Estate planning - transfer on death vs will

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Topic Author
curious george
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Estate planning - transfer on death vs will

Post by curious george »

Hello

I am trying to work on an estate plan and was hoping to get some input.

My understanding is:

Transfer on death - this allows transfer of the account on death of the account holder without probate and this would bypass the will as well. This is different than beneficiaries and most useful for single owner accounts such as an IRA or 401k.
Is this correct ?
Is there any use to doing this for joint accounts ?


Will - general instructions for assets. May still need to go through probate. This is useful to setup instructions for how the deceased wishes their estate to be distributed at the time of their death.

For minor children - probably best to have trust in place. Although, I am not sure if this is true or if a will is sufficient ??

So, in general one should have a will and beneficiary designations on all accounts.

Questions: Do most BHs use a transfer on death designation for all accounts ? Both single and joint (spousal) accounts?
A will seems like a good idea
Is it usually a good idea to have a trust for minor children ?

Are there any good basic books to get started ?

I understand a good attorney is helpful but I like to have at least a basic understanding of what I may need before hiring an attorney.

Thanks in advance.
delamer
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Re: Estate planning - transfer on death vs will

Post by delamer »

No transfer on death accounts for us. Everthing is joint spousal or goes into a trust (either for spouse or adult children) per the provisions of our wills.

Minor chldren can’t own assets outright. So you can either designate that a trust be set up for minor(s) through your will and exercise some control or you can let your state set up the trust and its provisions. You need to name a guardian for minor children too.
123
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Re: Estate planning - transfer on death vs will

Post by 123 »

We have minimized expected probate delays and expenses by having beneficiaries and contingent beneficaries on all accounts (all beneficaries are adults) and beneficiary deeds on real estate. In the situations that we would normally expect to arise there would be absolutely no need for any lawyer, probate, or trust.

Of course there is always a chance that a probate could be required if something unusual were to happen (uncashed winning lotto ticket) but we've planned for what we can plan for.
The closest helping hand is at the end of your own arm.
TBillT
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Re: Estate planning - transfer on death vs will

Post by TBillT »

I am rusty on this matter but it may depend on state.
Some states you can transfer house to get out of probate....I probably messed that up, but...
We went the will approach as my spouse had a strong preference, and Virginia had recently allowed the house to pass so that made the Will approach workable.
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FIREchief
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Re: Estate planning - transfer on death vs will

Post by FIREchief »

123 wrote: Sun Oct 11, 2020 3:33 pm We have minimized expected probate delays and expenses by having beneficiaries and contingent beneficaries on all accounts (all beneficaries are adults) and beneficiary deeds on real estate. In the situations that we would normally expect to arise there would be absolutely no need for any lawyer, probate, or trust.
How will the executor of the second to die spouse's estate pay the expenses of the estate (burial, taxes, final bills, etc.)?
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
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FIREchief
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Re: Estate planning - transfer on death vs will

Post by FIREchief »

curious george wrote: Sun Oct 11, 2020 2:45 pm My understanding is:

Transfer on death - this allows transfer of the account on death of the account holder without probate and this would bypass the will as well. This is different than beneficiaries and most useful for single owner accounts such as an IRA or 401k.
Is this correct ?
I believe that the terms POD/TOD and beneficiary designations are largely synonymous.
Is there any use to doing this for joint accounts ?
It depends. For joint accounts that will not be needed to pay estate expenses, TOD can be desirable in the event that both spouses die at the same time. For some reason we've never deciphered, Vanguard appears to be the only entity in the modern financial world that refuses to allow beneficiary designations on a joint account. It's a mystery that may never be solved.....
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
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Watty
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Re: Estate planning - transfer on death vs will

Post by Watty »

In addition to a will and TOD other accounts like an IRA have a beneficiary and contingent beneficiary which you also need to look into and understand since they are a bit different.

I am not an expert and I really don't understand how the TOD work but you really need to research these to understand how they might work in unexpected situations.

For example what happens when;

1) You have a TOD designation that goes to two grown up kids that would split it. If one of them dies before you do and you do not update the TOD designation then what happens to the money?
a) It all goes to your other kid.
b) The deceased kid's widow get it.
c) The deceased kid's children(your grandkids) get it.
I don't have a clue this would work and it might not work the way that you would want it to.

