Massachusetts Estate Planning

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Topic Author
nun
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Joined: Wed Mar 12, 2008 9:51 pm

Massachusetts Estate Planning

Post by nun » Tue Mar 12, 2019 11:54 am

I'm in the nice position of being retired and pretty comfortable.
I've paid off the mortgage and the house is worth around $1M and I have another $2M in 401ks, IRAs, taxable accounts.
I live of rent from a downstairs apartment and a defined benefit pension so the size of my portfolio keeps growing.
I'm in my 50s and have a will and live in a state with a $1M estate tax threshold. I anticipate that before I
die I might be nudging the federal inheritance tax limits and as I'm already above my state estate tax limit I need to do some
estate planning to pass on money without paying vast amounts of estate tax.

So does anyone have practical advice of how to structure things. ie put the house and other things in trust, gift money etc
Last edited by nun on Thu Mar 14, 2019 11:56 am, edited 1 time in total.

jebmke
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Re: Estate Planning

Post by jebmke » Tue Mar 12, 2019 11:57 am

A well-qualified estate lawyer would probably have the best suggestions.
When you discover that you are riding a dead horse, the best strategy is to dismount.

2015
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Re: Estate Planning

Post by 2015 » Tue Mar 12, 2019 12:05 pm

jebmke wrote:
Tue Mar 12, 2019 11:57 am
A well-qualified estate lawyer would probably have the best suggestions.
+1
There is a difference in being frugal and being cheap. Being cheap is thinking I can "figure out" estate planning myself while hoping I'm not leaving any holes for my executor to have to clean up. I wouldn't attempt to "figure out" how to pull my own teeth, and I'm not going to attempt to "figure out" how to do estate planning from people on the internet.

Topic Author
nun
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Re: Estate Planning

Post by nun » Tue Mar 12, 2019 12:18 pm

2015 wrote:
Tue Mar 12, 2019 12:05 pm
jebmke wrote:
Tue Mar 12, 2019 11:57 am
A well-qualified estate lawyer would probably have the best suggestions.
+1
There is a difference in being frugal and being cheap. Being cheap is thinking I can "figure out" estate planning myself while hoping I'm not leaving any holes for my executor to have to clean up. I wouldn't attempt to "figure out" how to pull my own teeth, and I'm not going to attempt to "figure out" how to do estate planning from people on the internet.
I'll use a professional to set up trusts etc. I can gift money to my heirs before I die and to charities in my will. So I have an idea of some strategies, but I'd like to learn a bit more before I walk into a lawyers office so I know that I'm getting good advice. So I'm interested in what others have done so I don't make any big mistakes.

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bengal22
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Re: Estate Planning

Post by bengal22 » Tue Mar 12, 2019 12:23 pm

2015 wrote:
Tue Mar 12, 2019 12:05 pm
jebmke wrote:
Tue Mar 12, 2019 11:57 am
A well-qualified estate lawyer would probably have the best suggestions.
+1
There is a difference in being frugal and being cheap. Being cheap is thinking I can "figure out" estate planning myself while hoping I'm not leaving any holes for my executor to have to clean up. I wouldn't attempt to "figure out" how to pull my own teeth, and I'm not going to attempt to "figure out" how to do estate planning from people on the internet.
Equating estate planning and a medical procedure such as pulling teeth is proof positive how the legal industry has mystified estate planning and probate. Everyone's situation is different. Do a little research on your own before committing to a professional. I did my own estate planning and I am not cheap. A lawyer wanted $5000 to do my FIL probate so I filled out the 14 forms and did it myself. All 3 sisters got 1/3 of the estate minus $300 for court filings. I caution everyone that estate planning is not rocket surgery. Even if you do use a professional research fully so you are not given bad service.
"Earn All You Can; Give All You Can; Save All You Can." .... John Wesley

2015
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Re: Estate Planning

Post by 2015 » Tue Mar 12, 2019 12:36 pm

bengal22 wrote:
Tue Mar 12, 2019 12:23 pm
2015 wrote:
Tue Mar 12, 2019 12:05 pm
jebmke wrote:
Tue Mar 12, 2019 11:57 am
A well-qualified estate lawyer would probably have the best suggestions.
+1
There is a difference in being frugal and being cheap. Being cheap is thinking I can "figure out" estate planning myself while hoping I'm not leaving any holes for my executor to have to clean up. I wouldn't attempt to "figure out" how to pull my own teeth, and I'm not going to attempt to "figure out" how to do estate planning from people on the internet.
Equating estate planning and a medical procedure such as pulling teeth is proof positive how the legal industry has mystified estate planning and probate. Everyone's situation is different. Do a little research on your own before committing to a professional. I did my own estate planning and I am not cheap. A lawyer wanted $5000 to do my FIL probate so I filled out the 14 forms and did it myself. All 3 sisters got 1/3 of the estate minus $300 for court filings. I caution everyone that estate planning is not rocket surgery. Even if you do use a professional research fully so you are not given bad service.
Ugh.
I haven't done a little research on estate planning, I did massive research. Read the 500 page Nolo book twice, read the blogs, the links, the threads. I went the whole LegalZoom route. Even downloaded that worthless Willmaker. It wasn't a "mystery" but reality when the estate planning attorney I then visited to amend/restate my trust engaged in scenario planning with me pointing out things I could never have gotten off a post on BH.

I caution not to conflate familiarity with knowledge.

