Estate planning advice for young parents in Massachusetts

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beehappy
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Estate planning advice for young parents in Massachusetts

Post by beehappy » Wed Sep 13, 2017 5:58 pm

I've been reading this forum and (stealthily) learning more about investing. But this is my first post.

My husband and I are looking into estate planning. I'm in my mid-30s and he's in his mid 40's. We have 2 young children under 3 years old, and may have one more. We live in Massachusetts. We had a consultation with an attorney who provided several options from basic will and POAs to credit shelter trusts. The cost of the options ranged from about $1000 to $8000. But he didn't provide any recommendations, and I want to make sure we're asking the right questions before we commit to a route. I'm hoping the knowledge experts here can help us sift through to find what we really need.

Assets and liabilities
Our net-worth is about $1.5M. Our home (worth around $1.38M) is jointly owned and has a mortgage of around $600K on it. We have a joint brokerage with about $120K, 401ks with about $550K combined where we list each other as beneficiaries. We also have Roth IRAs with combined balance of around $40k, and 529s ($30K). We each have a 25-year term like policy for combined $4M (listing each other as beneficiaries) and he has a whole life with death benefit of $450K. We're starting to save and invest more of our earnings (we make combined about $500K), but I don't know if we'll cross the joint federal estate exemption threshold.

My main question is whether we need a trust, what type(s) of trust(s), and what other measures should we take now while we're still accumulating assets. Do the attorney's fees seem reasonable in view of the complexities of our finances? What questions should we be asking? Thank you in advance for your helpful insights.

edited -- typos
Last edited by beehappy on Wed Sep 13, 2017 6:52 pm, edited 1 time in total.

tibbitts
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Re: Estate planning advice for young parents in Massachusetts

Post by tibbitts » Wed Sep 13, 2017 6:18 pm

beehappy wrote:
Wed Sep 13, 2017 5:58 pm
<t>I've been reading this forum and (stealthily) learning more about investing. But this is my first post.<br/>
<br/>
My husband and I are looking into estate planning. I'm in my mid-30s and he's in his mid 40's. We have have 2 young children under 3 years old, and may have one more. We live in Massachusetts. We had a consultation with an attorney who provided several options from basic will and POAs to credit shelter trusts that cost anywhere from $1000 to $8000. But he didn't provide any recommendations, and I want to make sure we'er asking the right questions before we commit to a route. I'm hoping the knowledge experts here can help us sift what we really need. <br/>
<br/>
Assets and liabilities<br/>
Our net-worth is about $1.5M. Our home (worth around $1.38M) is jointly owned and has a mortgage of around $600K on it. We have a joint brokerage with about $120K, 401ks with about $550K combined where we list each other as beneficiaries. We also have Roth IRAs with combined balance of around $40k, and 529s ($30K). We each have a 25-year term like policy for combined $4M (listing each other as beneficiaries) and he has a whole life with death benefit of $450K. We're starting to save and invest more of our earnings (we make combined about $500K), but I don't know if we'll cross the joint federal estate exemption threshold.

My main question is whether we need a trust, what type(s) of trust(s), and what other measures should we take now while we're still accumulating assets. Do the attorneys fees seem reasonable in view of the complexities of our finances? What questions should we be asking? Thank you in advance for your helpful insights.
I don't understand why the attorney would just leave you with a price list and not provide a recommendation. Maybe consult another attorney. I wouldn't expect every attorney to agree on the best path forward, but I would expect them all to perhaps explain the pros and cons of different approaches and then express an opinion.

JBTX
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Re: Estate planning advice for young parents in Massachusetts

Post by JBTX » Wed Sep 13, 2017 7:04 pm

beehappy wrote:
Wed Sep 13, 2017 5:58 pm
I've been reading this forum and (stealthily) learning more about investing. But this is my first post.

My husband and I are looking into estate planning. I'm in my mid-30s and he's in his mid 40's. We have 2 young children under 3 years old, and may have one more. We live in Massachusetts. We had a consultation with an attorney who provided several options from basic will and POAs to credit shelter trusts. The cost of the options ranged from about $1000 to $8000. But he didn't provide any recommendations, and I want to make sure we're asking the right questions before we commit to a route. I'm hoping the knowledge experts here can help us sift through to find what we really need.

Assets and liabilities
Our net-worth is about $1.5M. Our home (worth around $1.38M) is jointly owned and has a mortgage of around $600K on it. We have a joint brokerage with about $120K, 401ks with about $550K combined where we list each other as beneficiaries. We also have Roth IRAs with combined balance of around $40k, and 529s ($30K). We each have a 25-year term like policy for combined $4M (listing each other as beneficiaries) and he has a whole life with death benefit of $450K. We're starting to save and invest more of our earnings (we make combined about $500K), but I don't know if we'll cross the joint federal estate exemption threshold.

My main question is whether we need a trust, what type(s) of trust(s), and what other measures should we take now while we're still accumulating assets. Do the attorney's fees seem reasonable in view of the complexities of our finances? What questions should we be asking? Thank you in advance for your helpful insights.

edited -- typos
Hopefully one of the more experienced estate planners in here will weigh in. I had never heard of a credit shelter trust, but it appears it is basically a way to avoid estate taxes. With your large life insurance policy you are starting to get into the range where there could be estate tax issues if/when you both die. There is also a MA estate tax at a lower amount, so it is something to consider.

https://www.fool.com/investing/general/ ... trust.aspx

$8000 seems like a lot of money, but it is MA. I have spent far less than that in TX for wills, trusts, etc. I'd ask around and get one or two more bids. Cheapest isn't always best with this stuff.

pintail07
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Re: Estate planning advice for young parents in Massachusetts

Post by pintail07 » Wed Sep 13, 2017 7:55 pm

The attorney seems to be using an elephant gun to kill a flea.

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FIREchief
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Re: Estate planning advice for young parents in Massachusetts

Post by FIREchief » Wed Sep 13, 2017 8:11 pm

With two young children and the assets you described, I think $1000 for basic wills/POA/living wills would be a wise investment (assuming the lawyer is worth $1000). At that level, it should be mostly boilerplate. When your retirement savings and other assets are much larger, a more comprehensive estate plan may be in order. As others have suggested, $8000 is certainly on the high end of costs.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

beehappy
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Re: Estate planning advice for young parents in Massachusetts

Post by beehappy » Wed Sep 13, 2017 9:22 pm

Thanks for the responses. I think he mentioned the trusts and tax shelters, despite our relatively low assets, for 2 reasons:
(1) in MA, the state estate tax exemption is $1M. So we've already surpassed that if you add in the insurance proceeds.
(2) with small children, it would be good to not have all the assets pass to them at 18, so this is where a trust might come in. Along the same lines, if they had to be cared for by a guardian, he considered that having a separate conservator (right word?) over the money might provide additional oversight.

