Wills & Trusts

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
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skime
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Wills & Trusts

Post by skime »

My wife and I are meeting with an estate attorney to discuss setting up a trust.

Is there anything that I should be aware of? I've never done this before, so I'm trying to gather information about the process before proceeding.

Any insight would be appreciated.
Lee_WSP
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Re: Wills & Trusts

Post by Lee_WSP »

You should have a good idea of who you want to receive your estate, who you want as backup beneficiaries, who you want as backups to the backups, and who you want if they all predecease you.

You should have a good idea of who you want to handle your affairs, a backup, and a backup to the backup.

Same for any powers of attorney and healthcare decisions.

Other than that, the attorney should have an intake process to guide you through the journey. Feel free to post back with specific questions.
CoastLawyer2030
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Re: Wills & Trusts

Post by CoastLawyer2030 »

skime wrote: Mon Oct 04, 2021 10:36 am My wife and I are meeting with an estate attorney to discuss setting up a trust.

Is there anything that I should be aware of? I've never done this before, so I'm trying to gather information about the process before proceeding.

Any insight would be appreciated.
I repurposed this estate planning intake form (that law offices use) for my solo law practice. It should get your gears spinning.

https://collier-law.com/wp-content/uplo ... le2020.pdf
z3r0c00l
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Re: Wills & Trusts

Post by z3r0c00l »

Can I piggyback on this thread slightly? My parents are doing a will update and making a trust for the first time. They have been quoted what seems like a high fee for a couple of modest wealth and simple situation (two homes, a few accounts, under 2 million total net worth). The law firm is saying it is $10,000 - $5,000 for the will and $5,000 for the trust. Does this seem reasonable or too high? To the OP: do you have a cost yet and if you find out later, I would be curious to know.

Anyway, having supported my parents in the process a bit I gave them some questions to ask before saying yes:
  • You (the lawyer) mentioned tax savings after death, what taxes would heirs owe on such a modest estate to justify the cost of trust?
  • How many years must the trust be in effect to protect property from nursing home or other medical debt?
  • What is expected of heirs e.g. annual payments of a nominal amount, paperwork, legal obligations?
  • In what ways will this trust avoid or reduce the difficulty of probate?
  • Why does our situation not allow the use of free online will and trust forms?
That last one is a big issue for me. The legal industry, like the tax industry, thrives on the perception that certain things can't be done by the individual at minimal or no cost. I made my own will online and it took under 30 minutes for free. I wouldn't let a fear of taxes or creditors make you blind to the fact that lawyers charge a small fortune for their services.
Last edited by z3r0c00l on Mon Oct 04, 2021 10:58 am, edited 2 times in total.
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sport
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Re: Wills & Trusts

Post by sport »

z3r0c00l wrote: Mon Oct 04, 2021 10:48 am Can I piggyback on this thread slightly? My parents are doing a will update and making a trust for the first time. They have been quoted what seems like an extremely high fee for a couple of modest wealth and simple situation (two homes, a few accounts, under 2 million total net worth). The law firm is saying it is $10,000 - $5,000 for the will and $5,000 for the trust. Does this seem reasonable or too high? To the OP: do you have a cost yet and if you find out later, I would be curious to know.
When we did a trust and will, the will was very simple. It basically said everything that is not in the trust goes into the trust.
mrpotatoheadsays
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Re: Wills & Trusts

Post by mrpotatoheadsays »

I am assuming this is a basic revocable living trust.

The question to ask is "Do I really need a trust?

Many asset types use beneficiaries (e.g. 401k, IRA, insurance), so these aren't held by a trust.
Some asset types can use pay on death (POD) (e.g. bank accounts, vehicle titles), so these aren't held by a trust.
The remaining asset types (e.g taxable brokerage, real estate) can be put in a will.
It may be no big deal to go with just a will and go through probate.

Go in with a complete itemization of your assets.

I recommend you spend $80 and buy Nolo's books on how to write your own will and living trust. You will learn about their capabilities and limitations. An estate attorney is likely going to tell you need a trust no matter what, charge you a gross fee, and want you to return every year for update.

A trust may be needed if you have something complex.
bsteiner
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Re: Wills & Trusts

Post by bsteiner »

skime wrote: Mon Oct 04, 2021 10:36 am My wife and I are meeting with an estate attorney to discuss setting up a trust.

Is there anything that I should be aware of? I've never done this before, so I'm trying to gather information about the process before proceeding.

Any insight would be appreciated.
How much do you want to give away? Your entire $23.4 million combined exclusion amounts. One spouse’s entire $11.7 exclusion amount? Some lesser amount?

What assets do want to give?

Will some be a sale?

Will you do a GRAT?

What will the terms be?
bsteiner
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Re: Wills & Trusts

Post by bsteiner »

mrpotatoheadsays wrote: Mon Oct 04, 2021 11:06 am I am assuming this is a basic revocable living trust.

The question to ask is "Do I really need a trust?

Many asset types use beneficiaries (e.g. 401k, IRA, insurance), so these aren't held by a trust.
Some asset types can use pay on death (POD) (e.g. bank accounts, vehicle titles), so these aren't held by a trust.
The remaining asset types (e.g taxable brokerage, real estate) can be put in a will.
It may be no big deal to go with just a will and go through probate.
...
... An estate attorney is likely going to tell you need a trust no matter what, charge you a gross fee, and want you to return every year for update.
...
Revocable trusts make sense in some cases and in some states. The lawyer should recommend one where appropriate but not for most people in most states.

Beneficiary designations are needed for life Insurance and retirement benefits but are generally not a good idea for other assets.