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NYCPete
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Re: Estate Planning

Post by NYCPete » Tue Mar 12, 2019 12:54 pm

nun wrote:
Tue Mar 12, 2019 11:54 am
I'm in the nice position of being retired and pretty comfortable.
I've paid off the mortgage and the house is worth around $1M and I have another $2M in 401ks, IRAs, taxable accounts.
I live of rent from a downstairs apartment and a defined benefit pension so the size of my portfolio keeps growing.
I'm in my 50s and have a will and live in a state with a $1M estate tax threshold. I anticipate that before I
die I might be nudging the federal inheritance tax limits and as I'm already above my state estate tax limit I need to do some
estate planning to pass on money without paying vast amounts of estate tax.

So does anyone have practical advice of how to structure things. ie put the house and other things in trust, gift money etc
If you want to leave everything to non-spouse heirs, then estate and inheritance taxes could come into play. If you want to leave everything to 501c3 charities, there won't be much complication needed. If you want some mix of the two, there's a wide spectrum of what may or may not be needed.

Tax avoidance is only a means to an end. What are your goals for the money, both before after you pass?

Best,
Peter
To the extent that a fool knows his foolishness, | He may be deemed wise | A fool who considers himself wise | Is indeed a fool. | | Buddha

CascadiaSoonish
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Re: Estate Planning

Post by CascadiaSoonish » Tue Mar 12, 2019 1:05 pm

Yeah, the danger here would be overlooking something that didn't come up when doing research, the 'you don't know what you don't know' issue. Personally, there are some things that I think are worth paying someone to do just to apply their expertise to a specific problem. I'll give an example: at this point our taxes have been consistent enough over the past few years that I could theoretically do them myself, but this year our CPA flagged an new issue with multi-state business income reporting (based on emerging requirements from states where we do business) that I never would have been aware of if I was just doing the stuff myself. That to me is worth the money.

NotWhoYouThink
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Re: Estate Planning

Post by NotWhoYouThink » Tue Mar 12, 2019 1:12 pm

Working with an estate lawyer and doing some online research about estate planning aren't mutually exclusive. I think it's a great idea to think through what you want to happen, which includes getting information about what others have done.

If you walk into the attorney's office with a blank slate, you are more likely to either get a boilerplate plan that doesn't really meet your needs, or pay high hourly rates for the attorney to educate you about things you could have thought through in advance. Neither would be a good outcome.

So as others have asked.....
What do you want to happen to your money after you are gone? How much do you want to give away now? How much do you want to protect it from fairly low-probability risks after you are gone?

Topic Author
nun
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Re: Estate Planning

Post by nun » Tue Mar 12, 2019 1:15 pm

I'm always surprised that estate planning questions get such limited answers. It's an area where many Bogleheads might need some help and personal knowledge helps when seeking professional help. I've just done some reading about state estate taxes and an easy solution to my problem would be to move to another state with a more generous estate tax threshold. So I think my plan will be to start gifting to my heirs and leave some to charities in my will as this will reduce the tax bill quite a bit for now and then if the money grows by a lot I'll sell up and move to another state.

Topic Author
nun
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Re: Estate Planning

Post by nun » Tue Mar 12, 2019 1:28 pm

NotWhoYouThink wrote:
Tue Mar 12, 2019 1:12 pm


So as others have asked.....
What do you want to happen to your money after you are gone? How much do you want to give away now? How much do you want to protect it from fairly low-probability risks after you are gone?
I have a will that leaves most of my estate to my 3 nieces and an old retirement plan to my ex-wife. I've also named a couple of charities. I think there may be better ways to give to the charities than just leaving them money in the will by using trusts or life insurance.....I'll probably need a professional for that, but I want to understand the startegies.

Two solutions would be to move to a state with a higher estate tax threshold or to get married and double the threshold....assuming that I don't marry someone in a similar situation to me that is.
Last edited by nun on Tue Mar 12, 2019 1:40 pm, edited 1 time in total.

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bengal22
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Re: Estate Planning

Post by bengal22 » Tue Mar 12, 2019 1:35 pm

2015 wrote:
Tue Mar 12, 2019 12:36 pm
bengal22 wrote:
Tue Mar 12, 2019 12:23 pm
2015 wrote:
Tue Mar 12, 2019 12:05 pm
jebmke wrote:
Tue Mar 12, 2019 11:57 am
A well-qualified estate lawyer would probably have the best suggestions.
+1
There is a difference in being frugal and being cheap. Being cheap is thinking I can "figure out" estate planning myself while hoping I'm not leaving any holes for my executor to have to clean up. I wouldn't attempt to "figure out" how to pull my own teeth, and I'm not going to attempt to "figure out" how to do estate planning from people on the internet.
Equating estate planning and a medical procedure such as pulling teeth is proof positive how the legal industry has mystified estate planning and probate. Everyone's situation is different. Do a little research on your own before committing to a professional. I did my own estate planning and I am not cheap. A lawyer wanted $5000 to do my FIL probate so I filled out the 14 forms and did it myself. All 3 sisters got 1/3 of the estate minus $300 for court filings. I caution everyone that estate planning is not rocket surgery. Even if you do use a professional research fully so you are not given bad service.
Ugh.
I haven't done a little research on estate planning, I did massive research. Read the 500 page Nolo book twice, read the blogs, the links, the threads. I went the whole LegalZoom route. Even downloaded that worthless Willmaker. It wasn't a "mystery" but reality when the estate planning attorney I then visited to amend/restate my trust engaged in scenario planning with me pointing out things I could never have gotten off a post on BH.

I caution not to conflate familiarity with knowledge.
Did not mean you personally I meant in general one should do a little research and make a decision based on personal situation. Just like you did. For me it was simple to handle a probate and do my own estate planning. Some people are nervous to even consider DIY.
"Earn All You Can; Give All You Can; Save All You Can." .... John Wesley

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celia
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Re: Estate Planning

Post by celia » Tue Mar 12, 2019 1:49 pm

The biggest benefit to doing your own research before you see a lawyer is becoming familiar with the terminology. You won't have to keep stopping the lawyer and ask "What's that mean?". You will also be able to respond to the lawyer's questions using the appropriate terminology.

