Advice on Estate Planning, Will, POA, Trust etc

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sgm7091
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Advice on Estate Planning, Will, POA, Trust etc

Post by sgm7091 » Thu Feb 13, 2020 10:15 am

We are new to estate planning. We attended a class offered by local community college. I have also read a few threads already like this here: viewtopic.php?f=2&t=284332&p=4614365&hi ... m#p4614365

Our needs seem simple to us:
- Married and no previous marriages for either of us
- Two daughters and independent (one married and other working)
- Primary residence and a second home - most likely we will sell off second home this year to simplify our life as we near retirement
- Couple of Cars
- We are setting up all bank accounts with POD beneficiaries, IRA/401k with primary and contingent beneficiaries etc
- Total assets including real estate is < $3m

I got some local estate estimates like $3,000 - $4,000 to structure a Will, POA, Living Will and Trust etc. With above, Trust may be an overkill perhaps too. Since most liquid assets have beneficiaries, the only ones needing a Will are other assets.

The cost seems high, I would have expected it to be in $1,000 range. Any thoughts and advice?
Does the lawyer expected to provide some future service for which we are paying now?
Should we give a copy of Will to beneficiaries (i.e. our daughters)?
Should we register Will and Trust anywhere?

Thank you.
sgm7091

David Althaus
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Re: Advice on Estate Planning, Will, POA, Trust etc

Post by David Althaus » Thu Feb 13, 2020 10:32 am

While our estate plan was straightforward (one marriage and one son) there is considerable peace of mind delivered by getting all this done. Maybe the main benefit is forcing you and your spouse to think through issues and how you want them handled should such issues arise. I believe we paid about $3k for the entire package of reworked will, estate plan, and living trust setup. Get it done sooner than later--now being the strong preference.

All the best

senex
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Re: Advice on Estate Planning, Will, POA, Trust etc

Post by senex » Thu Feb 13, 2020 11:06 am

sgm7091 wrote:
Thu Feb 13, 2020 10:15 am
The cost seems high, I would have expected it to be in $1,000 range. Any thoughts and advice?
Does the lawyer expected to provide some future service for which we are paying now?
Should we give a copy of Will to beneficiaries (i.e. our daughters)?
Should we register Will and Trust anywhere?
I've seen many boglehead threads mention the $3k neighborhood for medium-to-large metro areas (more in HCOL areas, possibly less in rural).

The generic advice I've seen on living trusts is that they are often oversold, unless you live in a difficult/expensive probate state or have particular concerns about your own mental incapacitation (or possibly some specific cases in states with state-level estate/inheritance taxes). This will depend on your exact circumstances.

If you intend to pass most assets via beneficiary/TOD, you may consider a software will. If you go that route, you can often get power of attorney forms for free, either as part of the will software, or from your state (many states have statutory, free Medical and General power of attorney forms).

For your level of wealth, some attorneys may recommend you leave assets to daughters in trust instead of outright (beneficiary/TOD). Such a trust need not be established while living; it can be created with language in your will (called a testamentary trust). The upsides of leaving assets in trust, according to a prolific boglehead & longtime estate attorney, are some shielding of assets from creditors, ex-spouses, medicaid, and potential estate taxes due when your daughters eventually die. The downsides are yearly costs and obligations (including filing yearly trust tax returns and reports) and some loss of control of how the money is spent. Also, the trust must be properly structured with all the proper magical phrasings to accrue those costs & benefits. At your level of wealth I have seen some attorneys recommend leaving in trust and some not. See my post here: viewtopic.php?f=2&t=302013&hilit=litigious#p4984479

The drafting attorney may expect to get your future business, to probate the will, etc, but cannot force it; you may change lawyers at any time. If you want to *amend* legal documents, you generally are stuck with the original attorney or must start over. A second attorney probably will throw away everything and start over, due to the costs & risks of trying to amend another attorney's documents.

The original copy is *the* will. I personally make copies of all legal docs, and I see no problem with giving copies to daughters, knowing that they may not be legally binding if the original is lost, but may be useful nonetheless.

I'm not aware of any method to register a Will.