2) You financial situation changes a lot between when you set the TOD designation and when you die. For example you might have multiple accounts but then go into a nursing home for 10 years which depletes some of the accounts. Whoever was named on the TOD account 10 years before would still get that money but then the rest of the estate might not be very much or even enough to pay your final tax bill and any other debts.

There are lots of way that this could work out a lot differently than you intended.
Alan S.
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Re: Estate planning - transfer on death vs will

Post by Alan S. »

If everyone is on the ball financially, passing assets via TOD, POD, ITF and other "operation of law" methods can be very efficient, save time, and save costs.

However, if there is not enough left in the estate subject to probate and if the direct beneficiaries do not understand and agree to pony up to pay the final expenses of the decedent (debts, burial, final medical, utility bills, and taxes), then not leaving enough to the estate to pay these expenses is a serious problem.

The more beneficiaries there are, the more likely that problems will crop up in settling the estate when there is not enough left to the estate to pay final expenses.
Topic Author
curious george
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Re: Estate planning - transfer on death vs will

Post by curious george »

Does anyone know at Vanguard - is beneficiary designation transferable on death or is it separate designation re beneficiary is different than transfer on death ?
senex
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Re: Estate planning - transfer on death vs will

Post by senex »

OP, Nolo Press offers well-regarded introductory books, and/or you can check your local library.

If you have children under 18, your will is the way you name guardians, which to me is the single most important function of a will.

The best plan depends on your situation, particularly your net worth, dependents, and family complexities (or lack thereof). Many people use joint accounts or beneficiary/TOD to bypass the delays, expense, and public-record aspects of probate (and in some states like CA, the nightmare reputation). In simple situations I have seen it operate incredibly smoothly. But it has potential downsides.

Children cannot own assets. You can create a trust now, or, describe a children's trust in your will (called a testamentary trust, because it is created when you die by your will & testament). Without a trust, child's assets would be held in some type of guardianship (probably something akin to a UTMA account) that the child will fully control at age 18-21, depending on state. A trust allows you to gradually transfer control to the child at whatever ages you like, which many people prefer to "huge lump sum at age 18."
MikeG62
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Re: Estate planning - transfer on death vs will

Post by MikeG62 »

delamer wrote: Sun Oct 11, 2020 3:18 pm No transfer on death accounts for us. Everthing is joint spousal or goes into a trust (either for spouse or adult children) per the provisions of our wills.
Same for us (with one recent exception where we needed to add a POD account at a CU to ensure we were staying within NCUA insurance coverage given large and increasing amounts in CD’s with such CU).
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senex
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Re: Estate planning - transfer on death vs will

Post by senex »

curious george wrote: Sun Oct 11, 2020 4:26 pm Does anyone know at Vanguard - is beneficiary designation transferable on death or is it separate designation re beneficiary is different than transfer on death ?
From a layman's perspective, those are two names for the same thing. I don't know why brokerages tend to use "beneficiary" and banks tend to use "transfer on death." Maybe there is a legal reason, or a subtle legal difference, but in basic operation, they both cause the money to be given directly to the named people upon the death of the account owner.
michaeljc70
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Re: Estate planning - transfer on death vs will

Post by michaeljc70 »

123 wrote: Sun Oct 11, 2020 3:33 pm We have minimized expected probate delays and expenses by having beneficiaries and contingent beneficaries on all accounts (all beneficaries are adults) and beneficiary deeds on real estate. In the situations that we would normally expect to arise there would be absolutely no need for any lawyer, probate, or trust.

Of course there is always a chance that a probate could be required if something unusual were to happen (uncashed winning lotto ticket) but we've planned for what we can plan for.
This is what I have done. I don't have kids and it seems early to spend thousands of dollars on trusts and things I don't really need at this point and that might change multiple times in the next 30-40 years (hopefully) of my life. What I have now cost almost nothing and should avoid probate and allow the quick transfer of all major assets. Since the OP has minor kids that needs additional handling.
inbox788
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Re: Estate planning - transfer on death vs will

Post by inbox788 »

senex wrote: Sun Oct 11, 2020 4:38 pm
curious george wrote: Sun Oct 11, 2020 4:26 pm Does anyone know at Vanguard - is beneficiary designation transferable on death or is it separate designation re beneficiary is different than transfer on death ?
From a layman's perspective, those are two names for the same thing. I don't know why brokerages tend to use "beneficiary" and banks tend to use "transfer on death." Maybe there is a legal reason, or a subtle legal difference, but in basic operation, they both cause the money to be given directly to the named people upon the death of the account owner.
That's my understanding. OP, not understanding how what you're describing is different. How would one have a beneficiary and a different TOD recipient? That's the kind of discrepancy if it were possible, that would cause lot of confusion.