The hardest part of estate planning is making the decisions. Like mentioned above, we don't commonly think about what would happen if all our successor trustees die before us or are unwilling to serve. We don't commonly think about our heirs dying before us. We don't commonly think about both spouses dying at the same time. But any of these things could happen and they have consequences on what will happen after you die.

Nun, If there's a chance you will hit the estate tax exemption in the future (currently $11M per person) and you will be leaving at least some of your estate to people, you should know that a dollar in a pre-tax account is counted the same as a dollar in a Roth account. But a beneficiary will be able to get more spending power from the Roth dollar. This is where Roth conversions can come in handy. Spend some of your taxable dollars while you are alive on "Roth conversion taxes". This can bring down the value of your estate while giving something more valuable to your heirs.
A dollar in Roth is worth more than a dollar in a taxable account. A dollar in taxable is worth more than a dollar in a tax-deferred account.

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NYCPete
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Re: Estate Planning

Post by NYCPete » Tue Mar 12, 2019 1:50 pm

nun wrote:
Tue Mar 12, 2019 1:15 pm
I'm always surprised that estate planning questions get such limited answers. It's an area where many Bogleheads might need some help and personal knowledge helps when seeking professional help.
Part of the reason for this is the kind of information that might be needed for decent estate planning answers is not generally provided on BH when people post about this topic, and it's not a topic of focus for the forum. The laws vary in every single state, and wills executed in one state may not be valid in another. There's 50 states with 50 sets of laws. In this instance, there's more than one state that has a $1MM threshold for the estate tax, so one can't even assume where you live.
nun wrote:
Tue Mar 12, 2019 1:15 pm
I've just done some reading about state estate taxes and an easy solution to my problem would be to move to another state with a more generous estate tax threshold. So I think my plan will be to start gifting to my heirs and leave some to charities in my will as this will reduce the tax bill quite a bit for now and then if the money grows by a lot I'll sell up and move to another state.
Here's some very general issues to think about(and even then it's wise to come up with your plan and run it by someone admitted/barred in your state):

-Estate plans only have one shot at being right, and you're not around to learn from mistakes.
-Keep your original will document in a safe place. Copies get challenged in probate, because they can't assume an original that is updated/newer doesn't exist.
-Trusts are rather pointless if you don't put your assets into them after creating them.
-Probate can be a breeze in some states, and a nightmare in others. Don't assume probate is a dirty word, (unless it is, in X state with X assets).
-Heirs get a stepped up basis when inheriting stock (and potentially other assets too).
-Certain accounts like 401k plans and life insurance policies are not bound by whatever is in a will. Double check your beneficiary designations and TOD instructions so they're in line with your will/trust docs. (but of course it doesn't mean these assets avoid estate/inheritance taxes...)
-If you leave your retirement accounts to non-spouse heirs, they'll pay income taxes when receiving the funds. If you leave those same retirement accounts to a charitable entity, that organization will receive the full value, due to being tax-exempt.
-Percentage gifts in your plans adjust with the size of your estate. Specific dollar gifts do not. If you name a person or entity to receive $500,000 and your estate has less than that in it, it doesn't mean they get the lesser amount. If you want "what if" clauses, you have to put them in there (or preferably get an attorney to do so).
-Most importantly, every single thing I've said is almost certain to have an exception that can be named.

Best,
Peter
To the extent that a fool knows his foolishness, | He may be deemed wise | A fool who considers himself wise | Is indeed a fool. | | Buddha

megabad
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Re: Estate Planning

Post by megabad » Tue Mar 12, 2019 5:44 pm

nun wrote:
Tue Mar 12, 2019 11:54 am
I'm in the nice position of being retired and pretty comfortable.
I've paid off the mortgage and the house is worth around $1M and I have another $2M in 401ks, IRAs, taxable accounts.
I live of rent from a downstairs apartment and a defined benefit pension so the size of my portfolio keeps growing.
I'm in my 50s and have a will and live in a state with a $1M estate tax threshold. I anticipate that before I
die I might be nudging the federal inheritance tax limits and as I'm already above my state estate tax limit I need to do some
estate planning to pass on money without paying vast amounts of estate tax.

So does anyone have practical advice of how to structure things. ie put the house and other things in trust, gift money etc
Unless you have an unusual family dynamic (divorces, blended families, etc), you seem to have a pretty standard situation (structurally). I would think a will (and medical directive, POA, etc) and properly listed beneficiaries would handle most everything. I wouldn't focus on the federal estate tax stuff until a lot closer to the big day...laws can change a lot over 30-40 years. If you get older and you know for sure you will be over the federal limit by a lot, you will want to address because that can be big money. State death taxes have never been a consideration for anyone in my family personally. Super rich people simply move before they die, no problem (unless you die early). It is amazing to me that those states haven't realized this.

jebmke
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Re: Estate Planning

Post by jebmke » Tue Mar 12, 2019 5:46 pm

megabad wrote:
Tue Mar 12, 2019 5:44 pm
Super rich people simply move before they die
How do they know when they are going to die?
When you discover that you are riding a dead horse, the best strategy is to dismount.

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Steelersfan
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Re: Estate Planning

Post by Steelersfan » Tue Mar 12, 2019 6:14 pm

NYCPete wrote:
Tue Mar 12, 2019 1:50 pm

-If you leave your retirement accounts to non-spouse heirs, they'll pay income taxes when receiving the funds. If you leave those same retirement accounts to a charitable entity, that organization will receive the full value, due to being tax-exempt.
Can you expand on your statement about income taxes when leaving retirement accounts to non-spouses?