Topic Author
sgm7091
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Re: Advice on Estate Planning, Will, POA, Trust etc

Post by sgm7091 » Thu Feb 13, 2020 4:23 pm

Looks like 3k-4k is not out of ordinary. We are in a mediums to high COL area. Local fidelity advisor will suggest a name too. Thank you for the advices and sharing experiences. We do plan to get one done within a few weeks.

deikel
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Re: Advice on Estate Planning, Will, POA, Trust etc

Post by deikel » Thu Feb 13, 2020 4:26 pm

Ask the lawyer exactly why you need the trust now ? With a trust, the 3k cost at 3 milion is OK. BUT, you don't need to set up a trust now (or ever really), you can just have a will that is structured such that in the case of death will form a trust (and be paid out of the estate).

Now, do you even need a trust and why ? Your 3 mil will presumably split in two (or maybe some other recipients as well), so what is the function of the trust (it seems both kids are over age)? Do you want to delay the payment to them over x amount of years to avoid divorces in their 40s or young age foolishness ? ...this is where the lawyer can guide you...

in my MCOL to LCOL area 1500 is the going rate, we ended up with 1200 (no trust, just will, POA and Health directives) and we felt well advised - just for a ballpark number.
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.

HomeStretch
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Re: Advice on Estate Planning, Will, POA, Trust etc

Post by HomeStretch » Thu Feb 13, 2020 4:32 pm

$3-4k is the going rate in our area for the estate docs you listed.

Be sure to leave at least one bank account without a POD. The executor will need some cash left in the estate to pay for funeral arrangements, (legitimate) bills, etc.

Topic Author
sgm7091
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Re: Advice on Estate Planning, Will, POA, Trust etc

Post by sgm7091 » Thu Feb 13, 2020 5:28 pm

With revocable trust, estimate we got is $4k. Without revocable trust, it is $3k.

Mr. Rumples
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Re: Advice on Estate Planning, Will, POA, Trust etc

Post by Mr. Rumples » Thu Feb 13, 2020 6:22 pm

I just redid my estate, my brother and his wife just redid their's, and my niece and her wife just did their's for the first time. It really surprises me how attorneys who specialize in this field and who are recognized leaders in the field (based not only on ratings, but on bar committees they serve on and so forth) are all over the place on what's needed and when. My attorney likes trusts - I went will a will; my brother's doesn't like trusts, my niece's wants both.

In the end, for myself with no kids, but with family members for whom I want to provide as well as two scholarships, I went with a will, POA and medical POA. No trusts which would avoid probate since the investments are handled outside of probate. Total cost was $950 and a little advice on some other things was included. She was explaining the difference between revokable trusts, irrevocable trusts and so forth.

I have a distain for trusts. My uncle died 20 years ago, his children died with no children of their own and that attorney is still milking the trust since part of it owns shares in the old family business. I am not sure my uncle understood the legal ramifications of what he was sold.

bsteiner
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Re: Advice on Estate Planning, Will, POA, Trust etc

Post by bsteiner » Fri Feb 14, 2020 9:27 am

Mr. Rumples wrote:
Thu Feb 13, 2020 6:22 pm
I just redid my estate, my brother and his wife just redid their's, and my niece and her wife just did their's for the first time. It really surprises me how attorneys who specialize in this field and who are recognized leaders in the field (based not only on ratings, but on bar committees they serve on and so forth) are all over the place on what's needed and when. ...
It's an art as much as a science. While some things may be right or wrong, there are many things for which there are different approaches none of which is necessarily right or wrong. Lawyers are influenced by the state they're in, the nature of their client base, who they trained under, what the others in their firm's trusts and estates group do, etc. There's sometimes a tendency to do things based on what the law used to be even if there have been changes in the law. We're also influenced by our experiences. We remember things that went well or badly in previous cases.

Topic Author
sgm7091
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Re: Advice on Estate Planning, Will, POA, Trust etc

Post by sgm7091 » Fri Feb 14, 2020 9:46 am

Thank you all for sharing your experiences - being new to estate stuff, learning a lot.

I have noticed that the estate attorney we talked to did not have much answers on security aspect of many sensitive information we will be sharing (and will be in their docs/database). The firm I have talked to so far is a law practice group in our metro area with 5 offices or so (i.e. it is not a small boutique one person firm), and yet don't seem to have any security/privacy structures. Anyone else has experiences/advice on security of sensitive info?

misterjohnny
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Re: Advice on Estate Planning, Will, POA, Trust etc

Post by misterjohnny » Fri Feb 14, 2020 12:54 pm

We live in Los Angeles area and a guy our family members have used charges 1k-2k depending on complexity. We plan to use him also when we get around to it. Have a will today, but in CA you really want a trust to avoid the cost and hassle of probate.