Anyway, for me it's the default in the online Vanguard account. If there's more than one way to change it online, I don't know or haven't come across it yet. And if you're talking about a different physical form or writing something different on your will, check with a lawyer first.
Big Dog
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Re: Estate planning - transfer on death vs will

Post by Big Dog »

curious george wrote: Sun Oct 11, 2020 2:45 pm Hello

I am trying to work on an estate plan and was hoping to get some input.

My understanding is:

Transfer on death - this allows transfer of the account on death of the account holder without probate and this would bypass the will as well. This is different than beneficiaries and most useful for single owner accounts such as an IRA or 401k.
Is this correct ?
Is there any use to doing this for joint accounts ?


Will - general instructions for assets. May still need to go through probate. This is useful to setup instructions for how the deceased wishes their estate to be distributed at the time of their death.

For minor children - probably best to have trust in place. Although, I am not sure if this is true or if a will is sufficient ??

So, in general one should have a will and beneficiary designations on all accounts.

Questions: Do most BHs use a transfer on death designation for all accounts ? Both single and joint (spousal) accounts?
A will seems like a good idea
Is it usually a good idea to have a trust for minor children ?

Are there any good basic books to get started ?

I understand a good attorney is helpful but I like to have at least a basic understanding of what I may need before hiring an attorney.

Thanks in advance.
Kids are adults (no minor children), we live in a community property state, so all accounts are ToD/PoD (including home). (The only risk is if I and spouse die at at the same time.)
Lee_WSP
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Re: Estate planning - transfer on death vs will

Post by Lee_WSP »

curious george wrote: Sun Oct 11, 2020 2:45 pm Hello

I am trying to work on an estate plan and was hoping to get some input.

My understanding is:

Transfer on death - this allows transfer of the account on death of the account holder without probate and this would bypass the will as well. This is different than beneficiaries and most useful for single owner accounts such as an IRA or 401k.
Is this correct ?
Is there any use to doing this for joint accounts ?

if you both die within days of each other


Will - general instructions for assets. May still Will need to go through probate. This is useful to setup instructions for how the deceased wishes their estate to be distributed at the time of their death.

For minor children - probably best to have trust in place. Although, I am not sure if this is true or if a will is sufficient ??

An irrevocable one? A living revocable won't make a difference except to avoid probate, but you can have it convert on death.

So, in general one should have a will and beneficiary designations on all accounts.

You need an I forgot will no matter what

Questions: Do most BHs use a transfer on death designation for all accounts ? Both single and joint (spousal) accounts?
A will seems like a good idea
Is it usually a good idea to have a trust for minor children ?

Are there any good basic books to get started ?

I understand a good attorney is helpful but I like to have at least a basic understanding of what I may need before hiring an attorney.

Thanks in advance.
See comments in red and strikeouts.

You need to figure out what you want and how much you're willing to pay, then find an attorney to make it happen.
Topic Author
curious george
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Re: Estate planning - transfer on death vs will

Post by curious george »

I am trying to educate myself. Some the terms are new to me.
I mistakenly thought TOD was different than a beneficiary.
I do appreciate the clarification.
I am not using these comments to write my will but to simply educate myself before going through the process and appreciate all of the comments above. Thanks!
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Ben Mathew
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Re: Estate planning - transfer on death vs will

