best care/guidance/training/character-moral development possible. This is done by my wife and I deciding who should finish the job of raising them if we're gone. And the will carrying out our wishes. But that's just me.

senex
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Re: New Child- Steps to take (will/trust)

Post by senex » Tue Jan 14, 2020 10:13 pm

Yooper wrote:
Tue Jan 14, 2020 9:55 pm

For me, it's the single most important part of my will - who raises my children if my wife and I are out of the picture. [...] Money or no money, I want to be sure that that my most important "assets", my children, have the best care/guidance/training/character-moral development possible.
+1. Well said.

I’d rather give kids a good guardian and a bad monetary inheritance than vice versa.

My top reason for a will is child guardian. Second is to put child assets in trust so children don’t get a big lump sum at age 18, which can be hazardous. Everything beyond that to me is gravy, optimizations, nice-to-haves, but lower priority and non-essential.

“Naked I came from my mother’s womb and naked I shall return; I neither lose nor gain.” True of me, true of my kids, their kids, etc.

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Re: New Child- Steps to take (will/trust)

Post by simplesimon » Wed Jan 15, 2020 8:05 am

dm200 wrote:
Tue Jan 14, 2020 5:07 pm
RickBoglehead wrote:
Tue Jan 14, 2020 4:21 pm
fourwheelcycle wrote:
Tue Jan 14, 2020 4:16 pm
I have advised our own children they do not need to do their first wills until they have decided who they would want to raise their children if they and their spouse should die, and that person or couple has agreed to do so.
I'd submit that this is really bad advice.
Yes - I agree.

In my opinion, naming guardians for children is one of the least important matters to put in your will.
What is more important than having your minor children raised by who you believe is the best person (that is willing to do it)? Determining who manages assets and when they should be distributed seems like the easy part.

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dm200
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Re: New Child- Steps to take (will/trust)

Post by dm200 » Wed Jan 15, 2020 12:58 pm

simplesimon wrote:
Wed Jan 15, 2020 8:05 am
dm200 wrote:
Tue Jan 14, 2020 5:07 pm
RickBoglehead wrote:
Tue Jan 14, 2020 4:21 pm
fourwheelcycle wrote:
Tue Jan 14, 2020 4:16 pm
I have advised our own children they do not need to do their first wills until they have decided who they would want to raise their children if they and their spouse should die, and that person or couple has agreed to do so.
I'd submit that this is really bad advice.
Yes - I agree.
In my opinion, naming guardians for children is one of the least important matters to put in your will.
What is more important than having your minor children raised by who you believe is the best person (that is willing to do it)? Determining who manages assets and when they should be distributed seems like the easy part.
There is nothing more important than providing for having your children raised as you wish. This, however, does not have to be in your will. There are other ways to provide/prepare for this.

As I noted in a previous post, my wife and I did not name guardians, nor did we discuss this with anyone - for several reasons. I strongly believe, though, that had both of us died while our son was still a minor/child, one (of the two families) would have stepped forward and take the responsibility. By having the financial aspects well defined and funded in our wills and testamentary trusts, the family members who would/could take on the guardian responsibility - would have faced no financial impediment.

deikel
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Re: New Child- Steps to take (will/trust)

Post by deikel » Wed Jan 15, 2020 2:13 pm

Its a questions of fees to be paid

If your current assets are small, there is little sense to pay a higher amount of lawyer fees now to set up a trust structure and instruct in your will how this all should be distributed.

Instead, you can write a more detailed will, that will basically establish a trust at the point of your untimely death - the fees will then be paid by your estate, which presumably has more money since your life insurance will be available.

The second advantage to do it via a will is that if you change your will a couple of times during the years, you do not need to pay the higher fees again (or change the trust structure), you just change the will as needed/intended. The wording in the will has basically the structure of the trust already included, you have influence on it and can esily edit it.