Miriam2
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Re: Advice on Estate Planning, Will, POA, Trust etc

Post by Miriam2 » Fri Feb 14, 2020 3:35 pm

bsteiner wrote:
Mr. Rumples wrote: I just redid my estate, my brother and his wife just redid their's, and my niece and her wife just did their's for the first time. It really surprises me how attorneys who specialize in this field and who are recognized leaders in the field (based not only on ratings, but on bar committees they serve on and so forth) are all over the place on what's needed and when. ...
It's an art as much as a science. While some things may be right or wrong, there are many things for which there are different approaches none of which is necessarily right or wrong. Lawyers are influenced by the state they're in, the nature of their client base, who they trained under, what the others in their firm's trusts and estates group do, etc. There's sometimes a tendency to do things based on what the law used to be even if there have been changes in the law. We're also influenced by our experiences. We remember things that went well or badly in previous cases.
Nice reply, bsteiner, thank you :happy

And, concerning "changes in the law," we are waiting with great anticipation to read your helpful posts on what we do with our estate planning with our limp stretch IRAs under the new Secure Act :mrgreen:

afan
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Re: Advice on Estate Planning, Will, POA, Trust etc

Post by afan » Fri Feb 14, 2020 4:18 pm

I would not pass all financial assets by POD. Doing that can leave the estate with no money to pay final bills. That would force the executor to get money back from the POD recipients. Having the money in the estate, or in a living trust, keeps it available for these required payments. The beneficiaries get what is left.

Leaving money to heirs in trust leads to little cost. The trusts will have separate tax returns but their complexity will depend on how the money is invested, as it would if owned outright by the beneficiaries. If it is in a few index funds then the tax returns will be easy for them to do themselves. They can serve as their own trustees, so they would not have to pay anyone to do this.

One of the biggest advantages of a living trust is that it simplifies someone taking over if the grantor becomes incapacitated. I am not sure how one would decide that this is unlikely to happen. It happens to a lot of people. Durable powers of attorney sound nice and you should have them but often financial institutions refuse to honor them. For those assets that can be put in trust, a living trust gets around these problems.
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Lee_WSP
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Re: Advice on Estate Planning, Will, POA, Trust etc

Post by Lee_WSP » Fri Feb 14, 2020 4:32 pm

Get two more quotes at least one from a smaller outfit and go from there.

smackboy1
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Re: Advice on Estate Planning, Will, POA, Trust etc

Post by smackboy1 » Fri Feb 14, 2020 5:08 pm

sgm7091 wrote:
Thu Feb 13, 2020 10:15 am
We are new to estate planning. We attended a class offered by local community college. . .

Our needs seem simple to us:
- Married and no previous marriages for either of us
- Two daughters and independent (one married and other working)
. . .

- We are setting up all bank accounts with POD beneficiaries, IRA/401k with primary and contingent beneficiaries etc
- Total assets including real estate is < $3m

I got some local estate estimates like $3,000 - $4,000 to structure a Will, POA, Living Will and Trust etc. With above, Trust may be an overkill perhaps too. Since most liquid assets have beneficiaries, the only ones needing a Will are other assets.

The cost seems high, I would have expected it to be in $1,000 range. Any thoughts and advice?
Some thoughts:

- Who taught the class? Was it an experienced specialist i.e. a lawyer whose sole occupation is helping people with estate and wealth planning?

- Estate planning is NOT just simply a way to move assets from A to B. I think it should more accurately be described an investment in wealth planning which can reap dividend for decades or even generations. It should be a system that provides a safety net over a family's finances to protect against as many risks as reasonably makes sense - even the unlikely risks which have the potential to cause financial havoc.

- While it's possible to obtain an estate plan for $1,000 or less, I'm skeptical it will be comprehensive and will likely be one size fits most. A situation with almost $3MM and dependents, children, future grandchildren, deserves better planning.

- An experienced estate planning lawyer typically bills between $500-$1,000/hr depending on locale. It often difficult to know how many hours will go into a plan until detailed discussions are had with the family - which takes time.

- Assuming the estate could be in the ballpark of $2-3MM or more. The cost of a $10,000 estate plan is at most 0.5% of that. $10,000 is 2 years of management fees for $3MM invested in Vanguard's Total Stock Market mutual fund. So even $10,000 in legal fees is a relatively tiny cost to protect that level of wealth. Like life insurance, it can be money well spent.