Post by Ben Mathew »

curious george wrote: Sun Oct 11, 2020 2:45 pm Transfer on death - this allows transfer of the account on death of the account holder without probate and this would bypass the will as well.
Assets passing through the will has to go through probate. So if an asset avoided probate, it means that it passed through some mechanism outside the will (joint ownership, trusts, accounts with designated beneficiary or transfer on death/pay on death).
curious george wrote: Sun Oct 11, 2020 2:45 pm This is different than beneficiaries
Transfer on death and pay on death seem similar to beneficiary designations. Not sure if there's a meaningful difference.
curious george wrote: Sun Oct 11, 2020 2:45 pm and most useful for single owner accounts such as an IRA or 401k.
Is this correct ?
Is there any use to doing this for joint accounts ?
Useful if both owners die.
curious george wrote: Sun Oct 11, 2020 2:45 pm Will - general instructions for assets. May still need to go through probate.
As noted earlier, if an asset passes through the will, it goes through probate.
curious george wrote: Sun Oct 11, 2020 2:45 pm For minor children - probably best to have trust in place. Although, I am not sure if this is true or if a will is sufficient ??
If you leave more than about $2,500 to $5,000 to minors without appointing an adult to manage it, the state will appoint a property guardian, which is cumbersome. To avoid a property guardianship, you can use either

(i) UTMA custodianship. Simpler and cheaper. Custodian you appoint will manage property until your child reaches a certain age (ranges from 18 to 30 depending on the state).

(ii) Trust-- either a (a) revocable trust into which you move assets into while alive or (b) a testamentary trust which is created by instructions in your will. Revocable trust offers probate avoidance. Testamentary trust does not avoid probate, but is easier for you because you don't have to move assets into it while you're alive. More cumbersome to set up and manage after you die. Whether revocable or testamentary, a trust will offer more flexibility than a UTMA custodianship. You can instruct that the money be handed over lump sum or in stages over whatever age range. UTMA custodianship is lump sum at fixed age. You can also set up one family pot trust for all your children. UTMA requires separate accounts for each child.

The more money you leave behind, the more attractive the flexibility of a trust becomes.
curious george wrote: Sun Oct 11, 2020 2:45 pm So, in general one should have a will and beneficiary designations on all accounts.
Yes. Will should catch any assets you forgot to make alternate arrangements for.
curious george wrote: Sun Oct 11, 2020 2:45 pm Are there any good basic books to get started ?
I recommend Get Your Ducks in a Row by Harry Margolis.
curious george wrote: Sun Oct 11, 2020 2:45 pm I understand a good attorney is helpful but I like to have at least a basic understanding of what I may need before hiring an attorney.
That's the right approach, I think. If your situation is simple enough, you can also go with software like Nolo WillMaker and Trust.
Last edited by Ben Mathew on Sun Oct 11, 2020 10:39 pm, edited 1 time in total.
michaeljc70
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Re: Estate planning - transfer on death vs will

Post by michaeljc70 »

Ben Mathew wrote: Sun Oct 11, 2020 10:35 pm
curious george wrote: Sun Oct 11, 2020 2:45 pm Transfer on death - this allows transfer of the account on death of the account holder without probate and this would bypass the will as well.
Assets passing through the will has to go through probate. So if an asset avoided probate, it means that it passed through some mechanism outside the will (joint ownership, trusts, accounts with designated beneficiary or transfer on death/pay on death).
curious george wrote: Sun Oct 11, 2020 2:45 pm This is different than beneficiaries
Transfer on death and pay on death seem similar to beneficiary designations. Not sure if there's a meaningful difference.
curious george wrote: Sun Oct 11, 2020 2:45 pm and most useful for single owner accounts such as an IRA or 401k.
Is this correct ?
Is there any use to doing this for joint accounts ?
Useful if both owners die.
curious george wrote: Sun Oct 11, 2020 2:45 pm Will - general instructions for assets. May still need to go through probate.
As noted earlier, if an asset passes through the will, it goes through probate.
curious george wrote: Sun Oct 11, 2020 2:45 pm For minor children - probably best to have trust in place. Although, I am not sure if this is true or if a will is sufficient ??
If you leave more than about $2,500 to $5,000 to minors without appointing an adult to manage it, the state will appoint a property guardian, which is cumbersome. To avoid a property guardianship, you can use either

(i) UTMA custodianship. Simpler and cheaper. Custodian you appoint will manage property until your child reaches a certain age (ranges from 18 to 30 depending on the state).