Ballpark figure for my area: normal will as described was 1200 USD, a trust set up would have been 4500 fixed. We figured, whoever wins the live insurance lottery can happily pay for the trust cost at that time...YMMV

Of course, if you have large assets now (especially if they exceed inheritance tax limits), you should set up a trust structure now and start transitioning assets to the trust(s) as to avoid taxes, max out gift space over the years ect.

I think for most people a smarty written will is more then plenty.
Everything you read in this post is my personal opinion. If you disagree with this disclaimer, please un-read the text immediately and destroy any copy or remembrance of it.

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Re: New Child- Steps to take (will/trust)

Post by deikel » Wed Jan 15, 2020 2:19 pm

dm200 wrote:
Wed Jan 15, 2020 12:58 pm
simplesimon wrote:
Wed Jan 15, 2020 8:05 am
dm200 wrote:
Tue Jan 14, 2020 5:07 pm
RickBoglehead wrote:
Tue Jan 14, 2020 4:21 pm
fourwheelcycle wrote:
Tue Jan 14, 2020 4:16 pm
I have advised our own children they do not need to do their first wills until they have decided who they would want to raise their children if they and their spouse should die, and that person or couple has agreed to do so.
I'd submit that this is really bad advice.
Yes - I agree.
In my opinion, naming guardians for children is one of the least important matters to put in your will.
What is more important than having your minor children raised by who you believe is the best person (that is willing to do it)? Determining who manages assets and when they should be distributed seems like the easy part.
There is nothing more important than providing for having your children raised as you wish. This, however, does not have to be in your will. There are other ways to provide/prepare for this.

As I noted in a previous post, my wife and I did not name guardians, nor did we discuss this with anyone - for several reasons. I strongly believe, though, that had both of us died while our son was still a minor/child, one (of the two families) would have stepped forward and take the responsibility. By having the financial aspects well defined and funded in our wills and testamentary trusts, the family members who would/could take on the guardian responsibility - would have faced no financial impediment.
+3, guardian ship was the major motivator for us to have a will and think this through from every angle (life insurance was for funding it). If you name your guardian (or list of guardians) in your will, it becomes a whole lot easier/faster for the courts to appoint one since your intend is clearly stated ...
Everything you read in this post is my personal opinion. If you disagree with this disclaimer, please un-read the text immediately and destroy any copy or remembrance of it.

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Re: New Child- Steps to take (will/trust)

Post by knightrider » Wed Jan 15, 2020 2:27 pm

schutzk21 wrote:
Tue Jan 14, 2020 2:36 pm
We don't have much in assets right now, and there is nothing out of the ordinary.
I would do nothing then. Keep in mind the probability of either of you dyeing soon is very very small. On the other hand, paying for all these fancy wills/trusts is not cheap. So why pay for something you likely will not need? Furthermore the horror stories of inheritance are all grossly exaggerated thanks to Hollywood IMO.

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Re: New Child- Steps to take (will/trust)

Post by bsteiner » Wed Jan 15, 2020 2:41 pm

UnLearnYourself wrote:
Tue Jan 14, 2020 4:58 pm
ThankYouJack wrote:
Tue Jan 14, 2020 4:34 pm
I would set up a will to specify your legal guardians, power of attorney, medical directive, executor and have things in writing like your assets and liabilities in a legal document that's easy to find.

For the trust part, if you want to keep things simple, you could do a trust under will. That's what we did and met with an attorney for about 90 minutes. I think the total cost was $500 or so for both so it wasn't that much.

As far as naming the beneficiaries, I would ask your lawyer what you should do. Mine was very specific with how I worded the Trust as a beneficiary. He said that can often cause headaches when the wording is off.
Curious what should one expect to pay for a recommendation like this?

- attorney fees?
- filing, processing, etc fees?
90 minutes of a lawyer's time to discuss your situation and for the lawyer to recommend how best to accomplish your objectives would probably be more than $500.