People should generally review their Wills periodically, especially if their situation changes or there’s a relevant change in the tax law, but not every year.
masteraleph
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Re: Wills & Trusts

Post by masteraleph »

z3r0c00l wrote: Mon Oct 04, 2021 10:48 am Can I piggyback on this thread slightly? My parents are doing a will update and making a trust for the first time. They have been quoted what seems like a high fee for a couple of modest wealth and simple situation (two homes, a few accounts, under 2 million total net worth). The law firm is saying it is $10,000 - $5,000 for the will and $5,000 for the trust. Does this seem reasonable or too high? To the OP: do you have a cost yet and if you find out later, I would be curious to know.
That seems very, very high for that situation- we (couple with two young kids, one house, NYC) were quoted under $2000 by a small law firm that does primarily estates and property. We're not planning any sort of irrevocable trust off the bat- but obviously we will have something to handle the kids' positions and finances if we pass- but to be honest at your parents' net worth it doesn't sound like they'd really need a complicated trust setup either. Lawyers should obviously customize things as necessary, but they all are going to start with something standard and then make changes, and it doesn't sound like your parents need something particularly custom.
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leonidas
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Re: Wills & Trusts

Post by leonidas »

We used ARAG ( Legal benefit from Work) to create our RLT. cost us nothing. The Trust will create 2 sub-trusts for my sons to disburse our assets to them over time. We requested a few additions like Trustee Discretion to avoid handing out money if in bankruptcy or divorce but nothing over the top.
Your getting ripped off for that kind of money.
miket29
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Re: Wills & Trusts

Post by miket29 »

One book that discusses the various problems that the author (an estate attorney) has seen arise during his practice is the book "The Living Trust Advisor" by Condon. While a bit depressing, it at least describes many problems that may not have occurred to the average person. Some/many may not apply, but for those that potentially do it gives topics to discuss with the estate attorney when drafting a will and possibly a trust.
bsteiner
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Re: Wills & Trusts

Post by bsteiner »

leonidas wrote: Mon Oct 04, 2021 11:58 am We used ARAG ( Legal benefit from Work) to create our RLT. cost us nothing. The Trust will create 2 sub-trusts for my sons to disburse our assets to them over time. We requested a few additions like Trustee Discretion to avoid handing out money if in bankruptcy or divorce but nothing over the top.
Your getting ripped off for that kind of money.
You say you're in New Jersey. "Our trust" suggests a single trust for you and your spouse. That's for a community property state, mainly California. Also, revocable trusts are unusual in New Jersey since probating a Will in New Jersey isn't difficult (the court clerks will usually fill out the forms for you, at least before and probably after the pandemic).

Also, if the trusts mandate distributions, you won't have any protection if the bankruptcy or divorce happens after the distributions occur.
bsteiner
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Re: Wills & Trusts

Post by bsteiner »

z3r0c00l wrote: Mon Oct 04, 2021 10:48 am Can I piggyback on this thread slightly? My parents are doing a will update and making a trust for the first time. They have been quoted what seems like a high fee for a couple of modest wealth and simple situation (two homes, a few accounts, under 2 million total net worth). The law firm is saying it is $10,000 - $5,000 for the will and $5,000 for the trust. Does this seem reasonable or too high? To the OP: do you have a cost yet and if you find out later, I would be curious to know.

Anyway, having supported my parents in the process a bit I gave them some questions to ask before saying yes:
  • You (the lawyer) mentioned tax savings after death, what taxes would heirs owe on such a modest estate to justify the cost of trust?
  • How many years must the trust be in effect to protect property from nursing home or other medical debt?
  • What is expected of heirs e.g. annual payments of a nominal amount, paperwork, legal obligations?
  • In what ways will this trust avoid or reduce the difficulty of probate?
  • Why does our situation not allow the use of free online will and trust forms?
That last one is a big issue for me. The legal industry, like the tax industry, thrives on the perception that certain things can't be done by the individual at minimal or no cost. I made my own will online and it took under 30 minutes for free. I wouldn't let a fear of taxes or creditors make you blind to the fact that lawyers charge a small fortune for their services.
The price for the Wills is reasonable though a smaller firm outside a larger city could probably do it for less.

It sounds like a Medicaid trust. $2 million is at the high end for a Medicaid trust but some people at that level want one. I think if you were to do the Medicaid trust at the same time as your Wills, there would be some economy of scale since the decision making process for the Medicaid trust is the same as that for your Wills.

Probating a Will is difficult in some cases and in some states, but in most cases in most states isn't difficult. But if this is a Medicaid trust, which it sounds like it is from your reference to nursing homes, that's not the purpose of the trust.

The issue with doing it yourself is that you don't know what you don't know. If you look at some of the other comments in this thread there are some examples. Where it gives you choices, you might not know which choices to select.
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Re: Wills & Trusts

Post by Lee_WSP »

z3r0c00l wrote: Mon Oct 04, 2021 10:48 am
  • You (the lawyer) mentioned tax savings after death, what taxes would heirs owe on such a modest estate to justify the cost of trust?
  • How many years must the trust be in effect to protect property from nursing home or other medical debt?
  • What is expected of heirs e.g. annual payments of a nominal amount, paperwork, legal obligations?
  • In what ways will this trust avoid or reduce the difficulty of probate?
  • Why does our situation not allow the use of free online will and trust forms?
That last one is a big issue for me. The legal industry, like the tax industry, thrives on the perception that certain things can't be done by the individual at minimal or no cost. I made my own will online and it took under 30 minutes for free. I wouldn't let a fear of taxes or creditors make you blind to the fact that lawyers charge a small fortune for their services.
1. The value of speaking to an experienced planning attorney is that you don't know what you don't know. It's not about saving taxes, it's about making sure your wishes are followed through. A better attorney will also be able to provide you advice about taxes during your lifetime (retirement and whatnot) as well as other useful life advice.

2. You're talking about a medicaid trust. It depends on the state, but usually 5 years. Whole different can of worms.

3. I don't understand this question. If the property passes out of trust, the heirs just own it outright, no further requirements are necessary. If in trust, it is governed by the trust document and your state's version of the Uniform Trust Code.

5. See answer to #1. Yes, of course you could. You could also just die intestate, it's not the end of the world and in most situations, the intestacy laws accomplish what the decedent would have wanted. However, you don't know what you don't know and when your estate is sizable or you have minor children or a blended family or really anything other than "I really don't care what happens when I die" attitude, you probably have something to gain by engaging the services of a knowledgeable attorney skilled in the field.
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Ben Mathew
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Re: Wills & Trusts

Post by Ben Mathew »

It's useful to read up on estate planning before meeting with the lawyer. That way you have some idea of what you may need. You can also evaluate the lawyer better. I recommend

Get Your Ducks in a Row, by Harry Margolis

for a brief, well-written summary.
Wanderingwheelz
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Re: Wills & Trusts

Post by Wanderingwheelz »

z3r0c00l wrote: Mon Oct 04, 2021 10:48 am Can I piggyback on this thread slightly? My parents are doing a will update and making a trust for the first time. They have been quoted what seems like a high fee for a couple of modest wealth and simple situation (two homes, a few accounts, under 2 million total net worth). The law firm is saying it is $10,000 - $5,000 for the will and $5,000 for the trust. Does this seem reasonable or too high? To the OP: do you have a cost yet and if you find out later, I would be curious to know.