- The fact is almost all lay people (or even non-estate planner lawyers) do not have the technical knowledge or experience to make reasonable judgments about it. Furthermore, the law is constantly changing - especially tax laws. People who are not knowledgeable just do not know what they do not know.

- The problem with estate planning is that by the time a problem is discovered, it's often too late to correct because somebody is dead and the effects are irreversible. Even if it's fixable, it may be at great cost. It should be done with great care and expertise instead of low bid.

- POD/TOD designations are a really blunt tool. Fine for small value accounts or a simple situation where the downside risks are relatively insignificant e.g. single person with $100K net worth and no dependents. They lack the nuance to plan for different situation which may occur. Hope for the best and plan for the worst. POD/TODs cannot do that.

- Imagine a Cinderella scenario: one of your daughters has a child and through some tragedy your grandchild will be brought up by a gold digger step-parent. Could have been avoided if your daughters' inheritance had been left to them in trust for theirs and their descendant's benefit.

- What if of your daughters marries and moves to a community property state. It's not that difficult to accidentally commingle assets so it all become marital property. In a divorce her inheritance could go to her ex. Again, avoidable with a trust.

- Inheritance given to heirs outright are susceptible to attack by other creditors too. Accident victims, malpractice claims, business deals gone wrong. Assets held in trust are protected from beneficiary's creditors.

- Nobody knows what will happen with the estate tax at the time of you or your daughters' deaths. It's possible the IRS gets 2 bites at the estate, once when the last parent dies and again when the daughters' die. Assets held in trust are not subject to estate taxes.
Disclaimer: nothing written here should be taken as legal advice, but I did stay at a Holiday Inn Express last night.

bsteiner
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Re: Advice on Estate Planning, Will, POA, Trust etc

Post by bsteiner » Fri Feb 14, 2020 5:20 pm

Miriam2 wrote:
Fri Feb 14, 2020 3:35 pm
... concerning "changes in the law," we are waiting with great anticipation to read your helpful posts on what we do with our estate planning with our limp stretch IRAs under the new Secure Act.
If the benefits are payable over 10 years they may be taxable at higher rates than before. So there will be some more Roth conversions than before.

Since grandchildren won't get a longer stretch than children, some people will leave them to or in trust for children rather than grandchildren.

If you have young beneficiaries (but at least 27) you may want to leave them in charitable remainder trusts. This works best for beneficiaries who will need substantial distributions, don't expect to have taxable estates, are at low risk for creditors and divorcing spouses, and have other money available for one-off needs.

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sgm7091
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Re: Advice on Estate Planning, Will, POA, Trust etc

Post by sgm7091 » Fri Feb 14, 2020 5:36 pm

The class was part of Retirement Planning Class - total 6 hours session, the estate planning was 2 hrs of it. We had an Estate Attorney who ran that part. It was an overview. He is from a local law firm with 4-5 offices in the metro area. It is him that I had one-on-one follow up consultation with and he provided the proposal and cost estimate. I have not yet talked with anyone else. I do plan to meet with one of Fidelity recommended attorney and perhaps one other.

Murgatroyd
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Re: Advice on Estate Planning, Will, POA, Trust etc

Post by Murgatroyd » Fri Feb 14, 2020 5:43 pm

We specifically looked for a young attorney looking to expand. We found a mid-30ish one who was very knowledgeable and the initial cost for will, trust, poa, health instruction and custom details for trust was $1,300. A follow up to change the trust was $400. This is over a 4 year span. Haven’t found anything indicating problems with her work and advice.

Topic Author
sgm7091
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Re: Advice on Estate Planning, Will, POA, Trust etc

Post by sgm7091 » Fri Feb 14, 2020 5:44 pm

bsteiner wrote:
Fri Feb 14, 2020 5:20 pm
If you have young beneficiaries (but at least 27) you may want to leave them in charitable remainder trusts. This works best for beneficiaries who will need substantial distributions, don't expect to have taxable estates, are at low risk for creditors and divorcing spouses, and have other money available for one-off needs.
Sorry for a newbie question, how will Charitable Remainder Trust be used here? Allocate certain selected longer 20 years of distribution of certain % to child/grand-child and the remainder goes to charity? Will IRS frown this if remainder is small?

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Watty
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Re: Advice on Estate Planning, Will, POA, Trust etc

Post by Watty » Fri Feb 14, 2020 6:13 pm

sgm7091 wrote:
Thu Feb 13, 2020 10:15 am
Any thoughts and advice?
A few random points that might not have been mentioned.