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Re: New Child- Steps to take (will/trust)

Post by fourwheelcycle » Wed Jan 15, 2020 2:55 pm

dm200 wrote:
Wed Jan 15, 2020 12:58 pm
There is nothing more important than providing for having your children raised as you wish. This, however, does not have to be in your will. There are other ways to provide/prepare for this.

As I noted in a previous post, my wife and I did not name guardians, nor did we discuss this with anyone - for several reasons. I strongly believe, though, that had both of us died while our son was still a minor/child, one (of the two families) would have stepped forward and take the responsibility.
Your previous post says you and your wife signed your first wills immediately after you were married, before you had any children. That may be part of the reason you did not name guardians or discuss that concern with anyone. Most of the posts on this thread are in regard to young parents who are thinking about estate planning in order to provide for their young child or children.

You also note that if you had died without identifying a preferred person or couple to raise your children one or the other set of grandparents would have stepped forward to raise them. I agree, in fact they both may have wanted to raise your children, and they may have put your children in the middle of a court process to decide which grandparents should be named as guardians. I imagine you and your wife agreed either set of grandparents would be suitable, but if you did not talk to them to explain your preference, or if you did not have a preference, how would they have decided between themselves?

Unfortunately, there are some young couples who agree one or both sets of grandparents would not be suitable to raise their children. These are the couples who really need to think about who they want to name, talk to that person or couple, and then prepare their first estate documents.

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dm200
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Re: New Child- Steps to take (will/trust)

Post by dm200 » Wed Jan 15, 2020 3:09 pm

knightrider wrote:
Wed Jan 15, 2020 2:27 pm
schutzk21 wrote:
Tue Jan 14, 2020 2:36 pm
We don't have much in assets right now, and there is nothing out of the ordinary.
I would do nothing then. Keep in mind the probability of either of you dyeing soon is very very small. On the other hand, paying for all these fancy wills/trusts is not cheap. So why pay for something you likely will not need? Furthermore the horror stories of inheritance are all grossly exaggerated thanks to Hollywood IMO.
Maybe or maybe not - perhaps some of each.

While the risk is very small, nonetheless it is greater than zero. If there do turn out to be "problems" - they very well may be uncorrectible - since you are both dead. It seems to me, and the actions my wife and I took, that well drafted wills can provide for proper and successful dealing with such deaths. Or, put another way, if you spend just a little bit more on your wills now, you may very well not need to frequently do any redrafting - or a long term net saving.

I have (and pay for) life insurance - even though it is unlikely it would be used in the next 24 hours
I have (and pay for) auto insurance - even though it is unlikely that I would use it on my way home from work this evening.
I have (and pay for) health insurance - even though I am unlikely to use it in the next 24 hours

In my knowledge, understanding, experience and opinion - while such wills/trusts are not "cheap", there are many choices you can make that can keep the costs in the "moderate" range. There may be "fancy" and expensive features that you do not want or need.

"Stuff" happens - whether it is a plane crash, malignant brain tumor(s), deadly heart attacks and strokes, auto accidents, and so on.

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dm200
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Re: New Child- Steps to take (will/trust)

Post by dm200 » Wed Jan 15, 2020 3:17 pm

fourwheelcycle wrote:
Wed Jan 15, 2020 2:55 pm
dm200 wrote:
Wed Jan 15, 2020 12:58 pm
There is nothing more important than providing for having your children raised as you wish. This, however, does not have to be in your will. There are other ways to provide/prepare for this.
As I noted in a previous post, my wife and I did not name guardians, nor did we discuss this with anyone - for several reasons. I strongly believe, though, that had both of us died while our son was still a minor/child, one (of the two families) would have stepped forward and take the responsibility.
Your previous post says you and your wife signed your first wills immediately after you were married, before you had any children. That may be part of the reason you did not name guardians or discuss that concern with anyone. Most of the posts on this thread are in regard to young parents who are thinking about estate planning in order to provide for their young child or children.
You also note that if you had died without identifying a preferred person or couple to raise your children one or the other set of grandparents would have stepped forward to raise them. I agree, in fact they both may have wanted to raise your children, and they may have put your children in the middle of a court process to decide which grandparents should be named as guardians. I imagine you and your wife agreed either set of grandparents would be suitable, but if you did not talk to them to explain your preference, or if you did not have a preference, how would they have decided between themselves?
Unfortunately, there are some young couples who agree one or both sets of grandparents would not be suitable to raise their children. These are the couples who really need to think about who they want to name, talk to that person or couple, and then prepare their first estate documents.
Not exactly - grandparents were always "out" - my mother died at the age of 49 and my father was still unmarried and older. My wife's parents were beyond the age, etc. of raising child(ren).