But I don't know if any of these considerations necessarily calls for a trust, or multiple trusts.

bsteiner
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Re: Estate planning advice for young parents in Massachusetts

Post by bsteiner » Thu Sep 14, 2017 11:56 am

For estate planning purposes, you have a $6 million estate, since life insurance becomes cash at your death.

This should be a fairly routine matter. The cost shouldn't vary that much based on the plan you select, since the time in the planning and the time in the drafting won't vary that much. However, there shouldn't be that much variation in the plans that different lawyers would recommend or that different clients would select.

It's hard to estimate fees since the cost of the same project can vary considerably from one client to another. However, I think a good lawyer could probably do thisl at a cost roughly midway between the two figures you mentioned.

Massachusetts has a state estate tax with a $1 million exclusion amount, and it allows a state-only QTIP election. So your Wills would probably provide for a $1 million credit shelter trust, a gap trust in QTIP form (for which you would elect QTIP for Massachusetts but not Federal estate tax purposes) for the difference between the Massachusetts exclusion amount and the Federal exclusion amount, and then any excess above the Federal exclusion amount to the spouse either outright or in a QTIP trust.

QTIP means the spouse is entitled to all the income, so the trust qualifies for the marital deduction.

Your Wills would then provide that at the second death the assets go to the children in separate trusts for their benefit. Guardianships are cumbersome so you wouldn't want them. You would have to decide at what age each child gets to control his/her trust. Providing for your children in trust rather than outright will keep their inheritances out of their estates for estate tax purposes, and will protect their inheritances from their creditors and spouses. That's especially important in Massachusetts since inheritance are in the pot for equitable distribution (division) upon divorce in Massachusetts.

The drafting is a little tricky if you each have a $2 million policy while the Massachusetts estate tax exclusion amount is $1 million. However, this comes up from time to time, and there are ways to draft for this.

You'll also need to include a second set of trusts for your children for their shares of the retirement benefits. That, too, comes up regularly, so a good lawyer should include this as a routine matter.

Until about 5 years ago, you might have done revocable trusts. The probate process in Massachusetts used to be more complicated, and trusts under a Will used to have to file periodic accountings. However, Massachusetts enacted the Uniform Probate Code about 5 years ago, which greatly simplified the probate process; and Massachusetts enacted the Uniform Trust Code about 5 years ago, which eliminated the need for trusts under a Will to file accountings absent a dispute.

WannabeEarlyRetiree
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Re: Estate planning advice for young parents in Massachusetts

Post by WannabeEarlyRetiree » Thu Sep 14, 2017 1:37 pm

look into your work benefit to see if it provide simple legal aids.

Most employers provide some sort of legal aids. Our employers provide free phone call legal aids but if we paid additional $10/pay check, attorney consultation for simple matters (such as estate planning, prenups, adoptions, etc) are also included. We were able to hire an attorney to take care of all our estate planning legal documents under this coverage and total out of pocket to us end up being very little

beehappy
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Re: Estate planning advice for young parents in Massachusetts

Post by beehappy » Thu Sep 14, 2017 2:27 pm

Bruce,

Thank you SO MUCH for this excellent response! I feel a huge weight just coming off my shoulders from reading your guidance on this.
bsteiner wrote:
Thu Sep 14, 2017 11:56 am
For estate planning purposes, you have a $6 million estate, since life insurance becomes cash at your death.

This should be a fairly routine matter. The cost shouldn't vary that much based on the plan you select, since the time in the planning and the time in the drafting won't vary that much. However, there shouldn't be that much variation in the plans that different lawyers would recommend or that different clients would select.

It's hard to estimate fees since the cost of the same project can vary considerably from one client to another. However, I think a good lawyer could probably do thisl at a cost roughly midway between the two figures you mentioned.
Interesting that you mention this. I figured our situation was common enough that this should be the case. But I've spoken with 3 lawyers in 2 days and gotten 3 very different approaches. The first lawyer (in original post) met with us for an hour (too long in my view), threw the kitchen sink of options at us and basically told us to "check google or ask our friends what they did" when I asked for what he'd recommend. Second lawyer (15 mins on the phone) said we shouldn't worry too much about the tax avoidance strategies (at least for now) because of the unlimited marital exclusion, but would recommend a testamentary trust/POA/living will for $1500. Third lawyer (15 mins on the phone) would have us do a revocable trust + ILIT and split and re-title our jointly owned primary residence into separate living trusts *right now*, for an unspecified capped (but not fixed) fee.

If I had to pick from these 3, I'd pick the second one for not pushing a revocable trust and for actually having a recommendation. But something tells me I should talk to one or two more lawyers.
bsteiner wrote:
Thu Sep 14, 2017 11:56 am
Massachusetts has a state estate tax with a $1 million exclusion amount, and it allows a state-only QTIP election. So your Wills would probably provide for a $1 million credit shelter trust, a gap trust in QTIP form (for which you would elect QTIP for Massachusetts but not Federal estate tax purposes) for the difference between the Massachusetts exclusion amount and the Federal exclusion amount, and then any excess above the Federal exclusion amount to the spouse either outright or in a QTIP trust.

QTIP means the spouse is entitled to all the income, so the trust qualifies for the marital deduction.

Your Wills would then provide that at the second death the assets go to the children in separate trusts for their benefit.
This is where I think we'd land. If I understand the above correctly, our Wills would provide for the creation of the trusts, but we wouldn't have to be managing any trusts while we're both alive, right? I think that's the balance between complexity and effectiveness that we've been seeking for our estate plan.
bsteiner wrote:
Thu Sep 14, 2017 11:56 am
Guardianships are cumbersome so you wouldn't want them.
To make sure I understand, this is referring to guardianship of the trusts, not guardianship of the children (should we pass while they're minors), correct?
bsteiner wrote:
Thu Sep 14, 2017 11:56 am
The drafting is a little tricky if you each have a $2 million policy while the Massachusetts estate tax exclusion amount is $1 million. However, this comes up from time to time, and there are ways to draft for this.
That's exactly what we have. Would you recommend an ILIT for these? I'm trying to avoid setting up and dealing with a trust now, unless we absolutely need it.
bsteiner wrote:
Thu Sep 14, 2017 11:56 am
Until about 5 years ago, you might have done revocable trusts. The probate process in Massachusetts used to be more complicated, and trusts under a Will used to have to file periodic accountings. However, Massachusetts enacted the Uniform Probate Code about 5 years ago, which greatly simplified the probate process; and Massachusetts enacted the Uniform Trust Code about 5 years ago, which eliminated the need for trusts under a Will to file accountings absent a dispute.
This is good to know. We did not talk about any unique family challenges, but 2 of the 3 lawyers I spoke with made probate avoidance a top priority in our estate plan. I wonder if it's just coming from the comfort of old habit.
Last edited by beehappy on Thu Sep 14, 2017 2:36 pm, edited 1 time in total.

beehappy
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Re: Estate planning advice for young parents in Massachusetts

Post by beehappy » Thu Sep 14, 2017 2:29 pm

WannabeEarlyRetiree wrote:
Thu Sep 14, 2017 1:37 pm
look into your work benefit to see if it provide simple legal aids.