Anyway, having supported my parents in the process a bit I gave them some questions to ask before saying yes:
  • You (the lawyer) mentioned tax savings after death, what taxes would heirs owe on such a modest estate to justify the cost of trust?
  • How many years must the trust be in effect to protect property from nursing home or other medical debt?
  • What is expected of heirs e.g. annual payments of a nominal amount, paperwork, legal obligations?
  • In what ways will this trust avoid or reduce the difficulty of probate?
  • Why does our situation not allow the use of free online will and trust forms?
That last one is a big issue for me. The legal industry, like the tax industry, thrives on the perception that certain things can't be done by the individual at minimal or no cost. I made my own will online and it took under 30 minutes for free. I wouldn't let a fear of taxes or creditors make you blind to the fact that lawyers charge a small fortune for their services.
We’re doing it right now with the top estate planning attorney in our area (Penn/Tulane)- $3,850. One home, a few accounts, one business. $10,000 would have me shopping.
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neverpanic
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Re: Wills & Trusts

Post by neverpanic »

CoastLawyer2030 wrote: Mon Oct 04, 2021 10:46 am
skime wrote: Mon Oct 04, 2021 10:36 am My wife and I are meeting with an estate attorney to discuss setting up a trust.

Is there anything that I should be aware of? I've never done this before, so I'm trying to gather information about the process before proceeding.

Any insight would be appreciated.
I repurposed this estate planning intake form (that law offices use) for my solo law practice. It should get your gears spinning.

https://collier-law.com/wp-content/uplo ... le2020.pdf
That's a terrific go-by. Thank you for sharing. I couldn't help but notice, however, that the question about disinheritance was 5th on the list.
I am not a financial professional or guru. I'm a schmuck who got lucky 10 times. Such is the life of the trader.
PinotGris
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Re: Wills & Trusts

Post by PinotGris »

z3r0c00l wrote: Mon Oct 04, 2021 10:48 am Can I piggyback on this thread slightly? My parents are doing a will update and making a trust for the first time. They have been quoted what seems like a high fee for a couple of modest wealth and simple situation (two homes, a few accounts, under 2 million total net worth). The law firm is saying it is $10,000 - $5,000 for the will and $5,000 for the trust. Does this seem reasonable or too high? To the OP: do you have a cost yet and if you find out later, I would be curious to know.

Anyway, having supported my parents in the process a bit I gave them some questions to ask before saying yes:
  • You (the lawyer) mentioned tax savings after death, what taxes would heirs owe on such a modest estate to justify the cost of trust?
  • How many years must the trust be in effect to protect property from nursing home or other medical debt?
  • What is expected of heirs e.g. annual payments of a nominal amount, paperwork, legal obligations?
  • In what ways will this trust avoid or reduce the difficulty of probate?
  • Why does our situation not allow the use of free online will and trust forms?
That last one is a big issue for me. The legal industry, like the tax industry, thrives on the perception that certain things can't be done by the individual at minimal or no cost. I made my own will online and it tk under 30 minutes for free. I wouldn't let a fear of taxes or creditors make you blind to the fact that lawyers charge a small fortune for their services.
I totally agree. We did our own estate planning and Will a few years ago with a Willmaker software. Our family situation has no complications. All our 401K have beneficiaries or POD. The bank is an exception, I have to deal with that. We did not create a Trust which is the first thing the lawyers always talk about when we went to see them, The house we live in cannot be placed in a trust.
That is the only thing that goes into probate which is not all that complicated.
As for taxes, I am not going to worry about taxes after I am dead. They will inherit a tidy sum and the taxes will not a be burden.
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GerryL
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Re: Wills & Trusts

Post by GerryL »

I literally just returned from signing my estate documents, which included creating a revocable trust. (I am, at this very moment, on hold with Vanguard because I am having trouble filling out the online form to change ownership of my non-retirement account to the trust. Who knew that 10/4/2021 is not a valid date? Sigh.)

Anyway, a book I found useful prior to meeting with an attorney was Living Trusts for Everyone by Ronald Farrington Sharp. I consulted several titles, but this is the one I bought. Just understand that the author is very pro-trust, especially as a way to avoid the probate boogeyman.
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Re: Wills & Trusts

Post by drzzzzz »

GerryL wrote: Mon Oct 04, 2021 4:45 pm I literally just returned from signing my estate documents, which included creating a revocable trust. (I am, at this very moment, on hold with Vanguard because I am having trouble filling out the online form to change ownership of my non-retirement account to the trust. Who knew that 10/4/2021 is not a valid date? Sigh.)

Anyway, a book I found useful prior to meeting with an attorney was Living Trusts for Everyone by Ronald Farrington Sharp. I consulted several titles, but this is the one I bought. Just understand that the author is very pro-trust, especially as a way to avoid the probate boogeyman.
We re-titled our brokerage accounts to trusts at Vanguard a few years back and it was all by snail mail and I think we even needed medallion signatures so if you can do it online that is a real improvement at Vanguard. It was so slow it took 6 weeks to get done while Fidelity did it in 5 days. What was really funny, was when we wanted to open a second trust with the same documents and Vanguard refused to do it unless we provided the social security numbers and signatures of subsequent trustees for when we were no longer competent or dead - obviously it was a person reviewing the same paperwork that we had previously submitted who had an entirely different understanding of what to do with a trust application. When I mentioned, acutally screamed at our Flagship rep, I told to him that Vanguard had already opened trusts with the identical documents and if it was going to be an issue all our funds would be at Fidelity in 2 days.
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Re: Wills & Trusts

Post by RudyS »

As mentioned by bsteiner, there are state-specific issues which might lead you to a trust. Massachusetts for example has an estate tax which can be reduced or eliminated with a revocable trust.
Bronco Billy
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Re: Wills & Trusts

Post by Bronco Billy »

My dad had a trust. When he passed it cost a fortune to get it divided between the three of us. That lawyer charged us for every little thing. If the world didnt have any lawyers nobody would need them!!
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Re: Wills & Trusts

Post by bluebolt »

RudyS wrote: Mon Oct 04, 2021 9:22 pm As mentioned by bsteiner, there are state-specific issues which might lead you to a trust. Massachusetts for example has an estate tax which can be reduced or eliminated with a revocable trust.
My understanding is that it can only be eliminated under a pretty narrow set of circumstances in MA. Specifically, if the decedent has <= $1MM that they place in trust to avoid the MA estate tax. Even in that circumstance, if there was a spouse they left it to instead of to a trust, and the spouse spent down the <= $1MM prior to their death, the couple might be no worse off tax-wise.