Our choices/candidates were two: both who lived about 400 miles from here and about the same distance from each other. One was my bother and his wife - who eventually had two daughters together and my sister-in-law's daughter from her first marriage. The other was my wife's sister and her husband - who, eventually also had two daughters.

Because of all the family details (some good and some less than ideal) - there would, I am sure, never be any arguments - after our deaths - that one family or the other would have fought for guardianship.

UnLearnYourself
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Re: New Child- Steps to take (will/trust)

Post by UnLearnYourself » Wed Jan 15, 2020 3:18 pm

bsteiner wrote:
Wed Jan 15, 2020 2:41 pm
UnLearnYourself wrote:
Tue Jan 14, 2020 4:58 pm
ThankYouJack wrote:
Tue Jan 14, 2020 4:34 pm
I would set up a will to specify your legal guardians, power of attorney, medical directive, executor and have things in writing like your assets and liabilities in a legal document that's easy to find.

For the trust part, if you want to keep things simple, you could do a trust under will. That's what we did and met with an attorney for about 90 minutes. I think the total cost was $500 or so for both so it wasn't that much.

As far as naming the beneficiaries, I would ask your lawyer what you should do. Mine was very specific with how I worded the Trust as a beneficiary. He said that can often cause headaches when the wording is off.
Curious what should one expect to pay for a recommendation like this?

- attorney fees?
- filing, processing, etc fees?
90 minutes of a lawyer's time to discuss your situation and for the lawyer to recommend how best to accomplish your objectives would probably be more than $500.
Interesting...I ask partly because my employer offers a legal benefit that would cost me about $199 for the year and includes services like this. So it seems to be finally prudent to opt into this benefit during my next open enrollment period, then plan to set up some wills and trusts next year.

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FOGU
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Re: New Child- Steps to take (will/trust)

Post by FOGU » Wed Jan 15, 2020 10:09 pm

bluebolt wrote:
Tue Jan 14, 2020 6:59 pm
senex wrote:
Tue Jan 14, 2020 6:45 pm
apple44 wrote:
Tue Jan 14, 2020 6:04 pm
Maybe a stupid question:
Suppose my spouse and I pass away and we only have one child, why do you need a will/trust? Wouldn't all of our property go to our child by law? As to who takes care of the child and who manages the money, wouldn't it be the closest relative alive, which is my mother? If the law takes care of all of this already, why do you need a will/trust? Suppose only one of us passes away, then the other person will take care of the child and the money by operation of law, right? So again why a will/trust?
Not a dumb question. It's hard to find good, succinct info on estate issues (hence so many questions here).

The reason is that the law may not say what you expect. For instance, if you have a living Mom & sister, which is the "closest" ?
In some states, if you are married and die without a will, your spouse will not get everything, which surprises some people.
etc.

And, laws can change over time, or you can move to a new state (with different laws), etc.

A will allows you to put your actual wishes in writing, instead of relying on some changing body of law that you may not know/understand.
And, not only can the law change, but the people who you'd expect/want to be your guardian(s) may not be around either.
And, without a valid will everything goes through probate and the court-appointed estate administrator will siphon off significant fees and expenses from the assets in the estate. By creating a last will and testament you get to pick the estate administrator, someone you know and trust that won't rip off your child's inheritance.