Most employers provide some sort of legal aids. Our employers provide free phone call legal aids but if we paid additional $10/pay check, attorney consultation for simple matters (such as estate planning, prenups, adoptions, etc) are also included. We were able to hire an attorney to take care of all our estate planning legal documents under this coverage and total out of pocket to us end up being very little
Thanks for the response. I've combed through our benefits. We can get a 30-minute legal consultation (which I plan to us), but not much more.

Buffetologist
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Re: Estate planning advice for young parents in Massachusetts

Post by Buffetologist » Thu Sep 14, 2017 3:43 pm

We live in MA. I am not an attorney, but I feel like I gave this a lot of thought.

20 years ago when our children were small, we did a joint living trust whose main purpose was to be the beneficiary of our life insurance policies so that the guardian of our children, who would also be successor trustee, executor and custodian of UTMA accounts would have immediate liquidity to handle things as soon as a death certificate was available. We copied the trust out of a Nolo book and just used it. Perhaps this was dumb, but I figured it was cheaper just to buy a little extra life insurance to cover any legal costs in the unlikely event that we screwed up than it was to pay an attorney to set this up. Back then our net worth (not counting term life insurance) was close to zero so we didn't think about estate tax issues. About 4 years ago I used the trust to buy vacation property in NH and the attorney who reviewed it for me said that it was valid.

Recently we redid our estate plan with an attorney naming our 22 year old daughter the successor trustee. Our net worth is in the 8-9 million range including the insurance policies. Our attorney told us to give no thought to probate avoidance in Massachusetts.

Our living trust is now the beneficiary of our will. The trust gives the surviving spouse the option to "disclaim" the marital share and create a credit shelter trust for estate tax purposes. This allows maximum flexibility depending on what the estate tax situation is at the time.

Our thinking is that if the surviving spouse's life expectancy is long (we're in our 50s) and the funds invested moderately to aggressively, then it's probably worth paying the extra Mass Estate tax on the $1 million when the second spouse dies to retain the second stepped up basis which would be lost in a credit shelter trust. If the surviving spouse is elderly and the money invested conservatively, then it might make sense to create the credit shelter. No reason to commit now. My wife is an investment professional and is competent to make that calculation.

We've moved mutual funds, brokerage accounts, and bank accounts into the trust. There should be enough in there to shelter $1M from Mass taxes if that made sense. We did not move our home into the trust as that would require additional legal work and if we both die, the trust gets it anyway.

We were also advised to leave our property in trust for our children. We elected not to do that to avoid complicating their lives. If they marry someone we dislike, or become extremely wealthy on their own, we might reconsider this at a later date. Honestly though, we have trust issues with having some professional manage the money and be the trustee. We'd like our children to become sufficiently competent to manage their own affairs.

Hope this helps.

bsteiner
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Re: Estate planning advice for young parents in Massachusetts

Post by bsteiner » Thu Sep 14, 2017 4:03 pm

beehappy wrote:
Thu Sep 14, 2017 2:27 pm
Bruce,

... I've spoken with 3 lawyers in 2 days and gotten 3 very different approaches. The first lawyer (in original post) met with us for an hour (too long in my view), threw the kitchen sink of options at us and basically told us to "check google or ask our friends what they did" when I asked for what he'd recommend ... something tells me I should talk to one or two more lawyers. ...
I would suggest one good one rather than two more like the first 3.

Like the first visit with a new doctor, the initial meeting takes a fair amount of time, usually somewhat more than an hour, to gather the information about the people and the assets, to understand your objectives, and to discuss how best to accomplish your objectives. But usually after the first meeting you've made the necessary decisions and the lawyer has everything or almost everything he/she needs in order to prepare the documents.
beehappy wrote:
Thu Sep 14, 2017 2:27 pm

... we wouldn't have to be managing any trusts while we're both alive, right? ...
Correct. Your Will doesn't take effect until your death.
beehappy wrote:
Thu Sep 14, 2017 2:27 pm
...
bsteiner wrote:
Thu Sep 14, 2017 11:56 am
Guardianships are cumbersome so you wouldn't want them.
To make sure I understand, this is referring to guardianship of the trusts, not guardianship of the children (should we pass while they're minors), correct? ...
Correct. Guardianships of property are cumbersome. Depending on state law, a guardian of a minor's property may be constrained as to investments and distributions. You would still have guardianships of the person. But a guardian of the person, once appointed, doesn't have much to do with the court. The guardian might also be appointed as guardian of the property at the same time, just in case the minor receives property from some other source, but most likely there wouldn't be any guardianship property.
beehappy wrote:
Thu Sep 14, 2017 2:27 pm
...
Would you recommend an ILIT for these? I'm trying to avoid setting up and dealing with a trust now, unless we absolutely need it. ...
I should have mentioned the possibility of creating insurance trusts. When the Federal estate tax exclusion amount was lower (it was $675,000 as recently as 2001), there were lots of people who were rich enough (including their life insurance) to pay Federal estate tax but poor enough to need life insurance. So we used to do lots of insurance trusts. You could do insurance trusts to save state estate tax. especially given the amount of the insurance coverage in this case. However, you would have to weigh that against (i) the additional cost and complexity of creating the insurance trusts (that probably accounts for the higher estimate of the cost of the plan), (ii) the cost of filing gift tax returns, at least for the first year if you elect out of automatic allocation of GST exemption, (iii) if one of you dies, the surviving spouse is likely to use some of the insurance proceeds, and (iv) the estate tax won't be due until the surviving spouse's death. A simpler solution might be to have a slightly higher amount of insurance (to cover the tax) than you would have if there were no state estate tax. If you decide to create insurance trusts, make sure they're sufficient different that they wouldn't be considered reciprocal trusts.

beehappy
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Re: Estate planning advice for young parents in Massachusetts

Post by beehappy » Thu Sep 14, 2017 4:41 pm

bsteiner wrote:
Thu Sep 14, 2017 4:03 pm
I should have mentioned the possibility of creating insurance trusts. When the Federal estate tax exclusion amount was lower (it was $675,000 as recently as 2001), there were lots of people who were rich enough (including their life insurance) to pay Federal estate tax but poor enough to need life insurance. So we used to do lots of insurance trusts. You could do insurance trusts to save state estate tax. especially given the amount of the insurance coverage in this case. However, you would have to weigh that against (i) the additional cost and complexity of creating the insurance trusts (that probably accounts for the higher estimate of the cost of the plan), (ii) the cost of filing gift tax returns, at least for the first year if you elect out of automatic allocation of GST exemption, (iii) if one of you dies, the surviving spouse is likely to use some of the insurance proceeds, and (iv) the estate tax won't be due until the surviving spouse's death. A simpler solution might be to have a slightly higher amount of insurance (to cover the tax) than you would have if there were no state estate tax. If you decide to create insurance trusts, make sure they're sufficient different that they wouldn't be considered reciprocal trusts.
Thanks for the clarifications. I really like the bolded suggestion. If the insurance companies have done their calculations right, there's a good chance we'll outlive both our term policies (our assets should grow to make up the difference by then). So we don't want to add too much complexity on account of the term policies. And we bought more than we thought we'd need to account for contingencies, I'd consider state estate taxes one of those.