It certainly can be reduced in a much larger set of circumstances.
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Re: Wills & Trusts

Post by marc in merrimack »

RudyS wrote: Mon Oct 04, 2021 9:22 pm As mentioned by bsteiner, there are state-specific issues which might lead you to a trust. Massachusetts for example has an estate tax which can be reduced or eliminated with a revocable trust.
I believe the reduction or elimination of the Massachusetts estate tax by way of a revocable trust applies only in the case of a married couple. For a single person, it’s my understanding that such a trust would provide no benefit with regard to estate tax. Is this correct?
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Re: Wills & Trusts

Post by bsteiner »

RudyS wrote: Mon Oct 04, 2021 9:22 pm As mentioned by bsteiner, there are state-specific issues which might lead you to a trust. Massachusetts for example has an estate tax which can be reduced or eliminated with a revocable trust.
Your second sentence is misleading. Revocable trusts don't save or cost any estate tax. You can put the same dispositive provisions in either a Will or a revocable trust.
marc in merrimack
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Re: Wills & Trusts

Post by marc in merrimack »

bsteiner wrote: Mon Oct 04, 2021 9:52 pm
RudyS wrote: Mon Oct 04, 2021 9:22 pm As mentioned by bsteiner, there are state-specific issues which might lead you to a trust. Massachusetts for example has an estate tax which can be reduced or eliminated with a revocable trust.
Your second sentence is misleading. Revocable trusts don't save or cost any estate tax. You can put the same dispositive provisions in either a Will or a revocable trust.
Thanks for the clarification, Bruce. Specifically then for a single person in Massachusetts without heirs, are there any considerations that immediately come to mind that would point to the use of a trust?
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Re: Wills & Trusts

Post by bsteiner »

marc in merrimack wrote: Mon Oct 04, 2021 10:06 pm
bsteiner wrote: Mon Oct 04, 2021 9:52 pm
RudyS wrote: Mon Oct 04, 2021 9:22 pm As mentioned by bsteiner, there are state-specific issues which might lead you to a trust. Massachusetts for example has an estate tax which can be reduced or eliminated with a revocable trust.
Your second sentence is misleading. Revocable trusts don't save or cost any estate tax. You can put the same dispositive provisions in either a Will or a revocable trust.
Thanks for the clarification, Bruce. Specifically then for a single person in Massachusetts without heirs, are there any considerations that immediately come to mind that would point to the use of a trust?
You should ask someone there whether, if there are no heirs, the involvement of the attorney general in the probate proceeding is such that it might warrant a revocable trust.
RetiredAL
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Re: Wills & Trusts

Post by RetiredAL »

drzzzzz wrote: Mon Oct 04, 2021 8:40 pm
GerryL wrote: Mon Oct 04, 2021 4:45 pm I literally just returned from signing my estate documents, which included creating a revocable trust. (I am, at this very moment, on hold with Vanguard because I am having trouble filling out the online form to change ownership of my non-retirement account to the trust. Who knew that 10/4/2021 is not a valid date? Sigh.)

Anyway, a book I found useful prior to meeting with an attorney was Living Trusts for Everyone by Ronald Farrington Sharp. I consulted several titles, but this is the one I bought. Just understand that the author is very pro-trust, especially as a way to avoid the probate boogeyman.
We re-titled our brokerage accounts to trusts at Vanguard a few years back and it was all by snail mail and I think we even needed medallion signatures so if you can do it online that is a real improvement at Vanguard. It was so slow it took 6 weeks to get done while Fidelity did it in 5 days. What was really funny, was when we wanted to open a second trust with the same documents and Vanguard refused to do it unless we provided the social security numbers and signatures of subsequent trustees for when we were no longer competent or dead - obviously it was a person reviewing the same paperwork that we had previously submitted who had an entirely different understanding of what to do with a trust application. When I mentioned, acutally screamed at our Flagship rep, I told to him that Vanguard had already opened trusts with the identical documents and if it was going to be an issue all our funds would be at Fidelity in 2 days.
2 years ago I changed a dormant Fidelity single owner (me) account to our Revocable Trust for DW and I. It was all done online including DW's signature and was effective in 3 days. This was being setup as to my RMD pay-to account for the next spring's RMD, until they moved the RMD age back 2 years. The only hiccup was the existing transfer linkage to our checking account disappeared and had to be re-created.
delamer
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Re: Wills & Trusts

Post by delamer »

There is a difference between a testamentary trust that is funded after you die based on the terms of your will versus a trust created and funded while you are alive to hold your assets.

Make sure you understand which type the attorney is proposing. My impression is that most attorneys will recommend a testamentary trust to protect the assets inherited by your heirs, while establishing a trust to hold assets while you are alive is only recommended in certain states and circumstances.
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marc in merrimack
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Re: Wills & Trusts

Post by marc in merrimack »

bsteiner wrote: Mon Oct 04, 2021 10:21 pm
marc in merrimack wrote: Mon Oct 04, 2021 10:06 pm
bsteiner wrote: Mon Oct 04, 2021 9:52 pm
RudyS wrote: Mon Oct 04, 2021 9:22 pm As mentioned by bsteiner, there are state-specific issues which might lead you to a trust. Massachusetts for example has an estate tax which can be reduced or eliminated with a revocable trust.
Your second sentence is misleading. Revocable trusts don't save or cost any estate tax. You can put the same dispositive provisions in either a Will or a revocable trust.
Thanks for the clarification, Bruce. Specifically then for a single person in Massachusetts without heirs, are there any considerations that immediately come to mind that would point to the use of a trust?
You should ask someone there whether, if there are no heirs, the involvement of the attorney general in the probate proceeding is such that it might warrant a revocable trust.
Thanks, Bruce. That is interesting.