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Re: New Child- Steps to take (will/trust)

Post by bsteiner » Wed Jan 15, 2020 10:59 pm

UnLearnYourself wrote:
Wed Jan 15, 2020 3:18 pm
bsteiner wrote:
Wed Jan 15, 2020 2:41 pm
...
90 minutes of a lawyer's time to discuss your situation and for the lawyer to recommend how best to accomplish your objectives would probably be more than $500.
Interesting...I ask partly because my employer offers a legal benefit that would cost me about $199 for the year and includes services like this. So it seems to be finally prudent to opt into this benefit during my next open enrollment period, then plan to set up some wills and trusts next year.
If something very basic is sufficient for your needs, that might be sufficient. But sometimes it's not.
FOGU wrote:
Wed Jan 15, 2020 10:09 pm
....
without a valid will everything goes through probate and the court-appointed estate administrator will siphon off significant fees and expenses from the assets in the estate. By creating a last will and testament you get to pick the estate administrator, someone you know and trust that won't rip off your child's inheritance.
Without a Will your Will can't be probated.

State law specifies the order of priority for the appointment of an administrator. It's usually the closest relatives. An administrator is entitled to the same commissions (fees) as an executor, though close relatives often waive compensation. Spouses usually waive compensation. Children usually take or waive compensation based on tax considerations.

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Re: New Child- Steps to take (will/trust)

Post by senex » Wed Jan 22, 2020 4:55 pm

bsteiner wrote:
Wed Jan 15, 2020 10:59 pm
Without a Will your Will can't be probated.
Hi bsteiner, you've made such comments previously upon discussion of probate without a will. It is strictly true (no Will to probate) but it might give a misleading impression that probate requires a Will.

In some states the probate courts handle intestate succession and they call it "probate." For instance, Michigan:
  • "When a person dies intestate, Michigan probate courts see to the administration of the deceased person's estate. Based on Michigan laws of intestate succession, the probate court will establish a probate estate. " [1]
  • Michigan's official Petition for Probate form has a checkbox for Testate or Intestate [2]

Maybe you refer to a specialized legal definition of "probate," but colloquially (in my experience), and officially in some states, "probate" is the name of the process that occurs with or without a will.

[1] https://info.legalzoom.com/death-michigan-24093.html
[2] https://courts.michigan.gov/Administrat ... /pc559.pdf

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Re: New Child- Steps to take (will/trust)

Post by bsteiner » Wed Jan 22, 2020 5:16 pm

senex wrote:
Wed Jan 22, 2020 4:55 pm
bsteiner wrote:
Wed Jan 15, 2020 10:59 pm
Without a Will your Will can't be probated.
Hi bsteiner, you've made such comments previously upon discussion of probate without a will. It is strictly true (no Will to probate) but it might give a misleading impression that probate requires a Will.

In some states the probate courts handle intestate succession and they call it "probate." For instance, Michigan:
  • "When a person dies intestate, Michigan probate courts see to the administration of the deceased person's estate. Based on Michigan laws of intestate succession, the probate court will establish a probate estate. " [1]
  • Michigan's official Petition for Probate form has a checkbox for Testate or Intestate [2]

Maybe you refer to a specialized legal definition of "probate," but colloquially (in my experience), and officially in some states, "probate" is the name of the process that occurs with or without a will.

[1] https://info.legalzoom.com/death-michigan-24093.html
[2] https://courts.michigan.gov/Administrat ... /pc559.pdf
That's poor use of the English language. However, except for there not being a Will, the estate administration is for the most part the same regardless of whether there's a Will.

Some states such as Florida use the term personal representative to cover executors, administrators, and the like. In Florida it's called a petition for administration even if there's a Will. Different states have different names for the court that handles estate matters.