Hug401k
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Re: Estate planning advice for young parents in Massachusetts

Post by Hug401k » Thu Sep 14, 2017 7:39 pm

If you find a good lawyer, will you PM me? I could use one for exactly the same reasons and I am in MA. Great conversation. Thank you.

bsteiner
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Re: Estate planning advice for young parents in Massachusetts

Post by bsteiner » Fri Sep 15, 2017 10:37 am

Buffetologist wrote:
Thu Sep 14, 2017 3:43 pm
We live in MA. I am not an attorney, but I feel like I gave this a lot of thought.

20 years ago when our children were small, we did a joint living trust ...
Joint revocable trusts fit community property states, mainly California since it's the largest of the community property states and the one where revocable trusts are commonly used. Did you buy a California form?
Buffetologist wrote:
Thu Sep 14, 2017 3:43 pm
... Our net worth is in the 8-9 million range ...

... The trust gives the surviving spouse the option to "disclaim" the marital share and create a credit shelter trust for estate tax purposes. This allows maximum flexibility depending on what the estate tax situation is at the time.

Our thinking is that if the surviving spouse's life expectancy is long (we're in our 50s) and the funds invested moderately to aggressively, then it's probably worth paying the extra Mass Estate tax on the $1 million when the second spouse dies to retain the second stepped up basis which would be lost in a credit shelter trust. If the surviving spouse is elderly and the money invested conservatively, then it might make sense to create the credit shelter. No reason to commit now. My wife is an investment professional and is competent to make that calculation.

We were also advised to leave our property in trust for our children. We elected not to do that to avoid complicating their lives. If they marry someone we dislike, or become extremely wealthy on their own, we might reconsider this at a later date. Honestly though, we have trust issues with having some professional manage the money and be the trustee. We'd like our children to become sufficiently competent to manage their own affairs.
...
Your children could marry spouses you like, but subsequently get divorced. They could then remarry new spouses whom you wouldn't like if you were still living. Note that unlike most states, inheritances are in the pot for equitable distribution in Massachusetts.

Your children could also have taxable estates of their own, especially if you leave them $8 million (collectively), which would be added to whatever assets they already have or may acquire.

Each child can be a trustee of his/her own trust, together with someone he/she is comfortable having as co-trustee. The trustees may but need not hire a professional to manage the assets.

afan
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Re: Estate planning advice for young parents in Massachusetts

Post by afan » Fri Sep 15, 2017 2:51 pm

Only people who do not have such trusts think the revocable living trust is a complication. One handles this exactly like assets owned outright. There is no need to hire someone else to manage the investment duties. No more than you are required to hire someone to manage your own investments.

Almost the same is true for a trust you would set up for your kids. They can be trustee and they can manage the assets. Their trusts would have their own tax ID numbers and need to file tax returns. Other than that, there is nothing to it.

Important value of living trusts that has not been brought up so far: they are MUCH better if the grantor becomes incapable of managing his/her affairs. For someone to take over using a durable power of attorney they have to get the financial institutions to accept it. In my efforts to help an older person for whom I had a DPOA, NOT A SINGLE bank, broker or insurance company would accept it. For assets that were in the revocable trust, of which I was trustee, there were no problems. But the DPOA was completely useless.

Having the assets in trust also made things easier for me when the person passed. I did not have to go around getting multiple places to accept me as the personal representative. Since I was already trustee I did not need to wait for the court to appoint me and provide my letters of administration. I did have to get them ultimately so I could file the tax returns but nothing else required that delay.

Those were huge advantages of having things in a revocable trust that had nothing to do with probate. From what I learned going through the process, a revocable trust would be far better than just having a will and DPOA even if there were no such thing as probate.

Setting up and "managing" a revocable trust is easy. Spouse and I have had them for decades and have never encountered a problem. Do a favor for whoever would have to step in if you were to become incompetent. Set up and fund a living trust. Probate is beside the point.
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FIREchief
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Re: Estate planning advice for young parents in Massachusetts

Post by FIREchief » Fri Sep 15, 2017 9:31 pm

Excellent post afan.
afan wrote:
Fri Sep 15, 2017 2:51 pm
Since I was already trustee I did not need to wait for the court to appoint me and provide my letters of administration. I did have to get them ultimately so I could file the tax returns but nothing else required that delay.
I hadn't considered this. Can you obtain letters of administration (aka letters of office?) if there is no will being probated?

https://www.irs.gov/pub/irs-pdf/p559.pdf
Signature. If a personal representative has been appointed, that person must sign the return. If it is a joint return, the surviving spouse must also sign it. If no personal representative has been appointed, the surviving spouse (on a joint return) signs the return and writes in the signature area “Filing as surviving spouse.” If no personal representative has been appointed and if there is no surviving spouse, the person in charge of the decedent's property must file and sign the return as “personal representative.”
That sounds like, at least at the federal level, a final return can be filed without formal appointment as personal representative via letters of administration.

Edit: I've checked both the IRS and my state's tax instructions. In both cases, it appears that anybody who is responsible for a decedent's property (via will, trust, whatever) can and must file the final tax return. They don't need to be formally appointed by the responsible court as executor or administrator of the estate. This is important in situations where there is no need for probate.
Last edited by FIREchief on Sat Sep 16, 2017 12:19 am, edited 1 time in total.
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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Lieutenant.Columbo
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Re: Estate planning advice for young parents in Massachusetts

Post by Lieutenant.Columbo » Fri Sep 15, 2017 11:43 pm

afan wrote:
Fri Sep 15, 2017 2:51 pm
...a trust you would set up for your kids. They can be trustee and they can manage the assets. Their trusts would have their own tax ID numbers and need to file tax returns.
afan,
I understand that as long as both spouses are alive, their revocable living trust doesn't have a tax ID and no trust tax returns are filed. Does the trust need a tax ID and tax returns after one spouse dies? Thank you.
Lt. Columbo: Well, what do you know. Here I am talking with some of the smartest people in the world, and I didn't even notice!

Buffetologist
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Re: Estate planning advice for young parents in Massachusetts

Post by Buffetologist » Sat Sep 16, 2017 1:46 pm

bsteiner wrote:
Fri Sep 15, 2017 10:37 am
Buffetologist wrote:
Thu Sep 14, 2017 3:43 pm
... Our net worth is in the 8-9 million range ...

... The trust gives the surviving spouse the option to "disclaim" the marital share and create a credit shelter trust for estate tax purposes. This allows maximum flexibility depending on what the estate tax situation is at the time.

