Options on Will Creation

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Topic Author
UPWanderer
Posts: 5
Joined: Thu Jan 03, 2019 10:27 am

Options on Will Creation

Post by UPWanderer » Tue Jun 30, 2020 1:02 pm

Hello Bogleheads,

I have a couple of questions I am hoping you may be able to help with. Thank you in advance.

Background:

State of Michigan
Have three kids all under the age of 8.
Have investment accounts: Roth IRA, IRA, 401K, (2) 403B's and (2) 457's, savings, checking
Own our home and have no other debts.

For our Will, we need to ensure the long term financial future of our children along with who will be responsible for their care. Do we need a lawyer for this or can we successfully do this with an online service, ie legal zoom? Does this situation warrant a trust or some other legal document beyond the will?

Not sure if I have described enough for the help I am requesting. Not being in the legal field we were a little overwhelmed with the two quotes we received which were ~$2,000 for a an in person meeting with lawyer.

UPWanderer

senex
Posts: 471
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Re: Options on Will Creation

Post by senex » Tue Jun 30, 2020 2:17 pm

I looked at will software a couple years ago. It had language to specify child guardians (and secondary/alternate, etc) and had language to leave assets for children in trust, for the child's support, with any residual amount distributed at fixed ages of your choosing.

The experienced attorneys here often recommend optimizing the trust to provide asset protection against future divorce, lawsuits, and such. I don't recall those optimizations being available (or even discussed) in the software will, so if you want those, you probably need to pay for an estate-specializing attorney.

The value of those optimizations depends on your net worth. If most of your money (hypothetically) would be consumed paying for your children's care & schooling, including college, there isn't much value (in my opinion) in optimizing. If you expect millions to be leftover after those expenses, the optimizations are worth strong consideration.

If you go the software route, there are some "gotchas" to know. For instance, beneficiary designations supersede your will, so if you list minor children as beneficiaries, they will receive full control of the assets at the state-specified age (usually 18-21), regardless of what you say in your will. A large windfall at that age can often go wrong, so if you desire a trust until older ages, you need to know to avoid listing minor children as beneficiary or transfer-on-death.

I recommend reading an estate planning book or two from Nolo Press as a cheap way to learn the lay of the land. If you are very cost sensitive, you can often find such books at your library. Then you can decide, based on your risk factors and net worth, which options make sense for you.

bsteiner
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Re: Options on Will Creation

Post by bsteiner » Tue Jun 30, 2020 2:38 pm

UPWanderer wrote:
Tue Jun 30, 2020 1:02 pm
...
State of Michigan
Have three kids all under the age of 8.
Have investment accounts: Roth IRA, IRA, 401K, (2) 403B's and (2) 457's, savings, checking
Own our home and have no other debts.

For our Will, we need to ensure the long term financial future of our children along with who will be responsible for their care. Do we need a lawyer for this or can we successfully do this with an online service, ie legal zoom? Does this situation warrant a trust or some other legal document beyond the will?

Not sure if I have described enough for the help I am requesting. Not being in the legal field we were a little overwhelmed with the two quotes we received which were ~$2,000 for a an in person meeting with lawyer.
...
The figure you mentioned seems high for the initial meeting, but low for the entire project.

A nationally prominent trusts and estates lawyer, now retired, drafted a Will for himself on LegalZoom (not to sign it, but rather just to see how it worked). He said that while it didn't offer all of the choices he would have wanted, it was pretty good.
senex wrote:
Tue Jun 30, 2020 2:17 pm
...
If you go the software route, there are some "gotchas" to know. For instance, beneficiary designations supersede your will, so if you list minor children as beneficiaries, they will receive full control of the assets at the state-specified age (usually 18-21), regardless of what you say in your will. A large windfall at that age can often go wrong, so if you desire a trust until older ages, you need to know to avoid listing minor children as beneficiary or transfer-on-death.
...
As you point out, beneficiary designations on assets other than life insurance and retirement benefits can destroy a well-drafted estate plan.

They'll need beneficiary designations for their life insurance and retirement benefits. They'll have to coordinate them with their Wills.

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Watty
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Re: Options on Will Creation

Post by Watty » Tue Jun 30, 2020 3:26 pm

bsteiner wrote:
Tue Jun 30, 2020 2:38 pm
A nationally prominent trusts and estates lawyer, now retired, drafted a Will for himself on LegalZoom (not to sign it, but rather just to see how it worked). He said that while it didn't offer all of the choices he would have wanted, it was pretty good.
I used LegalZoom a few years ago and one thing to realize was that it also included a 30 minute conference call with a lawyer to go over your choices after you had already gone through their online process to fill out questionnaire and select various options. We could have scheduled more time with the lawyer if we wanted to but our situation was pretty streightforward so we did not need that. One of the things that we talked over with the lawyer was if we should set up a trust or not and we did not have a good reason to do that. It was part of a bundle of related paperwork like medical directives, power of attorney , etc which in many ways are just as important as the will itself. They can also set up a trust if that is appropriate for a modest additional charge.