Though you’ve long maintained that in most states (including, I believe, Massachusetts) the probate process is straightforward and doesn’t generally warrant a trust to avoid it, you seem to be saying that the lack of heirs may actually heighten the need for a trust in such a case. Is this correct?
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Re: Wills & Trusts

Post by soxfan10 »

bsteiner wrote: Mon Oct 04, 2021 12:27 pm
z3r0c00l wrote: Mon Oct 04, 2021 10:48 am Can I piggyback on this thread slightly? My parents are doing a will update and making a trust for the first time. They have been quoted what seems like a high fee for a couple of modest wealth and simple situation (two homes, a few accounts, under 2 million total net worth). The law firm is saying it is $10,000 - $5,000 for the will and $5,000 for the trust. Does this seem reasonable or too high? To the OP: do you have a cost yet and if you find out later, I would be curious to know.

Anyway, having supported my parents in the process a bit I gave them some questions to ask before saying yes:
  • You (the lawyer) mentioned tax savings after death, what taxes would heirs owe on such a modest estate to justify the cost of trust?
  • How many years must the trust be in effect to protect property from nursing home or other medical debt?
  • What is expected of heirs e.g. annual payments of a nominal amount, paperwork, legal obligations?
  • In what ways will this trust avoid or reduce the difficulty of probate?
  • Why does our situation not allow the use of free online will and trust forms?
That last one is a big issue for me. The legal industry, like the tax industry, thrives on the perception that certain things can't be done by the individual at minimal or no cost. I made my own will online and it took under 30 minutes for free. I wouldn't let a fear of taxes or creditors make you blind to the fact that lawyers charge a small fortune for their services.
The price for the Wills is reasonable though a smaller firm outside a larger city could probably do it for less.

It sounds like a Medicaid trust. $2 million is at the high end for a Medicaid trust but some people at that level want one. I think if you were to do the Medicaid trust at the same time as your Wills, there would be some economy of scale since the decision making process for the Medicaid trust is the same as that for your Wills.

Probating a Will is difficult in some cases and in some states, but in most cases in most states isn't difficult. But if this is a Medicaid trust, which it sounds like it is from your reference to nursing homes, that's not the purpose of the trust.

The issue with doing it yourself is that you don't know what you don't know. If you look at some of the other comments in this thread there are some examples. Where it gives you choices, you might not know which choices to select.
There's a second explanation for the fee. Some firms dont want to say they dont want a client's business so they just price themselves out. $2M isnt a huge estate - I dont know the NJ market, but if they are throwing out $10k as an estimate, $2M might be about the smallest client the firm has.
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Re: Wills & Trusts

Post by capran »

we did our trust many years ago and were disappointed that they kept saying "laws have changed, you need to have it updated or it may not be valid". we paid for several years and then stopped. Had a friend that had the same lawyer brother team in Spokane and he got another lawyer and their comment was these are intentionally confusing and complex, and ended up doing a simple will and getting out of the trust. Not sure if it's even necessary for a joint estate value of 2.6m
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Re: Wills & Trusts

Post by 2pedals »

skime wrote: Mon Oct 04, 2021 10:36 am My wife and I are meeting with an estate attorney to discuss setting up a trust.

Is there anything that I should be aware of? I've never done this before, so I'm trying to gather information about the process before proceeding.

Any insight would be appreciated.
OP, did you have the meeting? There are many different types of trusts with varying costs to set up. Last month we set up a simple revocable trust including all end-of-life documents for a few simple reasons. We paid $2,500 plus a quitclaim fee for our real estate. We live in a community property state. Without the trust, we set up, if either spouse dies the surviving spouse would need to go through probate to get the full title of real estate, and then our heirs would after the surviving spouse dies. Also, the trust has several clauses that would protect the spouses if there is a catastrophic illness and/or dementia. The lawyer said that it used to be very uncommon to see both spouses with these issues at the same time but it is now becoming more frequent.

edited based on a comment from miket29 below
Last edited by 2pedals on Tue Oct 05, 2021 12:12 pm, edited 3 times in total.
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2pedals
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Re: Wills & Trusts

Post by 2pedals »

capran wrote: Mon Oct 04, 2021 10:51 pm we did our trust many years ago and were disappointed that they kept saying "laws have changed, you need to have it updated or it may not be valid". we paid for several years and then stopped. Had a friend that had the same lawyer brother team in Spokane and he got another lawyer and their comment was these are intentionally confusing and complex, and ended up doing a simple will and getting out of the trust. Not sure if it's even necessary for a joint estate value of 2.6m
I am not sure what the purpose of your trust was many years ago. Is the purpose the same today? It seems to me if your trust document was flexible, not too many if anything would need to be changed. If you are trying to avoid taxes rather than just probate and end-of-life concerns then that might be more difficult to do.
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Re: Wills & Trusts

Post by sandramjet »

GerryL wrote: Mon Oct 04, 2021 4:45 pm I literally just returned from signing my estate documents, which included creating a revocable trust. (I am, at this very moment, on hold with Vanguard because I am having trouble filling out the online form to change ownership of my non-retirement account to the trust. Who knew that 10/4/2021 is not a valid date? Sigh.)
I hear you. Some things at vanguard are easy, others aren't! I bet after 2 hours on hold you'll find out 10/4/2021 is not valid but 10/04/2021 would be :happy
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Re: Wills & Trusts

Post by bsteiner »

marc in merrimack wrote: Mon Oct 04, 2021 10:46 pm
bsteiner wrote: Mon Oct 04, 2021 10:21 pm
marc in merrimack wrote: Mon Oct 04, 2021 10:06 pm
bsteiner wrote: Mon Oct 04, 2021 9:52 pm
RudyS wrote: Mon Oct 04, 2021 9:22 pm As mentioned by bsteiner, there are state-specific issues which might lead you to a trust. Massachusetts for example has an estate tax which can be reduced or eliminated with a revocable trust.
Your second sentence is misleading. Revocable trusts don't save or cost any estate tax. You can put the same dispositive provisions in either a Will or a revocable trust.
Thanks for the clarification, Bruce. Specifically then for a single person in Massachusetts without heirs, are there any considerations that immediately come to mind that would point to the use of a trust?
You should ask someone there whether, if there are no heirs, the involvement of the attorney general in the probate proceeding is such that it might warrant a revocable trust.
Thanks, Bruce. That is interesting.