Our thinking is that if the surviving spouse's life expectancy is long (we're in our 50s) and the funds invested moderately to aggressively, then it's probably worth paying the extra Mass Estate tax on the $1 million when the second spouse dies to retain the second stepped up basis which would be lost in a credit shelter trust. If the surviving spouse is elderly and the money invested conservatively, then it might make sense to create the credit shelter. No reason to commit now. My wife is an investment professional and is competent to make that calculation.

We were also advised to leave our property in trust for our children. We elected not to do that to avoid complicating their lives. If they marry someone we dislike, or become extremely wealthy on their own, we might reconsider this at a later date. Honestly though, we have trust issues with having some professional manage the money and be the trustee. We'd like our children to become sufficiently competent to manage their own affairs.
...
Your children could marry spouses you like, but subsequently get divorced. They could then remarry new spouses whom you wouldn't like if you were still living. Note that unlike most states, inheritances are in the pot for equitable distribution in Massachusetts.

Your children could also have taxable estates of their own, especially if you leave them $8 million (collectively), which would be added to whatever assets they already have or may acquire.

Each child can be a trustee of his/her own trust, together with someone he/she is comfortable having as co-trustee. The trustees may but need not hire a professional to manage the assets.
Thanks for your feedback.

We were told that if the children have a power of appointment over their trust if can be in the pot for equitable distribution also. Our attorney recommended having the power to choose the trustee, but be a trustee having a power of appointment would be far safer.

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Re: Estate planning advice for young parents in Massachusetts

Post by bsteiner » Sun Sep 17, 2017 2:58 pm

Buffetologist wrote:
Thu Sep 14, 2017 3:43 pm
We live in MA. ...

Our net worth is in the 8-9 million range ...

Our thinking is that if the surviving spouse's life expectancy is long (we're in our 50s) and the funds invested moderately to aggressively, then it's probably worth paying the extra Mass Estate tax on the $1 million when the second spouse dies to retain the second stepped up basis which would be lost in a credit shelter trust. ...
It's hard to know. A $1 million Massachusetts credit shelter trust will avoid the Massachusetts estate tax on the value of the credit shelter trust at the surviving spouse's death (assuming the surviving spouse remains in Massachusetts and Massachusetts has an estate tax at the surviving spouse's death). However, it will cost capital gains tax on the appreciation in the assets of the credit shelter trust. Since you can always take assets out of the trust, but you can't put them back in, I would create the $1 million Massachusetts credit shelter trust at the first spouse's death.

A middle ground would be creating a disclaimer trust as a backup, and giving the surviving spouse the choice. However, a disclaimer trust is less flexible than a mandatory credit shelter trust (since the surviving spouse can't have a power of appointment over it, nor can he/she participate in discretionary distributions to the children except for an ascertainable standard such as health, maintenance, support and education). It also requires the surviving spouse to complete the disclaimer within 9 months of the first spouse's death.

With an $8-9 million estate, there's also a concern that the surviving spouse's estate might be subject to Federal estate tax, especially if you don't create the $1 million Massachusetts credit shelter trust. If that were to happen, the cost could be far more than any savings if the benefit of the second basis step-up outweighs the additional state estate tax. In this regard, the deceased spousal unused exclusion (portability) amount is not indexed for inflation.

To protect against the possibility of Federal estate tax in the surviving spouse's estate, you might even consider sheltering the entire Federal exclusion amount (or the entire value of the first spouse's estate other than retirement benefits) at the first death, even at the cost of a few hundred thousand dollars of state estate tax at the first death.
afan wrote:
Fri Sep 15, 2017 2:51 pm
Only people who do not have such trusts think the revocable living trust is a complication. ...
We've discussed this many times, but it has nothing to do with this thread, which involves the planning for a couple with $6 million in a state having a state estate tax with a $1 million exclusion estate, and which permits state-only QTIP elections. So I won't respond to it, except to point out that Buffetologist appears to have a California-type trust despite being in Massachusetts.
Buffetologist wrote:
Sat Sep 16, 2017 1:46 pm
bsteiner wrote:
Fri Sep 15, 2017 10:37 am
... unlike most states, inheritances are in the pot for equitable distribution in Massachusetts.
...
...
We were told that if the children have a power of appointment over their trust if can be in the pot for equitable distribution [in Massachusetts] ...
Do you have a citation for that? It's hard to prove a negative, but it would seem that if there were a case to that effect, there would have been a good deal of discussion of it.

There has been a good deal of discussion recently about several cases dealing with the extent to which trusts for children, and the income they produce or could produce, are taken into account in determining the amount of alimony and child support that the child will have to pay, or will be entitled to receive. I always say that one should assume that the child's trust will be taken into account for purposes of alimony and child support, and if it isn't, so much the better.

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Re: Estate planning advice for young parents in Massachusetts

Post by Kidneydoc » Sun Sep 17, 2017 3:42 pm

My wife and I are both physicians. After the birth of our twins in 2003, we both got revocable living trusts, in addition to the basic will/advance directive/POA documents, plus we got Irrevocable Life Insurance Trust (ILIT) when the federal estate tax threshold was roughly $1 million. It cost roughly $4500-5000 altogether at that time. Our assets are separate except for 2 joint checking accounts for asset protection.

Your assets are not much different than ours in 2003. Revocable living trusts are not hard to manage (same tax ID number: your social security number), but converting your brokerage/banking accounts to trust accounts is a short term hassle (Try Ally Bank and PurePoint Financial). If you value your financial privacy, revocable living trusts are definitely the way to go as you assets will be public knowledge at probate.

If you save like a Boglehead, chances are good that you may meet the federal estate tax threshold. In NJ, state estate tax is $2 million, formerly $675,000, and with life insurance, our assets would reach the federal estate tax limits: that's why we still maintain our ILIT to keep the life insurance proceeds out of our estate. Do you anticipate any inheritances? Then a revocable living with credit shelter trust is worth your while.

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Re: Estate planning advice for young parents in Massachusetts

Post by bsteiner » Sun Sep 17, 2017 5:38 pm

Kidneydoc wrote:
Sun Sep 17, 2017 3:42 pm
...
If you value your financial privacy, revocable living trusts are definitely the way to go as you assets will be public knowledge at probate.

If you save like a Boglehead, chances are good that you may meet the federal estate tax threshold. In NJ, state estate tax is $2 million, formerly $675,000, and with life insurance, our assets would reach the federal estate tax limits: that's why we still maintain our ILIT to keep the life insurance proceeds out of our estate. Do you anticipate any inheritances? Then a revocable living with credit shelter trust is worth your while.
That is not true. Absent a dispute, your assets would not become public in New Jersey.

Probating a Will couldn't be simpler in New Jersey. The court clerks will even fill out the forms for you. After that, absent a dispute, you won't have anything more to do with the court.

In 37 years and hundreds of Wills, trusts and estates in New Jersey, I don't recall seeing even one revocable trust in New Jersey.

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Re: Estate planning advice for young parents in Massachusetts

Post by Kidneydoc » Sun Sep 17, 2017 5:59 pm

What I meant was that a revocable living trust would keep trust titled assets private unlike regular assets.