It was not my understanding that they'd pay income taxes when they receive the funds, but would pay income taxes on the required distributions every year thereafter, based on their age.

In states with inheritance taxes they would pay that state tax, depending on the tax laws of the state.

megabad
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Re: Estate Planning

Post by megabad » Tue Mar 12, 2019 6:14 pm

jebmke wrote:
Tue Mar 12, 2019 5:46 pm
megabad wrote:
Tue Mar 12, 2019 5:44 pm
Super rich people simply move before they die
How do they know when they are going to die?
Well this is a bit like asking "How do you know 4% is a good rule to use for retirement withdrawals?" You don't, but you can certainly statistically estimate when you are approaching death based on historical data. In practice, what this looks like is that when old folks go into assisted living, they move to a state with no estate tax (and usually no income tax). I don't think states like TX, AZ, and FL are chosen for no reason by retirees.

Heck people do much more to avoid a small sales tax and death tax can be 16%+ in some states. I am only familiar with MA and it has a death tax cliff. If you have $999,999.99 cents you pay zero. If you have $1,000,000.01 you owe something like an extra [crapton] upon death. I love MA, but I will be living elsewhere once I hit 80s and 90s. Nothing personal.
Last edited by megabad on Tue Mar 12, 2019 6:57 pm, edited 4 times in total.

bluebolt
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Re: Estate Planning

Post by bluebolt » Tue Mar 12, 2019 6:33 pm

megabad wrote:
Tue Mar 12, 2019 6:14 pm
Well this is a bit like asking "How do you know 4% is a good rule to use for retirement withdrawals?" You don't, but you can certainly statistically estimate when you are approaching death based on historical data. In practice, what this looks like is that when old folks go into assisted living, they move to a state with no estate tax (and usually no income tax). I don't think states like TX, AZ, and FL are chosen for no reason by retirees.

Heck people do much more to avoid a small sales tax and death tax can be 16%+ in some states. I am only familiar with MA and it has a death tax cliff. If you have $999,999.99 cents you owe zero in taxes. If you have $1,000,000.01 you owe something like $27k upon death. I love MA, but I will be living elsewhere once I hit 80s and 90s. Nothing personal.
I'm guessing you'd have to pay me a lot more than $27K to get me to move when I'm in my 80s. :happy

Topic Author
nun
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Re: Estate Planning

Post by nun » Tue Mar 12, 2019 6:48 pm

I'm not worried about the federal estate taxes...$11M threshold is more than enough. But in MA the estate tax kicks in for a single tax payer at $1M. If I was to die today with my estate valued at around $2M then there would be a $200k MA state estate tax bill to pay. I'm already doing IRA to ROTH rollovers and I think I'll look at insurance as a way to pass on wealth tax free, but maybe the long term plan will be to hope I live a while longer and can move to NH when I'm 80.
Last edited by nun on Tue Mar 12, 2019 6:59 pm, edited 1 time in total.

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Sandtrap
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Re: Estate Planning

Post by Sandtrap » Tue Mar 12, 2019 6:51 pm

nun wrote:
Tue Mar 12, 2019 12:18 pm
2015 wrote:
Tue Mar 12, 2019 12:05 pm
jebmke wrote:
Tue Mar 12, 2019 11:57 am
A well-qualified estate lawyer would probably have the best suggestions.
+1
There is a difference in being frugal and being cheap. Being cheap is thinking I can "figure out" estate planning myself while hoping I'm not leaving any holes for my executor to have to clean up. I wouldn't attempt to "figure out" how to pull my own teeth, and I'm not going to attempt to "figure out" how to do estate planning from people on the internet.
I'll use a professional to set up trusts etc. I can gift money to my heirs before I die and to charities in my will. So I have an idea of some strategies, but I'd like to learn a bit more before I walk into a lawyers office so I know that I'm getting good advice. So I'm interested in what others have done so I don't make any big mistakes.
Make a list of things you have in mind.

Make initial appointments with various estate lawyers. (inquire if no charge for lst meeting)

Find one you can get along with and is able to meet your needs.

Much like financial advice, the more research you do beforehand, and the more you are able to define what you want, will help you know when you find the right person. . . .and the wrong one.
Wiki Bogleheads Wiki: Everything You Need to Know

Topic Author
nun
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Re: Estate Planning

Post by nun » Tue Mar 12, 2019 7:01 pm

Sandtrap wrote:
Tue Mar 12, 2019 6:51 pm
nun wrote:
Tue Mar 12, 2019 12:18 pm
2015 wrote:
Tue Mar 12, 2019 12:05 pm
jebmke wrote:
Tue Mar 12, 2019 11:57 am
A well-qualified estate lawyer would probably have the best suggestions.
+1
There is a difference in being frugal and being cheap. Being cheap is thinking I can "figure out" estate planning myself while hoping I'm not leaving any holes for my executor to have to clean up. I wouldn't attempt to "figure out" how to pull my own teeth, and I'm not going to attempt to "figure out" how to do estate planning from people on the internet.
I'll use a professional to set up trusts etc. I can gift money to my heirs before I die and to charities in my will. So I have an idea of some strategies, but I'd like to learn a bit more before I walk into a lawyers office so I know that I'm getting good advice. So I'm interested in what others have done so I don't make any big mistakes.
Make a list of things you have in mind.

Make initial appointments with various estate lawyers. (inquire if no charge for lst meeting)

Find one you can get along with and is able to meet your needs.