Though you’ve long maintained that in most states (including, I believe, Massachusetts) the probate process is straightforward and doesn’t generally warrant a trust to avoid it, you seem to be saying that the lack of heirs may actually heighten the need for a trust in such a case. Is this correct?
I don't know the procedure in Massachusetts, but depending on the state's procedure where you don't know who the heirs (the persons who would inherit absent a Will), or where you think there aren't any heirs, it could. The heirs have standing to contest the Will, so, depending on the state, you might have to make an effort to find them, and the court might appoint a guardian ad litem to represent the unknown heirs. If there are no heirs, then absent a Will, the estate would go to the state, so, depending on the state, the attorney general might be involved on behalf of the state if you say that there aren't any heirs.

Someone in your state would know your state's procedures on what happens if you don't know who all the heirs are, or if there might not be any heirs, and whether those procedures are such that they would warrant a revocable trust.
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Re: Wills & Trusts

Post by marc in merrimack »

bsteiner wrote: Tue Oct 05, 2021 6:21 am
marc in merrimack wrote: Mon Oct 04, 2021 10:46 pm
bsteiner wrote: Mon Oct 04, 2021 10:21 pm
marc in merrimack wrote: Mon Oct 04, 2021 10:06 pm
bsteiner wrote: Mon Oct 04, 2021 9:52 pm

Your second sentence is misleading. Revocable trusts don't save or cost any estate tax. You can put the same dispositive provisions in either a Will or a revocable trust.
Thanks for the clarification, Bruce. Specifically then for a single person in Massachusetts without heirs, are there any considerations that immediately come to mind that would point to the use of a trust?
You should ask someone there whether, if there are no heirs, the involvement of the attorney general in the probate proceeding is such that it might warrant a revocable trust.
Thanks, Bruce. That is interesting.

Though you’ve long maintained that in most states (including, I believe, Massachusetts) the probate process is straightforward and doesn’t generally warrant a trust to avoid it, you seem to be saying that the lack of heirs may actually heighten the need for a trust in such a case. Is this correct?
I don't know the procedure in Massachusetts, but depending on the state's procedure where you don't know who the heirs (the persons who would inherit absent a Will), or where you think there aren't any heirs, it could. The heirs have standing to contest the Will, so, depending on the state, you might have to make an effort to find them, and the court might appoint a guardian ad litem to represent the unknown heirs. If there are no heirs, then absent a Will, the estate would go to the state, so, depending on the state, the attorney general might be involved on behalf of the state if you say that there aren't any heirs.

Someone in your state would know your state's procedures on what happens if you don't know who all the heirs are, or if there might not be any heirs, and whether those procedures are such that they would warrant a revocable trust.
Thanks very much for your reply. Very helpful!

I had a misunderstanding of the term ‘heir.’ So to correct myself, I do have heirs. They will be made known to my executor and I expect also to the probate court. So with this clarification, can I proceed reasonably with the assumption that a properly crafted Will should suffice in my case?
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Re: Wills & Trusts

Post by bsteiner »

marc in merrimack wrote: Tue Oct 05, 2021 10:07 am ...
I had a misunderstanding of the term ‘heir.’ So to correct myself, I do have heirs. They will be made known to my executor and I expect also to the probate court. So with this clarification, can I proceed reasonably with the assumption that a properly crafted Will should suffice in my case?
Most likely, though occasionally there are other reasons for creating a revocable trust.
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Re: Wills & Trusts

Post by miket29 »

2pedals wrote: Mon Oct 04, 2021 11:18 pm Last month we set up a simple revocable trust including all end-of-life documents for a few simple reasons. We paid $2,500 plus a quitclaim fee for our real estate. We live in a community property state, if either spouse dies the surviving spouse would need to go through probate to get the full title of real estate and then our heirs would after the surviving spouse dies.
I thought a purpose of a trust was to avoid probate. When you set up the revocable trust the real estate is transferred to the trust with you as trustees. When you both pass then the successor trustees take over control of the trust assets and can dispose of the assets as per the trust terms, probate not required.
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Re: Wills & Trusts

Post by GerryL »

sandramjet wrote: Tue Oct 05, 2021 1:22 am
GerryL wrote: Mon Oct 04, 2021 4:45 pm I literally just returned from signing my estate documents, which included creating a revocable trust. (I am, at this very moment, on hold with Vanguard because I am having trouble filling out the online form to change ownership of my non-retirement account to the trust. Who knew that 10/4/2021 is not a valid date? Sigh.)
I hear you. Some things at vanguard are easy, others aren't! I bet after 2 hours on hold you'll find out 10/4/2021 is not valid but 10/04/2021 would be :happy
No. I tried all variations. Somehow I got to the end of the form and the date showed up. So,... programming error. I gave up after 3 hours and 5PM pacific time.
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Re: Wills & Trusts

Post by 2pedals »

miket29 wrote: Tue Oct 05, 2021 11:26 am
2pedals wrote: Mon Oct 04, 2021 11:18 pm Last month we set up a simple revocable trust including all end-of-life documents for a few simple reasons. We paid $2,500 plus a quitclaim fee for our real estate. We live in a community property state, if either spouse dies the surviving spouse would need to go through probate to get the full title of real estate and then our heirs would after the surviving spouse dies.
I thought a purpose of a trust was to avoid probate. When you set up the revocable trust the real estate is transferred to the trust with you as trustees. When you both pass then the successor trustees take over control of the trust assets and can dispose of the assets as per the trust terms, probate not required.
You are correct, the post needs to be clarified as:

We live in a community property state. Without the trust, we set up, if either spouse dies the surviving spouse would need to go through probate to get the full title of real estate, and then our heirs would after the surviving spouse dies.
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Re: Wills & Trusts

Post by capran »