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Re: Estate planning advice for young parents in Massachusetts

Post by beehappy » Sun Sep 17, 2017 6:13 pm

Thank you all so much for your insightful comments.

I just wanted to add a bit more living color to the numbers. My husband isn't the finance type. I manage all our finances, even his individual accounts, and he gets flustered with having to make decisions about money or investments. So far, the only reason I can think of for setting up living trusts is if doing so helps me fool-proof (or at least minimize the number of decisions he has to make regarding) our estate plan if I predecease him. I'm not terribly concerned about the cost of setting up these trusts -- it seems any tax sensitive approach would fall within the same $$ ballpark. I'm concerned about any increased complexities one approach might represent over another approach, both now and later down the line when one of us passes. So I appreciate inputs from those living with trusts, and finding them manageable. But we don't want to set up a revocable trust unless it advances our goal of keeping our estate as simple/streamlined as possible. We will not concern ourselves with touted benefits of avoiding probate or publicity, as those aren't terribly important to us. In thinking about our estate plan what can I do to reduce the chances that it all falls apart if I'm not around to maintain the structure or that my husband finds himself overwhelmed by the structures? Is this a good reason to have living trusts?

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Re: Estate planning advice for young parents in Massachusetts

Post by afan » Sun Sep 17, 2017 6:54 pm

The biggest advantage of the living trust comes when the grantor is alive but incapable of managing finances. In theory, someone with a durable power of attorney could do this for them. In practice, it can be difficult or impossible to have the DPOA accepted by financial institutions.

Having a living trust solves this problem if there is a trustee who is prepared to step in.

But this is really more an issue at the extreme of someone who is suffering from a severe impairment in their ability to function. Someone who simply does not like to think about money, but remains competent, can hire another to pay bills, manage investments, and so forth without having a trust. If that person engages the estate planning attorney and perhaps an accountant before making any big financial moves that might affect the estate plan, then having the trust in existence and funded probably does not change much of anything versus a testamentary trust arrangement.

If the person, although competent, cannot be trusted to do what the attorney, cpa and financial planner say, then having another entity, family member or company, serving as trustee can protect against uninformed mistakes. However, if this is a standard revocable living trust, then the husband would have the ability to take assets out of the trust, fire the trustee, or otherwise frustrate all those careful plans. If there is concern that the husband might well do something like this, then you probably don't want a revocable living trust, but rather something that the husband could not change or defund.

From your comments, it is not clear whether it is simply "does not like to think about finances, and refuses to do so, but will follow a clear plan if implemented by others" or "there is a good chance he will do ill-advised things if given the opportunity". For the first situation, the living trust provides the protection against incapacity but does not impose any more complexity until that happens. For the latter situation a revocable living trust is probably not a solution.

Re: Letters of administration. They also made it simpler to do things like deal with retirement plans, life insurance, etc. I don't know what would have happened with these without being appointed personal representative. Getting that appointment was easy, it just was not quick. Since the estate and beneficiaries were not waiting for money from the retirement plans or life insurance, the delay of about a month to get the letters did not matter. It would have mattered a lot if I could not pay bills while waiting to get the ability to write checks.

bsteiner wrote
There has been a good deal of discussion recently about several cases dealing with the extent to which trusts for children, and the income they produce or could produce, are taken into account in determining the amount of alimony and child support that the child will have to pay, or will be entitled to receive. I always say that one should assume that the child's trust will be taken into account for purposes of alimony and child support, and if it isn't, so much the better.
Can you elaborate? Often the questions I have seen here on bogleheads have revolved around the identity of the trustee. Are the assets more exposed if the beneficiary is trustee than if there is an independent trustee? Some have suggested that a truly independent trustee, a bank, for example, can provide more asset protection than a friend of the beneficiary and much more than if the beneficiary is the trustee.
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Re: Estate planning advice for young parents in Massachusetts

Post by Ged » Sun Sep 17, 2017 7:08 pm

bsteiner wrote:
Thu Sep 14, 2017 11:56 am
However, Massachusetts enacted the Uniform Probate Code about 5 years ago, which greatly simplified the probate process
\I served as executor of my father's estate in Massachusetts in 2009. :oops:

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Re: Estate planning advice for young parents in Massachusetts

Post by FIREchief » Sun Sep 17, 2017 9:01 pm

afan wrote:
Sun Sep 17, 2017 6:54 pm

Re: Letters of administration. They also made it simpler to do things like deal with retirement plans, life insurance, etc. I don't know what would have happened with these without being appointed personal representative. Getting that appointment was easy, it just was not quick. Since the estate and beneficiaries were not waiting for money from the retirement plans or life insurance, the delay of about a month to get the letters did not matter. It would have mattered a lot if I could not pay bills while waiting to get the ability to write checks.
Was there or was there not a need to probate a will? That was my question earlier. If the probate estate is below a state's threshold, and virtually all assets are owned by a trust, then there would be no practical reason to go through a probate process (e.g. if there was just one or two directly owned cars that could be transferred via affidavit). Absent a probate process, I was unaware that a court would still issue letters of administration. Is this what happened in your case? :confused

Also, I've been under the understanding that non-trust owned assets (such as the retirement plans and life insurance that you mentioned), can be claimed by the named beneficiaries by providing a copy of the death certificate. What would a personal representative need to do in these cases? Perhaps just obtain statements and other account information to enable proper filing of tax returns?

I see that you did mention "Since the estate and beneficiaries were not waiting for money from the retirement plans or life insurance," so perhaps in your case the trust did not own substantially all of the decedent's assets and there was a meaningful probate estate.

Thanks.
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Re: Estate planning advice for young parents in Massachusetts

Post by afan » Mon Sep 18, 2017 5:07 am

Firechief

It took some time to figure out whether the assets were enough to require probate. Since there was no reason to avoid getting appointed as personal representative, I went ahead and did it. The court did not ask whether there was a need to go through probate. It just issued the appointment.

It took several weeks to get the death certificate and several weeks after that to get the appointment as personal representative. Since there was nothing pressing that depended on this I was not concerned about the time.

Since it was unclear for a while whether we needed to go through probate we started the process as promptly as we could.

There was life insurance that I did not know about before death. The amount was small, but enough to make it worth collecting.

There were also savings bonds squirreled away that were not in the name of the trust.

We ultimately decided that the household goods did not add up to enough to matter for probate purposes.

It might have been possible for the beneficiaries to have claimed the life insurance had they been on the policy. As it was, the owner had forgotten about the policy and we did not learn of it until after the death. The estate was the beneficiary.

Retirement plans: Since I had the letters of administration I used them. I would have thought you are likely right about the beneficiaries claiming the benefits with involvement of the personal representative, but since I was PR I handled it. I think the retirement plans had beneficiaries named, but that may have been the trust or the estate. I don't remember. Since I was also trustee I handled this as PR or as Trustee.