Much like financial advice, the more research you do beforehand, and the more you are able to define what you want, will help you know when you find the right person. . . .and the wrong one.
That's exactly what I'm doing. I have a few lawyers contact info, one did my house sale, a couple are from friends, but I want to see if this is worth it and get and idea of the things involved. There must be a few MA Bogleheads with >$1M estates that will be left to children/nieces

megabad
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Re: Estate Planning

Post by megabad » Tue Mar 12, 2019 7:05 pm

bluebolt wrote:
Tue Mar 12, 2019 6:33 pm
megabad wrote:
Tue Mar 12, 2019 6:14 pm
Well this is a bit like asking "How do you know 4% is a good rule to use for retirement withdrawals?" You don't, but you can certainly statistically estimate when you are approaching death based on historical data. In practice, what this looks like is that when old folks go into assisted living, they move to a state with no estate tax (and usually no income tax). I don't think states like TX, AZ, and FL are chosen for no reason by retirees.

Heck people do much more to avoid a small sales tax and death tax can be 16%+ in some states. I am only familiar with MA and it has a death tax cliff. If you have $999,999.99 cents you owe zero in taxes. If you have $1,000,000.01 you owe something like $27k upon death. I love MA, but I will be living elsewhere once I hit 80s and 90s. Nothing personal.
I'm guessing you'd have to pay me a lot more than $27K to get me to move when I'm in my 80s. :happy
Well maybe you get your wish of getting paid more. OP corrected me, that is just the $1 million bracket amount. You would also owe another $33,200. For a total of $60,800 for a $1m portfolio at death.

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Michael Patrick
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Re: Estate Planning

Post by Michael Patrick » Tue Mar 12, 2019 7:09 pm

Maybe statistically you have a certain life expectancy. But people die early with no warning, they have strokes or aneurysms, or they get hit by a bus.

Aren't I a ray of sunshine...
Last edited by Michael Patrick on Tue Mar 12, 2019 7:10 pm, edited 1 time in total.

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Sandtrap
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Re: Estate Planning

Post by Sandtrap » Tue Mar 12, 2019 7:09 pm

nun wrote:
Tue Mar 12, 2019 7:01 pm
Sandtrap wrote:
Tue Mar 12, 2019 6:51 pm
nun wrote:
Tue Mar 12, 2019 12:18 pm
2015 wrote:
Tue Mar 12, 2019 12:05 pm
jebmke wrote:
Tue Mar 12, 2019 11:57 am
A well-qualified estate lawyer would probably have the best suggestions.
+1
There is a difference in being frugal and being cheap. Being cheap is thinking I can "figure out" estate planning myself while hoping I'm not leaving any holes for my executor to have to clean up. I wouldn't attempt to "figure out" how to pull my own teeth, and I'm not going to attempt to "figure out" how to do estate planning from people on the internet.
I'll use a professional to set up trusts etc. I can gift money to my heirs before I die and to charities in my will. So I have an idea of some strategies, but I'd like to learn a bit more before I walk into a lawyers office so I know that I'm getting good advice. So I'm interested in what others have done so I don't make any big mistakes.
Make a list of things you have in mind.

Make initial appointments with various estate lawyers. (inquire if no charge for lst meeting)

Find one you can get along with and is able to meet your needs.

Much like financial advice, the more research you do beforehand, and the more you are able to define what you want, will help you know when you find the right person. . . .and the wrong one.
That's exactly what I'm doing. I have a few lawyers contact info, one did my house sale, a couple are from friends, but I want to see if this is worth it and get and idea of the things involved. There must be a few MA Bogleheads with >$1M estates that will be left to children/nieces
Yes.
Contact at least 3 "estate planning" lawyers. That is their speciality.
And/or law firms that specialize in this.
Interview.
Choose.

Good luck in your efforts.
j
Wiki Bogleheads Wiki: Everything You Need to Know

megabad
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Re: Estate Planning

Post by megabad » Tue Mar 12, 2019 7:14 pm

nun wrote:
Tue Mar 12, 2019 6:48 pm
I'm not worried about the federal estate taxes...$11M threshold is more than enough. But in MA the estate tax kicks in for a single tax payer at $1M. If I was to die today with my estate valued at around $2M then there would be a $200k MA state estate tax bill to pay. I'm already doing IRA to ROTH rollovers and I think I'll look at insurance as a way to pass on wealth tax free, but maybe the long term plan will be to hope I live a while longer and can move to NH when I'm 80.
I would make sure you gift away your $30k per year before considering an insurance policy if all you are worried about is the state death tax. This has been done in my family through 529s.

ps. MA marginal death tax rate much higher than I thought.

FBN2014
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Re: Estate Planning

Post by FBN2014 » Tue Mar 12, 2019 8:20 pm

nun wrote:
Tue Mar 12, 2019 6:48 pm
I'm not worried about the federal estate taxes...$11M threshold is more than enough. But in MA the estate tax kicks in for a single tax payer at $1M. If I was to die today with my estate valued at around $2M then there would be a $200k MA state estate tax bill to pay. I'm already doing IRA to ROTH rollovers and I think I'll look at insurance as a way to pass on wealth tax free, but maybe the long term plan will be to hope I live a while longer and can move to NH when I'm 80.
You mentioned that you would be gifting money to relatives. Are you aware that gifts get added back into the estate to calculate the MA estate tax? Since no one knows when death will occur, I would do your planning according to MA law and amend later if you move to NH. Message me if you want the names of several estate planning attorneys in MA that I have found to be very helpful.
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Steelersfan
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Re: Estate Planning

Post by Steelersfan » Tue Mar 12, 2019 8:27 pm

FBN2014 wrote:
Tue Mar 12, 2019 8:20 pm
Are you aware that gifts get added back into the estate to calculate the MA estate tax?
That's true, but only the amount in excess of $15,000 per year per recipient.

pascalwager
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Re: Estate Planning

Post by pascalwager » Wed Mar 13, 2019 2:12 am

I used Nolo for forms. I was able to connect my sole beneficiary to all of my possessions, but still a lot of work, time, and intermittent frustration. (My car would need to gather dust for 45 days before legally driveable.) Didn't even end up doing a will. My state helps avoid wills when practical.