Finally, we often say that everyone is born with a Will in the form of the intestacy law, and that once you become 18 (or the age when you may sign a Will in a given state) you may sign a new Will.

gr7070
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Re: New Child- Steps to take (will/trust)

Post by gr7070 » Thu Jan 23, 2020 1:33 am

Yooper wrote:
Tue Jan 14, 2020 9:55 pm
dm200 wrote:
Tue Jan 14, 2020 5:07 pm
RickBoglehead wrote:
Tue Jan 14, 2020 4:21 pm
fourwheelcycle wrote:
Tue Jan 14, 2020 4:16 pm
I have advised our own children they do not need to do their first wills until they have decided who they would want to raise their children if they and their spouse should die, and that person or couple has agreed to do so.
I'd submit that this is really bad advice.
Yes - I agree.

In my opinion, naming guardians for children is one of the least important matters to put in your will.
Well, you know what they say about opinions (grin).

For me, it's the single most important part of my will - who raises my children if my wife and I are out of the picture. Disposition of finances I can easily do online with a few keystrokes via primary and contingent beneficiaries. But in the grand scheme of life that doesn't matter to me. Money or no money, I want to be sure that that my most important "assets", my children, have the best care/guidance/training/character-moral development possible. This is done by my wife and I deciding who should finish the job of raising them if we're gone. And the will carrying out our wishes. But that's just me.
Couldn't agree more. Our child is most important in our lives.

Additionally, the extreme majority of our assets aren't even covered under our wills- beneficiary designations. Similarly with life insurance.

senex
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Re: New Child- Steps to take (will/trust)

Post by senex » Thu Jan 23, 2020 10:06 am

bsteiner wrote:
Wed Jan 22, 2020 5:16 pm
That's poor use of the English language. However, except for there not being a Will, the estate administration is for the most part the same regardless of whether there's a Will.
Thanks for clarifying. I had been confused about that bit of terminology for a while.

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Re: New Child- Steps to take (will/trust)

Post by JGoneRiding » Thu Jan 23, 2020 10:12 am

I have a temporary cheap will in place done just before first child. As soon as I have a little money and now that we have 2, I plan to have a lawyer do a testamentary trust. This seems to.me to be the simplest way to protect my children so there is a trust in the will as long as I need it and no concerns for the trust once I dont. I realize bsteiner recs always providing for children inside a trust even if they are 60 when they get the funds but I dont think my estate at that point will be worth it. I plan to spend my money! ;)

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Re: New Child- Steps to take (will/trust)

Post by JGoneRiding » Thu Jan 23, 2020 1:27 pm

senex wrote:
Tue Jan 14, 2020 6:45 pm
apple44 wrote:
Tue Jan 14, 2020 6:04 pm
Maybe a stupid question:
Suppose my spouse and I pass away and we only have one child, why do you need a will/trust? Wouldn't all of our property go to our child by law? As to who takes care of the child and who manages the money, wouldn't it be the closest relative alive, which is my mother? If the law takes care of all of this already, why do you need a will/trust? Suppose only one of us passes away, then the other person will take care of the child and the money by operation of law, right? So again why a will/trust?
Not a dumb question. It's hard to find good, succinct info on estate issues (hence so many questions here).

The reason is that the law may not say what you expect. For instance, if you have a living Mom & sister, which is the "closest" ?
In some states, if you are married and die without a will, your spouse will not get everything, which surprises some people.
etc.

And, laws can change over time, or you can move to a new state (with different laws), etc.

A will allows you to put your actual wishes in writing, instead of relying on some changing body of law that you may not know/understand.
This is super important! In MOST states that I have reviewed if you die without a will and with children your children are entitled to a certain percentage of your non communal property even if you have a spouse. Now for most people that have named benefeciariers and the rest of their real property is in a joint house this is a non issue. But depending on your state and how your house is titled your children could be entitled to some of your half and that could create a nightmare

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Re: New Child- Steps to take (will/trust)

Post by smackboy1 » Thu Jan 23, 2020 11:12 pm

schutzk21 wrote:
Tue Jan 14, 2020 2:36 pm
My wife and I welcomed our first child last year and we are in our 30's, and I would like to get some clarification on what steps we should take in regards to protecting our assets. I can't find a clear answer online in regards to whether it should be done with a will or a trust. . .