In this case the probate process itself only created a problem at the very start when I was dealing directly with the office in the jurisdiction. That place was complete chaos. It took hours going back and forth at various sites to file the will. Also got a bunch of mutually contradictory, and according to the attorney I eventually hired wrong, advice from the clerks at the offices.

Although the house was in the name of the trust, the homeowners insurance was in the name of the individual. The insurance company would not talk to me about anything until I presented myself as PR. I had the same interaction with other insurance companies.

The probate itself was nearly nothing but almost all the assets passed outside of probate. Since it was not "supervised" I did not have to file anything else with the court. If there had been an estate small enough to avoid it altogether I am not sure what effort would have been saved other than an afternoon wasted at the courthouse. The advertisements seemed to be useful to provide notice to creditors that they needed to submit any bills while they had the chance. Since we had been getting the person's mail for a couple of years, there did not turn out to be any bills that we did not know about, but I believe that under other circumstances this might be a useful step.

Again, the biggest advantage of the living trust was while the person was alive. I was able to pay bills and manage things although none of the companies would recognize the DPOA. Having almost all the assets under the trust avoided dealing with gathering them under DPOA, which would have been impossible, or as PR after death. That meant things like estimated taxes and insurance premiums got paid on time. One of the beneficiaries needed some money, a continuation of payments that were being made before the death. As trustee I could continue those without interruption.

The living trust made managing the last few years of life far easier than it would have been otherwise. It made the post death arrangements easier as well but mainly simpler and avoided delays on time sensitive issues.

There were zero downsides to the trust. I cannot think of a reason not to use one.
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Re: Estate planning advice for young parents in Massachusetts

Post by bsteiner » Mon Sep 18, 2017 8:42 am

afan wrote:
Sun Sep 17, 2017 6:54 pm
...
bsteiner wrote
There has been a good deal of discussion recently about several cases dealing with the extent to which trusts for children, and the income they produce or could produce, are taken into account in determining the amount of alimony and child support that the child will have to pay, or will be entitled to receive. I always say that one should assume that the child's trust will be taken into account for purposes of alimony and child support, and if it isn't, so much the better.
Can you elaborate? Often the questions I have seen here on bogleheads have revolved around the identity of the trustee. Are the assets more exposed if the beneficiary is trustee than if there is an independent trustee? Some have suggested that a truly independent trustee, a bank, for example, can provide more asset protection than a friend of the beneficiary and much more than if the beneficiary is the trustee.
It's hard to generalize from the cases. There have been three recent cases that have generated a good deal of discussion, Tannen in New Jersey, https://scholar.google.com/scholar_case ... s_sdt=6,33, Pfannensteih in Massachusetts, https://scholar.google.com/scholar_case ... s_sdt=6,33 and (on a related issue) Ferri v. Powell-Ferri in Connecticut, https://scholar.google.com/scholar_case ... s_sdt=6,33.

The typical approach is for the child to be a trustee together with a co-trustee, but for the child not to have any power over distributions.

To the extent that there has been a pattern of distributions, you should assume that the historical distributions will be considered as income in determining alimony and child support. If it isn't, so much the better.

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Re: Estate planning advice for young parents in Massachusetts

Post by afan » Mon Sep 18, 2017 9:10 am

Shouild those who value asset protection take solace in knowing that the Massachusetts Supreme Judicial Court reversed the lower courts in Pfannensteihl and restored some of the protection the trust was intended to confer?

Does the pattern of distributions, but not the identity of the trustee, not matter as long as the beneficiary does not have power over distributions? I thought some of the debate was over just how "independent" an independent trustee really was? For some of the cases, I thought, the court said that the trustee, although independent by form, was too much under the control of the beneficiary, hence not truly independent.
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Re: Estate planning advice for young parents in Massachusetts

Post by Buffetologist » Mon Sep 18, 2017 9:10 am

The typical approach is for the child to be a trustee together with a co-trustee, but for the child not to have any power over distributions.
Thanks bsteiner. That may well be exactly what the attorney recommended. Perhaps we had fears of unnecessarily making this more complex than it needed to be. Saving taxes I understand. Controlling assets from the grave is a concept that takes a little getting used to and just gut feeling turned us off. Perhaps we will revisit when one of our daughters gets engaged. We would certainly want to do this with their consent, and right now, they are too naive to have a well reasoned opinion. Fortunately, we're at an age where the odds of both of us dying in the next year is on the order of 1000:1.

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Re: Estate planning advice for young parents in Massachusetts

Post by FIREchief » Mon Sep 18, 2017 4:56 pm

Thanks for the thorough response afan.
It took some time to figure out whether the assets were enough to require probate. Since there was no reason to avoid getting appointed as personal representative, I went ahead and did it. The court did not ask whether there was a need to go through probate. It just issued the appointment.
I was of the understanding that appointment of a representative (i.e. issuing of letters of office) was an integral part of opening the probate estate, and that doing so obligated the appointee to satisfy all requirements of formal probate including:

inventory of assets
notification of creditors
provision of inventory and certain other formal legal documents to all beneficiaries
provision of a formal accounting to all beneficiaries
final appearance before the court to close the estate

I may have been mistaken or perhaps this varies by state. I have reviewed the formal "small estate affidavits" from two different states and in both cases use of this form/process to take possession of assets requires the affiant to certify that there has been no court appointment of a personal representative.
There was life insurance that I did not know about before death.

There were also savings bonds squirreled away that were not in the name of the trust.

We ultimately decided that the household goods did not add up to enough to matter for probate purposes.
I think this is a key issue for those who incorporate living trusts into their estate plans. Even with a pour over will, they still need to place as much as possible under ownership of the trust if they wish to avoid formal probate.
Retirement plans: Since I had the letters of administration I used them. I would have thought you are likely right about the beneficiaries claiming the benefits with involvement of the personal representative, but since I was PR I handled it. I think the retirement plans had beneficiaries named, but that may have been the trust or the estate. I don't remember. Since I was also trustee I handled this as PR or as Trustee.
This part confused me. If the retirement plan assets named beneficiaries, I don't understand what powers a PR would be able to exercise (other than gaining access to statements and tax information that might be necessary to properly complete the final tax return, the estate's tax return and perhaps a federal or state estate tax return).
In this case the probate process itself only created a problem at the very start when I was dealing directly with the office in the jurisdiction. That place was complete chaos. It took hours going back and forth at various sites to file the will. Also got a bunch of mutually contradictory, and according to the attorney I eventually hired wrong, advice from the clerks at the offices.