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Re: Estate Planning

Post by pennywise » Wed Mar 13, 2019 6:55 am

2015 wrote:
Tue Mar 12, 2019 12:36 pm


I haven't done a little research on estate planning, I did massive research. Read the 500 page Nolo book twice, read the blogs, the links, the threads. I went the whole LegalZoom route. Even downloaded that worthless Willmaker. It wasn't a "mystery" but reality when the estate planning attorney I then visited to amend/restate my trust engaged in scenario planning with me pointing out things I could never have gotten off a post on BH.
Agree. We have dealt with 2 situations involving estate planning. A friend with a terminal illness left his estate to us, via a will that a lawyer friend drew up basically saying 'everything I have goes to Pennywise and Mr. Pennywise'. Then he died. And it was an almost 2-year long ordeal navigating probate and a slew of annoying little and not so little complexities. Example-he had a car and 2 motorcycles. They are ours now, right? Not so fast.....it required a court order to transfer title before we could then dispose of them. In our crowded court system that was several months of aggravation and more billable time for the lawyer to handle.

A year later as my widowed MIL clearly was heading down Dementia lane and picking up speed fast, I got her and her two sons to the same estate planning attorney that we worked with for the inheritance. He set up the estate docs including a trust, medical proxy, living will etc and explained and assisted in transferring assets as required. A few months later she broke her hip and went (permanently) into assisted living. It's been smooth sailing so far; within the trust her sons are able to manage her financial affairs to keep her safe and comfortable, and when the time comes there hopefully won't be any surprise complications or annoying administrative hoops to jump through.

Actionable conclusion: spend the few thousand it will cost to have a good estate planning attorney draw up all the docs and explain the plan. Then you can relax and forget about it. That's what we did after our life lesson in how not to do estate planning (NB, still miss our friend and would happily trade his estate for even a half hour with him in our backyard enjoying a beer and the wonderful conversations we always had).

bsteiner
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Re: Estate Planning

Post by bsteiner » Wed Mar 13, 2019 9:13 am

nun wrote:
Tue Mar 12, 2019 11:54 am
I'm in the nice position of being retired and pretty comfortable.
I've paid off the mortgage and the house is worth around $1M and I have another $2M in 401ks, IRAs, taxable accounts.
I live of rent from a downstairs apartment and a defined benefit pension so the size of my portfolio keeps growing.
I'm in my 50s and have a will and live in a state with a $1M estate tax threshold. I anticipate that before I
die I might be nudging the federal inheritance tax limits and as I'm already above my state estate tax limit I need to do some
estate planning to pass on money without paying vast amounts of estate tax.

So does anyone have practical advice of how to structure things. ie put the house and other things in trust, gift money etc
You won't be paying "vast" amounts of state estate tax. Your marginal state estate tax rate will probably be around 10%.

If you make gifts during your lifetime, you'll save state estate taxes, but you'll give up the basis step-up at death.
nun wrote:
Tue Mar 12, 2019 12:18 pm
...
I can gift money to my heirs before I die and to charities in my will. So I have an idea of some strategies, but I'd like to learn a bit more before I walk into a lawyers office so I know that I'm getting good advice. So I'm interested in what others have done so I don't make any big mistakes.
To the extent you want to provide for charity, you might leave retirement benefits to charity to the extent possible, since your other beneficiaries would have to pay tax on them when they take distributions.
bengal22 wrote:
Tue Mar 12, 2019 12:23 pm
...
Equating estate planning and a medical procedure such as pulling teeth is proof positive how the legal industry has mystified estate planning and probate. Everyone's situation is different. Do a little research on your own before committing to a professional. I did my own estate planning and I am not cheap. A lawyer wanted $5000 to do my FIL probate so I filled out the 14 forms and did it myself. All 3 sisters got 1/3 of the estate minus $300 for court filings. I caution everyone that estate planning is not rocket surgery. Even if you do use a professional research fully so you are not given bad service.
As your post illustrates, probating a Will is generally not particularly difficult. It's usually a matter of filing some forms together with the Will and a death certificate.
nun wrote:
Tue Mar 12, 2019 1:15 pm
I'm always surprised that estate planning questions get such limited answers. It's an area where many Bogleheads might need some help and personal knowledge helps when seeking professional help. I've just done some reading about state estate taxes and an easy solution to my problem would be to move to another state with a more generous estate tax threshold. So I think my plan will be to start gifting to my heirs and leave some to charities in my will as this will reduce the tax bill quite a bit for now and then if the money grows by a lot I'll sell up and move to another state.
Yes, making gifts (at the cost of giving up the basis step-up), providing for charity (first out of retirement benefits) and moving to another state that doesn't have a state estate tax would all reduce or avoid state estate taxes.

The more facts someone provides, the better the responses are likely to be.

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NYCPete
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Re: Estate Planning

Post by NYCPete » Wed Mar 13, 2019 9:33 am

Steelersfan wrote:
Tue Mar 12, 2019 6:14 pm
NYCPete wrote:
Tue Mar 12, 2019 1:50 pm

-If you leave your retirement accounts to non-spouse heirs, they'll pay income taxes when receiving the funds. If you leave those same retirement accounts to a charitable entity, that organization will receive the full value, due to being tax-exempt.
Can you expand on your statement about income taxes when leaving retirement accounts to non-spouses?

It was not my understanding that they'd pay income taxes when they receive the funds, but would pay income taxes on the required distributions every year thereafter, based on their age.