I felt comfortable with the process and feel that it was just as good as using a budget local lawyer but not as good as a high level estate planning lawyer would have been, but we did not need that. I am also still alive and the paperwork has not been used so that really does not mean a lot though. :D

Two things to watch out for;

1) Many brokerages including Vanguard really want the power or attorney document to be on their form so you should do that too.
2) Naming a trust as a beneficiary of a 401k or IRA is possible but it can be tricky, you should have a lawyer tell you exactly how to do that right, I have heard of situations where that caused problems that caused legal fees to get it straightened out and if it was not fixable that could have been an expensive mistake.

LegalZoom was definitely a big step above DIY will software or preprinted forms.

We did not have any kids that were minors though with kids it can get a lot more complicated especially if you to not have people that are clearly willing and able to take care of your kids. You may want to have seperate people responsible for raising your kids and and someone else for taking care of their finances.

One thing to keep in mind is that even if your net worth is "only" worth a few hundred thousand dollars now if something happens like both you and your spouse are killed in a car accident then the settlement could be in the millions. People are funny about money and if there is a large amount of money involved then your brother Bubba who you are not close to may all the sudden have a lot of interest in taking care of your kids, and the millions of dollars. :twisted:

It is important to at least have the basic paperwork in place to keep people like Bubba from mucking things up.

One possible strategy would be to use LegalZoom to draw up the paperwork and then decide if you feel comfortable with it or not. If not you at least have an interim will and you can then start the process all over again with a local lawyer and you will have only lost the few hundred dollars that you paid to legal zoom. You would have also gone through a good learning process with legalzoom so you might require fewer billable hours of the high priced lawyers time. When you are talking with the legalzoom lawyer you could even discuss if more extensive estate planning might be appropriate for you. They don't have a dog in that fight so you will likely get a very honest response.
bsteiner wrote:
Tue Jun 30, 2020 2:38 pm
The figure you mentioned seems high for the initial meeting, but low for the entire project.
I have seen even lower prices for bundles with local lawyers. I never really looked into it but I am pretty sure that this just involves you meeting with the lawyer to sit down and go through their version of will software then to print it out and sign it. It likely only takes and hour or two of the lawyers time. Having them there to ask questions you might not think about or to explain things could be worthwhile but it is a lot different than a full service estate planning law office. Once you get below the high end "big law" and corporate lawyers a lot of lawyers really do not get paid a lot.

My impression, for the little that is worth, is that process is similar to using Legal Zoom but more expensive.

RetiredAL
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Location: SF Bay Area

Re: Options on Will Creation

Post by RetiredAL » Tue Jun 30, 2020 4:28 pm

Watty wrote:
Tue Jun 30, 2020 3:26 pm

Two things to watch out for;

1) Many brokerages including Vanguard really want the power or attorney document to be on their form so you should do that too.
2) Naming a trust as a beneficiary of a 401k or IRA is possible but it can be tricky, you should have a lawyer tell you exactly how to do that right, I have heard of situations where that caused problems that caused legal fees to get it straightened out and if it was not fixable that could have been an expensive mistake.
With respect to item 1:

Do be aware that Fidelity's POA form is considered "durable". This form must be both witnessed and notarized. I've used their local office for this. Fidelity does have a limited function on-line form that does not require a notary.

in contrast, Schwab's std POA form "is not durable". If you want durable at Schwab, you have use a hard to find form for submitting your lawyer's drawn POA for them to review and accept.

I have no relationship with Vanguard, so someone else will have to supply their POA durability info.

tibbitts
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Re: Options on Will Creation

Post by tibbitts » Tue Jun 30, 2020 5:12 pm

Do you have a will now? If not, why not, and what would happen to your estate and kids now without one?

Big Dog
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Re: Options on Will Creation

Post by Big Dog » Tue Jun 30, 2020 6:07 pm

anyone compare outputs of Legal Zoom vs. Quicken Willmaker Premium? (the latter is available thru Costco for $90)

Topic Author
UPWanderer
Posts: 5
Joined: Thu Jan 03, 2019 10:27 am

Re: Options on Will Creation

Post by UPWanderer » Mon Jul 06, 2020 12:30 pm

Thank you all for the feedback and I hope you had a wonderful 4th. Lots more to learn clearly. I appreciate the clarification for retirement accounts not being named to a trust as well as POA documents.