I believe that filing of the will is distinctly separate from the probate process. I have read the probate statutes for one major state and, in that case, anybody in possession of the will is required by law to file it with the court or face criminal charges of theft. After the will is filed, somebody else may petition the court to initiate probate and name the personal representative. That said, I think your comments reinforce the advantages of using a living trust to avoid probate entirely.
Although the house was in the name of the trust, the homeowners insurance was in the name of the individual. The insurance company would not talk to me about anything until I presented myself as PR. I had the same interaction with other insurance companies.
This was obviously an error by the decedent. I believe that most/all attorneys who create living trusts instruct the grantor(s) to immediately notify their insurance company. I have wondered about the mechanics of transferring auto and homeowners coverage upon death of the final named insured. With homeowners insurance, I guess the successor trustees could simply take out new policies listing current trustees of the irrevocable trust as named insured. I've read internet reports that suggest that transferring home ownership to a living trust, but failing to reference the trust on the homeowners policy, could result in a fire not being covered (since the named insured on the homeowners policy no longer own the house). I'm not sure if I believe that, especially if the named insured were the current trustees for the trust than now owns the home.
Having almost all the assets under the trust avoided dealing with gathering them under DPOA, which would have been impossible, or as PR after death. That meant things like estimated taxes and insurance premiums got paid on time. One of the beneficiaries needed some money, a continuation of payments that were being made before the death. As trustee I could continue those without interruption.

The living trust made managing the last few years of life far easier than it would have been otherwise. It made the post death arrangements easier as well but mainly simpler and avoided delays on time sensitive issues.

There were zero downsides to the trust. I cannot think of a reason not to use one.
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Re: Estate planning advice for young parents in Massachusetts

Post by afan » Tue Sep 19, 2017 2:37 pm

I don't pretend to know the probate laws in every state. In the one case for which I served as PR, there were three options- no probate at all, unsupervised and supervised. There were rules about whether one could avoid it altogether or be unsupervised. We did unsupervised. There were no requirements to file things with the court to close the estate.

We did do the notices so that creditors would have a chance to submit bills. We did not get anything other than the routine bills, utilities, etc. We did notify the heirs and submitted to the court the names of people who might have been beneficiaries, according to some rule about how closely related they were. Not all of them were beneficiaries. I don't remember whether we notified all of those people of the will. I did whatever the lawyer said to do.

There were definitely things I had to do because there was a will to handle some property that would not have been needed if everything were passing by trust. The documentation from the court even discussed this, a bit.

Regarding the retirement plans- the confusion is because I don't remember whether all the plans had named beneficiaries or the beneficiary was the estate. Even for things where they named the beneficiary, I had to make the arrangements to have the money distributed to the appropriate person.

There were some benefits that I am pretty sure the deceased did not realize would be coming, so had made no plans for them. They were therefore part of the estate.

The deceased had started out great with retitling things into the trust, but as time went by ran out of energy for that and everything else. I got involved rather late in the process and was able to help get into the trust everything I knew about. But for months thereafter mail would turn up with something else the deceased had owned, forgotten about, and left outside the trust. Trying to figure out when we had identified everything delayed getting the estate tax return filed, and something else turned up after the first version was submitted.

I don't know the rules for filing of wills- who has to do it, whether the PR should do it or someone else. As it stood, I was the only person who had it, so I filed it. Since no one else had the will, no one else could have filed it. I was also the only person who was going to initiate the probate. The beneficiaries were not able to do this.

After the death I was able to get a homeowner's policy on the house while it was on the market. Fortunately, it did not burn down between the time of the death and getting the policy. I don't know what would have happened if it had.

As it was, had that happened, I probably still could not have done everything without a lawyer. Much of the documentation the court provided was wrong. Forms on the website were outdated, instructions mutually contradictory. By bringing in a lawyer I got a paralegal who did this all day long. She knew exactly what forms, filled out how, how many copies, submitted where and so forth. "They told you to do what??? Ignore them. Sign these three copies, here, here, here and here. Send them back to me and I will make sure they go where they should". Perhaps the lawyer was telling her what to do, but it seemed to be perfectly routine, if you did it all the time.

It cost some money, but having the lawyer involved meant I knew everything was done right.

As you can see, there were a lot of loose ends because the deceased ran out of mental and physical stamina while getting things in order. Told me about much of it, but forgot about a number of things. It would have been different had the deceased gotten everything transferred at the time of writing the trust- at which point this person, although elderly, was sharp as a tack.

Spouse and I have had living trusts for decades. Originally set up as part of managing estate taxes under the older, lower, limits. But have kept them for all this time as the limits went up and down. No problem at all. The experience with this one estate, before death, made it clear just how valuable it was. People who say they don't want to deal with it now while they are healthy and clear headed don't realize the hassle they are creating for themselves and their families when they become incompetent and for the families and PR after death.
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Re: Estate planning advice for young parents in Massachusetts

Post by FIREchief » Tue Sep 19, 2017 3:29 pm

Thanks for the additional info afan.
There were definitely things I had to do because there was a will to handle some property that would not have been needed if everything were passing by trust. The documentation from the court even discussed this, a bit.
As I understand it, for states with an affidavit alternative to probate, as long as nobody petitions the court for appointment as PR there is no required documentation required by the court. This of course requires that the probate estate be worth less than some specified dollar amount(s). In my state, the most typical example is passing everything by trust with the exception of motor vehicles (which would be transferred via affidavit). I would be interested in hearing the options/pros/cons to listing a trust as sole owner or co-owner of a motor vehicle (including how insurance companies handle this).
Even for things where they named the beneficiary, I had to make the arrangements to have the money distributed to the appropriate person.
I'm going to ask my brokerage rep about this the next time we meet. It surprises me that a beneficiary couldn't show up at the brokerage with an account number and death certificate and "claim" the assets for which they are a designated beneficiary.
I was also the only person who was going to initiate the probate. The beneficiaries were not able to do this.
I've only thoroughly reviewed the statutes for one state, but in that case there is a hierarchy of people who can petition the court to be appointed as PR. Obviously, if a will has been filed with the court, and the will nominates an executor who meets the legal requirements, the court will issue letters of office to that person to serve as PR. If the nominated person renounces the appointment, or fails to petition the court within a defined time period, others can petition the court to be appointed PR. These range from surviving spouse, children who are beneficiaries, etc. down to a public administrator and finally creditors.
After the death I was able to get a homeowner's policy on the house while it was on the market. Fortunately, it did not burn down between the time of the death and getting the policy. I don't know what would have happened if it had.
That's good to hear. I would hope that state insurance laws would require an in force insurance policy to pay off, even if the named insured was deceased, for as long as the home were owned by the estate. Unfortunately, if the insurance lapsed, the house burned down and you were acting as PR; you might incur some personal liability.
As it was, had that happened, I probably still could not have done everything without a lawyer.

It cost some money, but having the lawyer involved meant I knew everything was done right.
I would never attempt something like serving as PR without the aid of a competent lawyer from day one.
Spouse and I have had living trusts for decades. Originally set up as part of managing estate taxes under the older, lower, limits. But have kept them for all this time as the limits went up and down. No problem at all. The experience with this one estate, before death, made it clear just how valuable it was. People who say they don't want to deal with it now while they are healthy and clear headed don't realize the hassle they are creating for themselves and their families when they become incompetent and for the families and PR after death.
:beer
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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