(ii) Trust-- either a (a) revocable trust into which you move assets into while alive or (b) a testamentary trust which is created by instructions in your will. Revocable trust offers probate avoidance. Testamentary trust is easier for you because you don't have to move assets into it while you're alive, but it can be more cumbersome to set up and manage after you die. Whether revocable or testamentary trust, either one will offer more flexibility than UTMA custodianship. You can instruct that the money be handed over lump sum or in stages over whatever age range. UTMA custodianship is lump sum at fixed age. You can also set up one family pot trust for all your children. UTMA requires separate accounts for each child.

The more money you leave behind, the more attractive the flexibility of a trust becomes.
curious george wrote: Sun Oct 11, 2020 2:45 pm So, in general one should have a will and beneficiary designations on all accounts.
Yes. Will should catch any assets you forgot to make alternate arrangements for.
curious george wrote: Sun Oct 11, 2020 2:45 pm Are there any good basic books to get started ?
I recommend Get Your Ducks in a Row by Harry Margolis.
curious george wrote: Sun Oct 11, 2020 2:45 pm I understand a good attorney is helpful but I like to have at least a basic understanding of what I may need before hiring an attorney.
That's the right approach, I think. If your situation is simple enough, you can also go with software like Nolo WillMaker and Trust.
This varies by state. In my state probatable assets under $100k do not go through probate. So, if you designate POD or beneficiaries on most things and leave a car and some personal affects it will not go through probate here (IL).
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Ben Mathew
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Re: Estate planning - transfer on death vs will

Post by Ben Mathew »

michaeljc70 wrote: Sun Oct 11, 2020 10:38 pm
Ben Mathew wrote: Sun Oct 11, 2020 10:35 pm Assets passing through the will has to go through probate.
This varies by state. In my state probatable assets under $100k do not go through probate. So, if you designate POD or beneficiaries on most things and leave a car and some personal affects it will not go through probate here (IL).
Does it avoid probate altogether, or does it go through a simplified probate?
michaeljc70
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Re: Estate planning - transfer on death vs will

Post by michaeljc70 »

Ben Mathew wrote: Sun Oct 11, 2020 10:41 pm
michaeljc70 wrote: Sun Oct 11, 2020 10:38 pm
Ben Mathew wrote: Sun Oct 11, 2020 10:35 pm Assets passing through the will has to go through probate.
This varies by state. In my state probatable assets under $100k do not go through probate. So, if you designate POD or beneficiaries on most things and leave a car and some personal affects it will not go through probate here (IL).
Does it avoid probate altogether, or does it go through a simplified probate?
In my state it uses a simple affidavit. The affidavit and death certificate can claim an account and there is no court proceeding needed. The affidavit is pretty simple to fill out and is a few pages long. So, there is no probate at all on small estates.

Unfortunately, $100k isn't what it used to be. I had a relative that couldn't pay their bills pass away recently except they owned their home outright and it was worth way more than $100k.
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Ben Mathew
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Re: Estate planning - transfer on death vs will

Post by Ben Mathew »

michaeljc70 wrote: Sun Oct 11, 2020 10:48 pm
Ben Mathew wrote: Sun Oct 11, 2020 10:41 pm
michaeljc70 wrote: Sun Oct 11, 2020 10:38 pm
Ben Mathew wrote: Sun Oct 11, 2020 10:35 pm Assets passing through the will has to go through probate.
This varies by state. In my state probatable assets under $100k do not go through probate. So, if you designate POD or beneficiaries on most things and leave a car and some personal affects it will not go through probate here (IL).
Does it avoid probate altogether, or does it go through a simplified probate?
In my state it uses a simple affidavit. The affidavit and death certificate can claim an account and there is no court proceeding needed. The affidavit is pretty simple to fill out and is a few pages long. So, there is no probate at all on small estates.
That's good to know. Thanks.
Duckinator
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Re: Estate planning - transfer on death vs will

Post by Duckinator »

Some institutions allow you to add "per stirpes" to the TOD. ie: Mom has "per stirpes" on accounts such that myself and sister each get 50%. If I die before my mother, my 50% flows to my two sons (25% each).