A few follow-up questions:
-Since retirement accounts will be handled via beneficiary does that mean my children would have full access at 18? Is there a way to prevent or limit that?
-It seems I am headed towards the need for a trust, is there a dollar amount of assets that makes having a trust the proper choice? And if so, would this dollar amount include all assets? Or, just the non-retirement (non-beneficiary designated) assets?

Thank you,

UPWanderer

delamer
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Joined: Tue Feb 08, 2011 6:13 pm

Re: Options on Will Creation

Post by delamer » Mon Jul 06, 2020 12:40 pm

UPWanderer wrote:
Mon Jul 06, 2020 12:30 pm
Thank you all for the feedback and I hope you had a wonderful 4th. Lots more to learn clearly. I appreciate the clarification for retirement accounts not being named to a trust as well as POA documents.

A few follow-up questions:
-Since retirement accounts will be handled via beneficiary does that mean my children would have full access at 18? Is there a way to prevent or limit that?
-It seems I am headed towards the need for a trust, is there a dollar amount of assets that makes having a trust the proper choice? And if so, would this dollar amount include all assets? Or, just the non-retirement (non-beneficiary designated) assets?

Thank you,

UPWanderer
You recognize that these are exactly the kinds of questions that a good local estate planning attorney could answer for you?

This is not an area to try to save money via do-it-yourself — not with three young children whose future may depend on getting the details right.

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CAsage
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Re: Options on Will Creation

Post by CAsage » Mon Jul 06, 2020 12:56 pm

You could break this into two parts. Immediately, write a cheapo will to name guardians for your children, and make sure all your beneficiary designations on all those accounts are first the other spouse, then the children. That will ensure at least the guardian part, which is arguably more critical, and is a livable solution. Then you can turn your attention (time and money...) towards a "better" long term plan. Yes, your children would have access to all those funds at 18, so... you are headed towards a trust. but you need enough money to really justify that need, along with the likelihood that both parents are gone. How much estate you need to justify that is a very open question, which also depends on what your children will be like (an unknown).
Salvia Clevelandii "Winifred Gilman" my favorite. YMMV; not a professional advisor.

Topic Author
UPWanderer
Posts: 5
Joined: Thu Jan 03, 2019 10:27 am

Re: Options on Will Creation

Post by UPWanderer » Mon Jul 06, 2020 2:13 pm

Yes I do recognize, I should have stated or included that needing a trust to me meant needing a lawyer. Appreciate the responses and it seems prudent to take the following actions

-Draft up quick will for guardianship - legalzoom or other
-Make sure beneficiary designations are setup with spouse, then children
-Engage local lawyer for trust and full estate plan

UPWanderer

bsteiner
Posts: 4902
Joined: Sat Oct 20, 2012 9:39 pm
Location: NYC/NJ/FL

Re: Options on Will Creation

Post by bsteiner » Mon Jul 06, 2020 3:22 pm

UPWanderer wrote:
Mon Jul 06, 2020 12:30 pm
...
Since retirement accounts will be handled via beneficiary does that mean my children would have full access at 18? Is there a way to prevent or limit that?

It seems I am headed towards the need for a trust, is there a dollar amount of assets that makes having a trust the proper choice? And if so, would this dollar amount include all assets? Or, just the non-retirement (non-beneficiary designated) assets?
...
You could set up trusts in your Will for your children, and leave your retirement benefits to the trusts for your children. The tradeoff is that it would limit the stretch to 10 years, whereas if you left your retirement benefits to your children outright (with a custodian for them until age 18 or 21) under the Uniform Transfers to Minors Act they could use their life expectancy during minority (including until they've completed a specified course of education, but not beyond age 26), whereupon the 10-year rule would commence.
UPWanderer wrote:
Mon Jul 06, 2020 2:13 pm
Yes I do recognize, I should have stated or included that needing a trust to me meant needing a lawyer. Appreciate the responses and it seems prudent to take the following actions

-Draft up quick will for guardianship - legalzoom or other
-Make sure beneficiary designations are setup with spouse, then children
-Engage local lawyer for trust and full estate plan
...
Michigan is a Uniform Probate Code state, which means the probate procedures shouldn't be difficult. So you could include the trusts for your children in your Will.

Mr. Rumples
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Re: Options on Will Creation

Post by Mr. Rumples » Mon Jul 06, 2020 3:50 pm

I went through this in January for just myself. At first I was taken aback by the price, but the price is considered compared to the value of the estate and in this case children, its a small price to pay.