In states with inheritance taxes they would pay that state tax, depending on the tax laws of the state.
I’m referring to the income taxes owed on distributions after the Inherited IRA is under their control (in whatever form that means, based on a variety of circumstances). If there are inheritances taxes at play, they are a separate factor.

RMDs from inherited IRAs are not based on your age, necessarily. There are multiple possible situations based on a variety of circumstances with the deceased (age at death, married or single, etc.). The decision is not always intuitive.

A related note: I can’t find the particular study showing this data at the moment, but in reality and practice, a significant majority of those who inherit IRAs do not make them “stretch IRAs” based on your life expectancy. Instead they take a lump sum or 5 year distribution. This study goes on to say that the evidence of actual IRA accounts suggests most inherited IRAs in these situations are empty within less than 5 years. In other words, one might plan for your beneficiaries to stretch their IRAs to minimize taxes, but that doesn't mean that's what they'll do. Not everyone's a Boglehead...

Best,
Peter

P.S. Inherited IRAs are a great example of why it's so tricky to give "general" estate planning advice on Bogleheads. There are so many rules based on so many different factors.
To the extent that a fool knows his foolishness, | He may be deemed wise | A fool who considers himself wise | Is indeed a fool. | | Buddha

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Steelersfan
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Re: Estate Planning

Post by Steelersfan » Wed Mar 13, 2019 9:48 am

NYCPete wrote:
Wed Mar 13, 2019 9:33 am

I’m referring to the income taxes owed on distributions after the Inherited IRA is under their control (in whatever form that means, based on a variety of circumstances). If there are inheritances taxes at play, they are a separate factor.

RMDs from inherited IRAs are not based on your age, necessarily. There are multiple possible situations based on a variety of circumstances with the deceased (age at death, married or single, etc.). The decision is not always intuitive.

A related note: I can’t find the particular study showing this data at the moment, but in reality and practice, a significant majority of those who inherit IRAs do not make them “stretch IRAs” based on your life expectancy. Instead they take a lump sum or 5 year distribution. This study goes on to say that the evidence of actual IRA accounts suggests most inherited IRAs in these situations are empty within less than 5 years. In other words, one might plan for your beneficiaries to stretch their IRAs to minimize taxes, but that doesn't mean that's what they'll do. Not everyone's a Boglehead...

Best,
Peter

P.S. Inherited IRAs are a great example of why it's so tricky to give "general" estate planning advice on Bogleheads. There are so many rules based on so many different factors.
Thanks for the clarification. That is my understanding as well.

I also agree that estate planning is not a particularly topic to get advice on at any forum, even one as good as Bogleheads.

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Re: Estate Planning

Post by bayview » Wed Mar 13, 2019 9:53 am

nun wrote:
Tue Mar 12, 2019 7:01 pm

< snipped multiple quotes >

That's exactly what I'm doing. I have a few lawyers contact info, one did my house sale, a couple are from friends, but I want to see if this is worth it and get and idea of the things involved. There must be a few MA Bogleheads with >$1M estates that will be left to children/nieces
I'd suggest editing your thread title to include "in Massachusetts" or some such. You might get more specific and useful replies. :happy
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WoodSpinner
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Re: Estate Planning

Post by WoodSpinner » Wed Mar 13, 2019 10:13 am

2015 wrote:
Tue Mar 12, 2019 12:36 pm
bengal22 wrote:
Tue Mar 12, 2019 12:23 pm
2015 wrote:
Tue Mar 12, 2019 12:05 pm
jebmke wrote:
Tue Mar 12, 2019 11:57 am
A well-qualified estate lawyer would probably have the best suggestions.
+1
There is a difference in being frugal and being cheap. Being cheap is thinking I can "figure out" estate planning myself while hoping I'm not leaving any holes for my executor to have to clean up. I wouldn't attempt to "figure out" how to pull my own teeth, and I'm not going to attempt to "figure out" how to do estate planning from people on the internet.
Equating estate planning and a medical procedure such as pulling teeth is proof positive how the legal industry has mystified estate planning and probate. Everyone's situation is different. Do a little research on your own before committing to a professional. I did my own estate planning and I am not cheap. A lawyer wanted $5000 to do my FIL probate so I filled out the 14 forms and did it myself. All 3 sisters got 1/3 of the estate minus $300 for court filings. I caution everyone that estate planning is not rocket surgery. Even if you do use a professional research fully so you are not given bad service.
Ugh.
I haven't done a little research on estate planning, I did massive research. Read the 500 page Nolo book twice, read the blogs, the links, the threads. I went the whole LegalZoom route. Even downloaded that worthless Willmaker. It wasn't a "mystery" but reality when the estate planning attorney I then visited to amend/restate my trust engaged in scenario planning with me pointing out things I could never have gotten off a post on BH.

I caution not to conflate familiarity with knowledge.
What was the problem with Willmaker?

bsteiner
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Re: Estate Planning

Post by bsteiner » Wed Mar 13, 2019 10:17 am

bayview wrote:
Wed Mar 13, 2019 9:53 am
nun wrote:
Tue Mar 12, 2019 7:01 pm

< snipped multiple quotes >

That's exactly what I'm doing. I have a few lawyers contact info, one did my house sale, a couple are from friends, but I want to see if this is worth it and get and idea of the things involved. There must be a few MA Bogleheads with >$1M estates that will be left to children/nieces
I'd suggest editing your thread title to include "in Massachusetts" or some such. You might get more specific and useful replies. :happy
Agreed. The more facts that are presented, the better the responses are likely to be.