Still, would be better for mom to re-do her TOD's if I were to die first.
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Re: Estate planning - transfer on death vs will

Post by Peter Foley »

Not to highjack the thread but you have one element missing that could derail your plans, power of attorney.

If one of you dies and the other is not capable of managing the family's affairs, someone with power of attorney could be helpful.

With power of attorney I believe it is advisable to name not only an individual but a successor or a line of succession (child #1, child #2, child #3).


What worries me about this is that the person with power of attorney may be able to change beneficiaries on accounts, make accounts payable on death/transfer on death or add transfer deed on death for a property. This seem open to potential abuse.

For a survivor with dementia, the person with power of attorney may be able to execute a new will leaving everything to himself/herself.
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Re: Estate planning - transfer on death vs will

Post by Lee_WSP »

Peter Foley wrote: Mon Oct 12, 2020 11:45 am What worries me about this is that the person with power of attorney may be able to change beneficiaries on accounts, make accounts payable on death/transfer on death or add transfer deed on death for a property. This seem open to potential abuse.

For a survivor with dementia, the person with power of attorney may be able to execute a new will leaving everything to himself/herself.
If a power of attorney is actually invoked in case of mental disability, the testator no longer meets the mental requirements to execute a will. It's the final caretaker problem where this occurs.

Actually, it's usually the opposite problem. Banks and brokerages will generally not (I'm generalizing here) recognize a power of attorney without an accompanying court order.
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Re: Estate planning - transfer on death vs will

Post by hudson »

curious george wrote: Sun Oct 11, 2020 2:45 pm I understand a good attorney is helpful but I like to have at least a basic understanding of what I may need before hiring an attorney.
Thanks in advance.
I think that you should start with the attorney. There's too much to know. I don't believe it's a do it yourself operation.
Wills are state specific; they are also very individualized. If it was me, I'd just hire an attorney. He or she will have great recommendations or options for you that will help insure that things turn out the way that you hope.

My attorney did a great job of making my plan fit my wants and needs. He also gave me a letter on instruction on precisely how to list beneficiaries for various accounts including standard and abbreviated versions. Due to this plan I feel like my affairs are about as good as they can get.

A friend was a long time trust officer. He told of nightmares about those who's wills and final plans did not turn out well. He couldn't find any potential nightmares in my plan.

The bottom line: There's no need to learn a lot about wills and estate plans ahead of time. Go with the expert for your situation. The attorney will likely work with you and come up with a plan and offer to change it as needed. After getting that plan, then educate yourself as you see fit.
Last edited by hudson on Tue Oct 13, 2020 5:20 am, edited 1 time in total.
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Re: Estate planning - transfer on death vs will

Post by andypanda »

TOD and will.

We had it all figured out. :) I had POAs and my parents had simple wills leaving everything to me. Their house was sold in 2007 when they moved to the nice retirement place. I sold it. I did their taxes for the last ten years, etc.

My father died in 2011 while in assisted living and everything was handled without opening probate. He was 89.
My mother died in 2016 after 9+ years in nursing in what amounted to a coma. She was 3 weeks from 92.

Sure, everything was going well with all of the accounts and CDs and such until...

1. The nursing home refunded $10k to her estate.
2. A checking account that was supposed to be their names & mine, wasn't. The bank left me off. And I was there when it was opened and heard what my father told them to do. Where was the paperwork I signed? Oh well, add $22k to the estate.
3. A small IRA of my mother's was, according to my father, to be left to me as beneficiary. There wasn't one listed. Add $23k to the estate.

I had to open probate in a small town in the Valley 2.5 hours from Richmond. Nice folks, friendly, answered the phone, etc. After one visit and filing some forms over a period of a few months they sent me a letter that pretty much said, "Okay, take the money, we're finished with this." :D
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Re: Estate planning - transfer on death vs will

Post by Bobby206 »

Remember estate planning is about planning for after death as well as after incapacity. A lot of people ignore the latter. POD designations are fine for death but do nothing for incapacity planning.
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Re: Estate planning - transfer on death vs will

Post by JBTX »

curious george wrote: Sun Oct 11, 2020 2:45 pm Hello

I am trying to work on an estate plan and was hoping to get some input.