Of course, even with an attorney, their judgement comes into play and they don't necessarily agree among themselves on some courses of action.

When I contacted attorneys 9 (four firms), all of them said they would charge for the initial meeting ($350) which would be applied to their final fee. It was worth it to know its all in order even though it felt like an assembly line.

solargod007
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Re: Options on Will Creation

Post by solargod007 » Mon Jul 06, 2020 4:32 pm

UPWanderer wrote:
Mon Jul 06, 2020 2:13 pm
Yes I do recognize, I should have stated or included that needing a trust to me meant needing a lawyer. Appreciate the responses and it seems prudent to take the following actions

-Draft up quick will for guardianship - legalzoom or other
-Make sure beneficiary designations are setup with spouse, then children
-Engage local lawyer for trust and full estate plan

UPWanderer
A quick note on the beneficiary designations in retirement accounts/accounts that should not be in WILL/TRUST:
Primary should be your spouse.
Contingent should be " The estate of First name Last name"

Bogleheads, correct me if this is wrong.

PS: I'm in the process of setting up my Will and other power of attorney (Financial/Health care) documents through a company provided benefit plan with a network attorney.. That's what he suggested me to do and not add the minor child as a contingent beneficiary. I created a DIY WILL some time ago for the guardianship and doing it right way now through an attorney.

rooms222
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Re: Options on Will Creation

Post by rooms222 » Mon Jul 06, 2020 5:44 pm

If you want something immediately, you and your wife can execute the Michigan Statutory Will. It is set up in statute as a simple workable fill in the blanks will if you choose to use it, and is enshrined in Michigan Statutory Law. Here is the official booklet directly from the Michigan State Legislature website: http://www.legislature.mi.gov/publicati ... ofmind.pdf

The will is in the middle of the booklet, followed by an advance directive on healthcare. As noted, if you have enough assets to trigger tax consequences under the inheritance laws (Federal), you should pay for a will. It allows you to designate who you want to take care of your children if you both should pass on.

Your local state representatives will send you a paper copy (hopefully 2 copies) of the booklet if you call their offices.

You could then contemplate doing something more complex while being somewhat protected immediately.

I second reading books from Nolo as a great way to get yourself up to speed on next steps.

johnnyc321
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Re: Options on Will Creation

Post by johnnyc321 » Mon Jul 06, 2020 5:58 pm

Many states (probably all) do not allow minors to control more than a minimal amount of assets before a guardian is required. I am in Florida and our limit is $15,000.00. A guardianship for each of your 3 kids would cost many times more than a trust that is set up solely for the purpose of holding the inheritance for your kids until they reach a certain age. Guardianship law typically requires a full distribution to the Ward once they turn 18. Guardianships also do not provide any creditor protection for the Ward.

delamer
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Re: Options on Will Creation

Post by delamer » Mon Jul 06, 2020 6:22 pm

solargod007 wrote:
Mon Jul 06, 2020 4:32 pm
UPWanderer wrote:
Mon Jul 06, 2020 2:13 pm
Yes I do recognize, I should have stated or included that needing a trust to me meant needing a lawyer. Appreciate the responses and it seems prudent to take the following actions

-Draft up quick will for guardianship - legalzoom or other
-Make sure beneficiary designations are setup with spouse, then children
-Engage local lawyer for trust and full estate plan

UPWanderer
A quick note on the beneficiary designations in retirement accounts/accounts that should not be in WILL/TRUST:
Primary should be your spouse.
Contingent should be " The estate of First name Last name"

Bogleheads, correct me if this is wrong.

PS: I'm in the process of setting up my Will and other power of attorney (Financial/Health care) documents through a company provided benefit plan with a network attorney.. That's what he suggested me to do and not add the minor child as a contingent beneficiary. I created a DIY WILL some time ago for the guardianship and doing it right way now through an attorney.
In my husband’s and my wills, accounts go into a trust even for the surviving spouse. So the beneficiary designations for primary are trusts for the spouse’s benefit.

So you may be right for your estate, but you are wrong for mine.

bsteiner
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Re: Options on Will Creation

Post by bsteiner » Mon Jul 06, 2020 7:32 pm

solargod007 wrote:
Mon Jul 06, 2020 4:32 pm

A quick note on the beneficiary designations in retirement accounts/accounts that should not be in WILL/TRUST:
Primary should be your spouse.
Contingent should be " The estate of First name Last name"

Bogleheads, correct me if this is wrong.
...
It is wrong. The contingent beneficiaries should be your children or trusts for their benefit under your Will or under another trust instrument.

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