2pedals wrote: Mon Oct 04, 2021 11:37 pm
capran wrote: Mon Oct 04, 2021 10:51 pm we did our trust many years ago and were disappointed that they kept saying "laws have changed, you need to have it updated or it may not be valid". we paid for several years and then stopped. Had a friend that had the same lawyer brother team in Spokane and he got another lawyer and their comment was these are intentionally confusing and complex, and ended up doing a simple will and getting out of the trust. Not sure if it's even necessary for a joint estate value of 2.6m
I am not sure what the purpose of your trust was many years ago. Is the purpose the same today? It seems to me if your trust document was flexible, not too many if anything would need to be changed. If you are trying to avoid taxes rather than just probate and end-of-life concerns then that might be more difficult to do.
It's not to avoid taxes. We went to a presentation about trusts and knew we needed something to update our 20 year old will. The lawyers kept putting up examples of people who died with only a will and suggested they lost huge amounts of their estate through a lengthy probate process. We also liked the supposed simplicity of executing a trust, as well as the asset protection if one were to enter a care facility, as well as protecting the inherited estate from depletion if children divorced or had other legal issues. There was never any mention of annual updating being recommended until after six months, and for several years we were paying over 300 a year for annual updates. At the time, I would not even know what questions to ask. And after recently going through a small estate via will, with no real property and only a small portfolio, and watching that take a year while CPA's and lawyers claimed their fee's, I am still not sure what the best course of action is. We're in Washington State, and even with our house we're well under the limits of estate value that would be taxed- 2.6ish. And either will or estate it seems you still need to get help in getting a letter of testamentary for liquidating small things not in the trust- like car, boat, etc.
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Re: Wills & Trusts

Post by 557880yvi »

I am in Massachusetts and have been directly involved in settling 5 estates in 10 years, 3 in the last 3 years. 3 had to go through probate either because the proper trusts and/or beneficiaries and/or titling of accounts or property deeds was not done or it was done incorrectly.
    $5,000 each for a will and a trust (total $10,000) seems very expensive unless there are complicating circumstances (i.e. multiple marriages, complex assets, businesses, etc.) $5,000 for both is reasonable in the Boston area, slightly less outside.

    Probate is not necessary - almost any estate can be "probate-proofed" through the proper creation of wills and trusts and naming of beneficiaries (recommend it be a "pour-over" will so that any assets acquired after the date of the will "pour-over" into the trust(s).)

    Probate is NOT SIMPLE, can be VERY EXPENSIVE (attorney fees, probate court fees), very time-consuming, can hold up selling and/or distributing assets. It can take weeks or months (even without a pandemic) to have the Executor (in MA called the Personal Representative) appointed - and virtually nothing can be done until that happens - no assets distributed, nothing sold, not even any bills paid (unless the PR happened to be joint on a TOD checking account). A simple example in one of the estates I was involved with very recently thought it had been probate-proofed. Turned out that the deed re-titling the primary residence into their trust had not been done properly - it was the only asset not in the trust. Legal fees of over $20k to probate the estate - it held up the sale of the house for almost 9 months (pre-pandemic).

    The 2 estates that were completely "probate-proof" - and these by far were the largest and most complex of the 5 - were closed out in less than 60 days, not a single problem, and those of us handling the work sailed through it. The other 3 were nightmares, one took almost 2 years.

    And be careful - I was asked once again, to be the Executor/Trustee for a family member's estate. Gave them extensive information about what the estate attorney should prepare to probate-proof estate. They provided me the documents and they were not prepared correctly, would not probate-proof the estate, did not set up a living trust - only a testamentary trust that only comes into being through the will, after death - guaranteeing probate! The attorney it turns out only does this a "side" gig to their real estate closing/ambulance chasing business. They paid a lot of money and didn't get what they needed, I am trying to help them through this right now - but I refuse to be the executor ever again on an estate that has to be probated, especially in MA.

    $5k is nothing to spend to ensure that upon one's death that your estate passes quickly and cleanly to your heirs/beneficiaries.
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    Re: Wills & Trusts

    Post by GerryL »

    My purpose in setting up a trust was two-fold. I've taken to calling the two tracks Dead and Daily.

    I am a singleton with limited family. And, having had to watch after my mom who had Alzheimer's (as did others in her family), I am concerned about the possibility of cognitive decline. My trust is fairly simple since I am the sole Trustor and the sole acting Trustee. If I drop dead, things will be in place so that my adult nephew (who lives in another state) and/or my good friends (a couple a bit younger than me) can wrap up my affairs. That's the Dead track. Not too complicated.

    If I don't suddenly die but rather become incapacitated, either quickly or gradually, life become a lot more complicated. How will I be looked after? How can I protect myself (and my portfolio) from being taken advantage of? The estate plan with the trust is intended to make it less onerous for my nephew and friends to make sure I am taken care of ... Daily.
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    Re: Wills & Trusts

    Post by Lee_WSP »

    IMO

    Probate is a simple process (at least for those casually acquainted with the legal filing process), but it's probably not easy for non legal professionals.

    I don't think it's necessarily more costly, but if the executor needs extra help, then it could be more costly. Any other costs are going to be related to unavoidable (family dynamics) or planning issues/mistakes.

    It can and usually does take more time to get access to funds (not settle everything). It's taking even longer in the age of covid.
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    Re: Wills & Trusts

    Post by RudyS »

    bsteiner wrote: Mon Oct 04, 2021 9:52 pm
    RudyS wrote: Mon Oct 04, 2021 9:22 pm As mentioned by bsteiner, there are state-specific issues which might lead you to a trust. Massachusetts for example has an estate tax which can be reduced or eliminated with a revocable trust.
    Your second sentence is misleading. Revocable trusts don't save or cost any estate tax. You can put the same dispositive provisions in either a Will or a revocable trust.
    Thanks for the clarification. The attorney who prepared our trust documents left me with the impression that we needed the trusts to realize the savings on Massachusetts estate tax. It never occurred to me to question that recommendation. But the total cost to us was only around $5K.
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    Re: Wills & Trusts

    Post by Whatyear? »

    My husband and I are about half-way through the process of getting wills done. After an initial consultation we determined we only need wills (not a Trust) because we a) don't care about minimizing estate taxes, b) don't qualify for/wouldn't benefit from a Medicaid trust, and c) don't want to micromanage the distribution to our kids from the grave. I told the attorney/paralegal this multiple times, and somehow they still cajoled us into getting (and prepaying for) them to draft a trust. After I saw the documents and all the warnings about needing to fund it, update it every year, etc., I went back to them one more time and said I don't get why we need the trust. We have an in-person meeting coming up where I imagine we'll be able to get out of it (it's not executed yet), and get that portion of the fee back. We shall see!