My understanding is:

Transfer on death - this allows transfer of the account on death of the account holder without probate and this would bypass the will as well. This is different than beneficiaries and most useful for single owner accounts such as an IRA or 401k.
Is this correct ?
Is there any use to doing this for joint accounts ?


Will - general instructions for assets. May still need to go through probate. This is useful to setup instructions for how the deceased wishes their estate to be distributed at the time of their death.

For minor children - probably best to have trust in place. Although, I am not sure if this is true or if a will is sufficient ??

So, in general one should have a will and beneficiary designations on all accounts.

Questions: Do most BHs use a transfer on death designation for all accounts ? Both single and joint (spousal) accounts?
A will seems like a good idea
Is it usually a good idea to have a trust for minor children ?

Are there any good basic books to get started ?

I understand a good attorney is helpful but I like to have at least a basic understanding of what I may need before hiring an attorney.

Thanks in advance.
TOD/POD - typically use these for taxable investment accounts

Bank accounts - mostly use joint accounts

Beneficiary - usually see these for IRAs/401ks.

We also have a revocable living trust which owns some of the accounts, and or is a secondary beneficiary of others. In theory we should re-title all non qualified accounts to the RLC but I'm too lazy and it isn't terribly material.

Finally it is always good to have a pour over will just to make sure everything passes efficiently.
secondcor521
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Re: Estate planning - transfer on death vs will

Post by secondcor521 »

Watty wrote: Sun Oct 11, 2020 3:48 pm For example what happens when;

1) You have a TOD designation that goes to two grown up kids that would split it. If one of them dies before you do and you do not update the TOD designation then what happens to the money?
a) It all goes to your other kid.
b) The deceased kid's widow get it.
c) The deceased kid's children(your grandkids) get it.
I don't have a clue this would work and it might not work the way that you would want it to.
It depends on whether you listed the deceased kid with "per stirpes" or not, whether the deceased kid had a will, and the laws of intestacy in the relevant state (probably the state of residency of the deceased kid when they passed away.)

In general: if you listed "per stirpes" it would go to your grandkids. If the deceased kid had a will, it would follow their wishes per their will. If they died intestate, it would follow the relevant state's laws. In my state I think it would go to the deceased kid's widow first, but I'm not 100% sure on that.
fourwheelcycle
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Re: Estate planning - transfer on death vs will

Post by fourwheelcycle »

Watty wrote: Sun Oct 11, 2020 3:48 pm I am not an expert ... but you really need to research ... how [TOD or beneficiary designations] might work in unexpected situations.

For example what happens when;

1) You have a TOD [or beneficiary] designation that goes to two grown up kids that would split it. If one of them dies before you do and you do not update the ... designation then what happens to the money?
a) It all goes to your other kid.
b) The deceased kid's widow get it.
c) The deceased kid's children(your grandkids) get it.

There are lots of way that this could work out a lot differently than you intended.
My wife and I have our taxable savings in a joint revocable trust at Vanguard, which does not allow TOD or beneficiary designations for joint accounts. Our trust spells out what should be done in the event of these situations, or even if we all go down in one big crash.

Our retirement savings have been at Fidelity and Vanguard, with our spouse as the primary beneficiary and our two now adult children as the 50/50 secondary beneficiaries. Our attorney drafted special beneficiary instructions which also address the the above situations. He warned us that Vanguard will accept special instructions for retirement account beneficiaries but Fidelity will not. As a result we have moved most of our retirement savings to Vanguard.
bsteiner
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Re: Estate planning - transfer on death vs will

Post by bsteiner »

fourwheelcycle wrote: Thu Oct 15, 2020 6:09 pm ...
Our retirement savings have been at Fidelity and Vanguard, with our spouse as the primary beneficiary and our two now adult children as the 50/50 secondary beneficiaries. Our attorney drafted special beneficiary instructions which also address the the above situations. He warned us that Vanguard will accept special instructions for retirement account beneficiaries but Fidelity will not. As a result we have moved most of our retirement savings to Vanguard.
Depending on the amount involved, either Vanguard or Fidelity will accept customized beneficiary designations.
fourwheelcycle
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Re: Estate planning - transfer on death vs will

Post by fourwheelcycle »

bsteiner wrote: Thu Oct 15, 2020 6:35 pm Depending on the amount involved, either Vanguard or Fidelity will accept customized beneficiary designations.
Our amounts still remaining at Fidelity are fairly large. Since our attorney said Fidelity would not accept custom designations we did not even ask. That was in 2016. Our attorney may have been wrong, may have recalled experiences from earlier years, or may have recalled experiences involving lower account values. I have sent a secure message to Fidelity to ask if we can submit custom designations.