Is it okay to name my daughter as a contingent beneficiary for all of our accounts? My wife and I have each other as the primary beneficiary on all of our accounts.
Your wife and yourself should each probably have at minimum the following:

Will
Durable Power of Attorney
Advanced Health Care Directive
Life Insurance
Disability Insurance

There are no clear answer online because it's complicated and a lot depends on the circumstances. Wills and trusts are not substitutes for the other, you may need both. Plan for the worst and hope for the best. A lawyer should be used. Wealth planning is like a safety net so you can help yourselves by imagining different unlikely but horrible scenarios and discuss how you would like to see them resolved. Your lawyer will have technical expertise, but will not know who you would want to raise your children. They won't know who you would trust to manage your children's money.

Some things to think about:

- Insurance provides cash replacement when income is lost. Make sure it's set up correctly in case both parents die simultaneously, or one dies and the other is left permanently incapacitated.

- Using TOD/POD designations on accounts might be OK without dependents, but it's not great in your situation. What if both parents die within a short space of time? Minor children cannot legally inherit property. A court will have it held in trust or guardianship for the child - until they reach adulthood i.e. 18-21. Imagine your child having full unrestricted control of large amounts of cash at 21.

- Imagine a Cinderella scenario: one parent dies and all the money goes to the surviving parent. Surviving parent remarries evil step parent with their own children. Then surviving parent dies. Who will raise your child? Will there be any money for your child? After both parents are dead, is there anything to prevent evil step parent from taking all the money for their own children?

- Talk to your families about your estate plans. Nobody likes surprises, especially after a tragedy. Have a deep bench. Make sure there are successor guardians and trustees in case some are unable or unwilling to serve.
Disclaimer: nothing written here should be taken as legal advice, but I did stay at a Holiday Inn Express last night.

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Re: New Child- Steps to take (will/trust)

Post by FoolMeOnce » Thu Jan 23, 2020 11:45 pm

fourwheelcycle wrote:
Wed Jan 15, 2020 2:55 pm
You also note that if you had died without identifying a preferred person or couple to raise your children one or the other set of grandparents would have stepped forward to raise them. I agree, in fact they both may have wanted to raise your children, and they may have put your children in the middle of a court process to decide which grandparents should be named as guardians. I imagine you and your wife agreed either set of grandparents would be suitable, but if you did not talk to them to explain your preference, or if you did not have a preference, how would they have decided between themselves?

Unfortunately, there are some young couples who agree one or both sets of grandparents would not be suitable to raise their children. These are the couples who really need to think about who they want to name, talk to that person or couple, and then prepare their first estate documents.
Even with a will naming preferred guardians, there will be a court process. At least in my state, the judge can still grant custody to someone other than the people named in the will - even if those people are still willing to take on the responsibility. The deceased parents' stated preference will certainly be a factor, but it is not dispositive.

fourwheelcycle
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Re: New Child- Steps to take (will/trust)

Post by fourwheelcycle » Fri Jan 24, 2020 7:32 am

FoolMeOnce wrote:
Thu Jan 23, 2020 11:45 pm
Even with a will naming preferred guardians, there will be a court process. At least in my state, the judge can still grant custody to someone other than the people named in the will - even if those people are still willing to take on the responsibility. The deceased parents' stated preference will certainly be a factor, but it is not dispositive.
I am aware that a will naming who you want to raise your child or children does not guarantee the court will grant custody to that person.

However, judges who deal with child custody cases are generally very humane and try hard to make the best decision in the child's interest. Except in unusual situations where major changes in the life, health, or finances of the person named in the will evolve soon after the death of the parent, the circumstances that might lead a judge to consider an alternative custodian would usually be apparent to the parent when they were preparing their will. As long as the parent's plan is carefully thought out and names a responsible person to raise their child it is very likely the court will grant custody to that person.

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