    .
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    2pedals
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    Re: Wills & Trusts

    Post by 2pedals »

    capran wrote: Tue Oct 05, 2021 1:55 pm
    2pedals wrote: Mon Oct 04, 2021 11:37 pm
    capran wrote: Mon Oct 04, 2021 10:51 pm we did our trust many years ago and were disappointed that they kept saying "laws have changed, you need to have it updated or it may not be valid". we paid for several years and then stopped. Had a friend that had the same lawyer brother team in Spokane and he got another lawyer and their comment was these are intentionally confusing and complex, and ended up doing a simple will and getting out of the trust. Not sure if it's even necessary for a joint estate value of 2.6m
    I am not sure what the purpose of your trust was many years ago. Is the purpose the same today? It seems to me if your trust document was flexible, not too many if anything would need to be changed. If you are trying to avoid taxes rather than just probate and end-of-life concerns then that might be more difficult to do.
    It's not to avoid taxes. We went to a presentation about trusts and knew we needed something to update our 20 year old will. The lawyers kept putting up examples of people who died with only a will and suggested they lost huge amounts of their estate through a lengthy probate process. We also liked the supposed simplicity of executing a trust, as well as the asset protection if one were to enter a care facility, as well as protecting the inherited estate from depletion if children divorced or had other legal issues. There was never any mention of annual updating being recommended until after six months, and for several years we were paying over 300 a year for annual updates. At the time, I would not even know what questions to ask. And after recently going through a small estate via will, with no real property and only a small portfolio, and watching that take a year while CPA's and lawyers claimed their fee's, I am still not sure what the best course of action is. We're in Washington State, and even with our house we're well under the limits of estate value that would be taxed- 2.6ish. And either will or estate it seems you still need to get help in getting a letter of testamentary for liquidating small things not in the trust- like car, boat, etc.
    We are in Washington State are as well and are concerned about the same things. Our lawyer definitely did not mention annual updates. In fact, he even suggested we would never need to update the trust. Most likely things would need to be maintained by a CPA shortly after one spouse passes away or if someone has a catastrophic illness. We definitely will not be paying over $300/year for annual updates. If you want I can PM you the name of the lawyer we used located in the Puget Sound area. We are in the process of converting all of our taxable accounts into the trust. Transfering the Fidelity joint taxable account was easy. We are young enough so all new cars and/or boats will be titled to the trust when purchased. It is my understanding probate is not required in Washington even if the car is not titled to the trust.
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    Re: Wills & Trusts

    Post by Lee_WSP »

    $300 sounds like you'd get an annual meeting to make sure you're keeping the accounting straight and the plan still makes sense and to go over any updates in the law and any word revisions (name changes and whatnot). I don't think it includes significant rewrites. IMO anyway.
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    Re: Wills & Trusts

    Post by bsteiner »

    capran wrote: Tue Oct 05, 2021 1:55 pm ...
    It's not to avoid taxes. We went to a presentation about trusts and knew we needed something to update our 20 year old will. The lawyers kept putting up examples of people who died with only a will and suggested they lost huge amounts of their estate through a lengthy probate process. ... There was never any mention of annual updating being recommended until after six months, and for several years we were paying over 300 a year for annual updates. ... We're in Washington State, and even with our house we're well under the limits of estate value that would be taxed- 2.6ish. And either will or estate it seems you still need to get help in getting a letter of testamentary for liquidating small things not in the trust- like car, boat, etc.
    Sounds like scare tactics. When I spoke at the Seattle Estate Planning Conference at the convention center in Seattle a few years ago everyone I spoke to said that probating a Will in Washington wasn't difficult, and that revocable trusts weren't commonly used there.

    It's unlikely that anyone would update his/her Will every year, though I recall one client with a 9-figure estate who, it seemed that every time he signed his Will, he would say he wanted to make some additional changes. We said that he should sign the one we prepared since it was closer to what he wanted than what he had before, and we would make the changes and he would sign it again.

    Occasionally there's a major change in someone's family or asset situation or a major change in the tax law soon after someone signs a Will and it has to be done over. That happened when the Economic Recovery Tax Act of 1981 was signed, which allowed an unlimited marital deduction (rather than only 50%), and allowed QTIP trusts.
    557880yvi wrote: Tue Oct 05, 2021 2:29 pm I am in Massachusetts ....

    Probate is NOT SIMPLE, can be VERY EXPENSIVE (attorney fees, probate court fees), very time-consuming, can hold up selling and/or distributing assets. It can take weeks or months (even without a pandemic) to have the Executor (in MA called the Personal Representative) appointed - and virtually nothing can be done until that happens - no assets distributed, nothing sold, not even any bills paid (unless the PR happened to be joint on a TOD checking account). A simple example in one of the estates I was involved with very recently thought it had been probate-proofed. Turned out that the deed re-titling the primary residence into their trust had not been done properly - it was the only asset not in the trust. Legal fees of over $20k to probate the estate - it held up the sale of the house for almost 9 months (pre-pandemic).
    ...
    We had an estate in Massachusetts where the personal representatives went to the court themselves without a lawyer and were able to get the Will probated in about an hour.
    Whatyear? wrote: Tue Oct 05, 2021 4:25 pm My husband and I are about half-way through the process of getting wills done. After an initial consultation we determined we only need wills (not a Trust) because we a) don't care about minimizing estate taxes, ...
    Revocable trusts neither save nor cost estate taxes. You can put the same dispositive provisions (who gets what) in a Will or in a revocable trust.
    2pedals wrote: Tue Oct 05, 2021 5:02 pm ...
    We are in Washington State are as well and are concerned about the same things. Our lawyer definitely did not mention annual updates. In fact, he even suggested we would never need to update the trust. Most likely things would need to be maintained by a CPA shortly after one spouse passes away or if someone has a catastrophic illness. We definitely will not be paying over $300/year for annual updates. ....
    While it's unlikely that anyone would update his/her Will every year, it's not correct to say that it will never need to be updated. People's family situations change, people's financial situations change, the tax law changes.

    In most cases, there's some legal work when someone dies, especially when the surviving spouse (or a single person) dies. Estate tax returns have to be prepared, houses have to be sold, sometimes business interests have to be sold, tax elections have to be made, assets have to be appraised (the lawyers don't do the appraisals, but will usually recommend appraisers).
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