1) Along with the will there are usually likely several other medical directives, POAs, etc that may be more important than the will. Make sure that people (often grown kids) will know where to get these quickly if they are needed. We have these in a home safe that our son has the combination to.

2) People have posted about Vanguard, and other financial companies, wanting a POA to be done using their form instead of a general POA form. In theory you should not need to do this but this is a battle that you do not want someone to have to fight when you are in coma and your bills need to be paid. Call the places where your big accounts are and and go on and use their forms if they want you to.

3) When you have more than one kid naming beneficiaries on investment accounts might be more complex than it sounds since if one of them dies before you then you might want the money to go to; their kids(your grandkids), their widowed spouse,to your other kids, or to someone else entirely. Pay a lot of attention to this so that it will work the way you would want it to in unexpected situations.

4) If you have issues with leaving an IRA to a kid because they may be irresponsible then it might be possible to use a trust but this can be tricky and needs to be done just right. I have heard of a situation where this caused a potential problem. This is one situation where you definitely need a lawyer.

bsteiner
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Re: Advice on Estate Planning, Will, POA, Trust etc

Post by bsteiner » Fri Feb 14, 2020 9:45 pm

sgm7091 wrote:
Fri Feb 14, 2020 5:44 pm
bsteiner wrote:
Fri Feb 14, 2020 5:20 pm
If you have young beneficiaries (but at least 27) you may want to leave them in charitable remainder trusts. This works best for beneficiaries who will need substantial distributions, don't expect to have taxable estates, are at low risk for creditors and divorcing spouses, and have other money available for one-off needs.
Sorry for a newbie question, how will Charitable Remainder Trust be used here? Allocate certain selected longer 20 years of distribution of certain % to child/grand-child and the remainder goes to charity? Will IRS frown this if remainder is small?
At one time you could have a minuscule remainder interest. So you could provide for distributions to as many individuals you wanted (who were living at your death). In 1997, Congress changed that to require that the value of the charitable remainder interest had to be at least 10% of the value of the trust as of the inception. That means that if you're creating a charitable remainder trust with one recipient, he/she has to be at least age 27 (nearest birthday).

Topic Author
sgm7091
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Re: Advice on Estate Planning, Will, POA, Trust etc

Post by sgm7091 » Sat Feb 15, 2020 8:46 am

bsteiner wrote:
Fri Feb 14, 2020 9:45 pm
At one time you could have a minuscule remainder interest. So you could provide for distributions to as many individuals you wanted (who were living at your death). In 1997, Congress changed that to require that the value of the charitable remainder interest had to be at least 10% of the value of the trust as of the inception. That means that if you're creating a charitable remainder trust with one recipient, he/she has to be at least age 27 (nearest birthday).
Thank you. Looks like an interesting approach to overcome the new Secure Act restrictions. What will be gotchas - attorney costs and complexity to manage the irrevocable trust for beneficiaries?

bsteiner
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Re: Advice on Estate Planning, Will, POA, Trust etc

Post by bsteiner » Sat Feb 15, 2020 9:01 am

sgm7091 wrote:
Sat Feb 15, 2020 8:46 am
bsteiner wrote:
Fri Feb 14, 2020 9:45 pm
At one time you could have a minuscule remainder interest. So you could provide for distributions to as many individuals you wanted (who were living at your death). In 1997, Congress changed that to require that the value of the charitable remainder interest had to be at least 10% of the value of the trust as of the inception. That means that if you're creating a charitable remainder trust with one recipient, he/she has to be at least age 27 (nearest birthday).
Thank you. Looks like an interesting approach to overcome the new Secure Act restrictions. What will be gotchas - attorney costs and complexity to manage the irrevocable trust for beneficiaries?
The tradeoffs are thet the distributions are inflexible and have to go to the beneficiary outright. So it works best for beneficiaries who will need distributions, don't expect to have taxable estates, are at low risk of creditors and divorcing spouses, and have some other money available for one-off needs.

The additional costs are the attorney time in the decision making process, some additional time in the drafting (though not very much after the lawyer has done a couple of them), and then the costs of the annual income tax returns (which may be a bit more than for a conventional trust since a charitable remainder trust files a different form (Form 5227) which some accountants may not be familiar with.

But I think some people will like the concept since the family comes out about even or a little better off, and charity is likely to get a substantial amount of money at the government's expense.

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