Edit: Yes! Fidelity advises we can submit custom beneficiary designations. Too bad we did not ask four years ago, although our two adult children have remained healthy and happy in the interim.
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FIREchief
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Re: Estate planning - transfer on death vs will

Post by FIREchief »

Peter Foley wrote: Mon Oct 12, 2020 11:45 am What worries me about this is that the person with power of attorney may be able to change beneficiaries on accounts, make accounts payable on death/transfer on death or add transfer deed on death for a property. This seem open to potential abuse.

For a survivor with dementia, the person with power of attorney may be able to execute a new will leaving everything to himself/herself.
I've seen DPOA documents that specifically state that the POA can NOT change any beneficiaries.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
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FIREchief
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Re: Estate planning - transfer on death vs will

Post by FIREchief »

hudson wrote: Mon Oct 12, 2020 11:55 am The bottom line: There's no need to learn a lot about wills and estate plans ahead of time. Go with the expert for your situation. The attorney will likely work with you and come up with a plan and offer to change it as needed. After getting that plan, then educate yourself as you see fit.
I don't agree with this unless the estate plan will consist of a simple, boilerplate will and related documents. If the estate plan will include trust(s), especially those dealing with qualified retirement assets, etc, than a bit of education before engaging an attorney can be very worthwhile. In my case, some meaningful advance education helped me rule out several estate attorneys before selecting a good one. At least one of the others didn't even understand what they didn't understand. They did dress well and sit in nice offices though.... :P
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
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FIREchief
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Re: Estate planning - transfer on death vs will

Post by FIREchief »

fourwheelcycle wrote: Thu Oct 15, 2020 6:09 pm My wife and I have our taxable savings in a joint revocable trust at Vanguard, which does not allow TOD or beneficiary designations for joint accounts. Our trust spells out what should be done in the event of these situations, or even if we all go down in one big crash.

Our retirement savings have been at Fidelity and Vanguard, with our spouse as the primary beneficiary and our two now adult children as the 50/50 secondary beneficiaries. Our attorney drafted special beneficiary instructions which also address the the above situations. He warned us that Vanguard will accept special instructions for retirement account beneficiaries but Fidelity will not. As a result we have moved most of our retirement savings to Vanguard.
That attorney was wrong. I'm guessing that "special beneficiary instructions" is basically being able to name a qualified trust as beneficiary. This can be done at Fidelity with their basic beneficiary designation process as long as the trust name will fit. Otherwise, it's one of those "see attached" type designations.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
Luckywon
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Re: Estate planning - transfer on death vs will

Post by Luckywon »

FIREchief wrote: Fri Oct 16, 2020 3:22 pm
hudson wrote: Mon Oct 12, 2020 11:55 am The bottom line: There's no need to learn a lot about wills and estate plans ahead of time. Go with the expert for your situation. The attorney will likely work with you and come up with a plan and offer to change it as needed. After getting that plan, then educate yourself as you see fit.
I don't agree with this unless the estate plan will consist of a simple, boilerplate will and related documents. If the estate plan will include trust(s), especially those dealing with qualified retirement assets, etc, than a bit of education before engaging an attorney can be very worthwhile. In my case, some meaningful advance education helped me rule out several estate attorneys before selecting a good one. At least one of the others didn't even understand what they didn't understand. They did dress well and sit in nice offices though.... :P
Based on personal experience I second FIREchief on this. I discovered a very serious error in my estate plan which was drafted by a well regarded trust and estates attorney in a large firm. This was despite doing quite a bit of homework before seeing that attorney. I became aware of the error because an alarm bell went off based on something I read in a thread right here in Bogleheads. Forum member bsteiner was kind enough to weigh in and confirm my suspicions (thank you again bsteiner!!!!!!!). The error had to be corrected with an amendment to my RLT. Lesson is be as educated as possible going into your meeting with your estate attorney.
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