Oregon is the only other state besides Massachusetts that has a state estate tax with a $1 million exempt amount. But there may be other state-specific issues for which it's helpful to know the state.

fittan
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Re: Estate Planning

Post by fittan » Wed Mar 13, 2019 11:23 am

I live in MA and have been researching extensively about wills and trusts. I called up several law firm that specialized in Estate Planning and the price quote I received ranges from $2500 to $3500. This is for 2 wills, 1 revocable trust and health care proxies, etc.

I really want to use a professional and be "set and done" but the cost seems high. I am really tempted to use WillMaker (which will guide thru setting up wills and trust).

Somehow I feel confident I can do everything myself. I know exactly who my guardian, executor and trustee will be. My main asset is the house which I can simply pay a real estate attorney to retitle into trust for $400. For checking and savings, it is as easy as walking into bank with trust and asking them to add a "signature card". For 401K and IRA, it is just to change the beneficiaries to the trust. For term life, I need to contact insurer to change beneficiaries also to trust. These are probably 90% of my assets. Also my family structure is simple, wife with 2 kids. No previous marriage, no siblings or parents to contest anything.

Fellow BH, please advice....should I bite the bullet and spend the $3500 or DIY ?

DrGoogle2017
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Re: Estate Planning

Post by DrGoogle2017 » Wed Mar 13, 2019 11:29 am

What about life insurance. I still have mine, life insurance proceeds will go tax free to my spouse or my kids. Premium is still reasonable.

DrGoogle2017
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Re: Estate Planning

Post by DrGoogle2017 » Wed Mar 13, 2019 11:30 am

fittan wrote:
Wed Mar 13, 2019 11:23 am
I live in MA and have been researching extensively about wills and trusts. I called up several law firm that specialized in Estate Planning and the price quote I received ranges from $2500 to $3500. This is for 2 wills, 1 revocable trust and health care proxies, etc.

I really want to use a professional and be "set and done" but the cost seems high. I am really tempted to use WillMaker (which will guide thru setting up wills and trust).

Somehow I feel confident I can do everything myself. I know exactly who my guardian, executor and trustee will be. My main asset is the house which I can simply pay a real estate attorney to retitle into trust for $400. For checking and savings, it is as easy as walking into bank with trust and asking them to add a "signature card". For 401K and IRA, it is just to change the beneficiaries to the trust. For term life, I need to contact insurer to change beneficiaries also to trust. These are probably 90% of my assets. Also my family structure is simple, wife with 2 kids. No previous marriage, no siblings or parents to contest anything.

Fellow BH, please advice....should I bite the bullet and spend the $3500 or DIY ?
Why do you have to change life insurance to trust. I only have real estate properties go to trust. Everything else goes to beneficiaries.

senex
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Re: Estate Planning

Post by senex » Wed Mar 13, 2019 11:57 am

nun wrote:
Tue Mar 12, 2019 1:15 pm
I'm always surprised that estate planning questions get such limited answers.
Agree. Half of attorneys are worse than median. Terse responses to "see a good lawyer" assume you can identify & efficiently utilize such a lawyer without knowing anything about the topic & vocabulary.

I see two issues:
(1) current assets will trigger MA estate tax
(2) future savings/growth may trigger federal estate tax

(By the way, I disagree with claims that "tax minimization" must be secondary to other "real" goals. It is fine for tax minimization to be your #1 goal if, say, you feel your tax dollars would help the govt wage wars, create a police state, infringe civil liberties, or carry out other policies you may oppose).

Tactics specific to MA include moving out of MA or reading the MA estate tax doc/forms to understand the rates & exemptions.

Tactics to reduce your current assets include:
- gifts to individuals - under federal rules, you can do all of the following with zero gift-tax filing/tracking (not sure how MA treats these): give $15k/year to an individual (can give to minors via UTMA or 529 plans); directly pay unlimited amounts of medical or education expenses for an individual
- spend money on yourself
- give to charity: outright, or via CRT (charitable remainder trust)
- buy life insurance - if you setup the proper insurance trust, the payout can be outside your federal estate (not sure about MA). Note: the opacity of life insurance & its attendant uncertainties (hidden fees, the affect of your lifespan on the ratio of premiums paid to benefit collected) make it hard to analyze, so tread very carefully

Tactics to reduce future growth of your estate include:
- move money now into an irrevocable trust - this will "use" some of your estate exemption, but then the future growth occurs outside your estate. Something called an IDGT allows you to pay the trust's income taxes, which further reduces your estate.
- use a GRAT, GRIT, etc - these allow you to lend money to a trust, earning a relatively low return for yourself, but allowing the trust to invest in high-return assets; thus the growth occurs in the trust instead of in your estate


Those lists aren't exhaustive or recommended -- I'm not an attorney; they are just a few starting topics you could begin to research. Reading a law school textbook can help, especially with basic principles and terminology. I believe bsteiner once recommended Gerry Beyer's "Wills, Trusts, and Estates" -- I found a cheap copy on Ebay and I found it helpful for learning the framework & terminology, even though large parts of it I skipped as being too detailed or irrelevant to me.

Some tactics have substantial costs & benefits. For instance, a trust managed by a professional trustee+advisor could cost more cumulatively (in fees & expenses) than just paying the estate tax (especially if you own appreciated stock). I agree with many users that it's prudent to discuss your specific case with an attorney and use an attorney to draft any significant docs. The more you know ahead of time, the better -- especially because not all attorneys are bogleheads, so even a good attorney may think that paying 1%+ trust fees is not a downside (or not worth mentioning). The more you know, the better. Best wishes.

bsteiner
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Re: Estate Planning

Post by bsteiner » Wed Mar 13, 2019 1:11 pm

fittan wrote:
Wed Mar 13, 2019 11:23 am
I live in MA and have been researching extensively about wills and trusts. I called up several law firm that specialized in Estate Planning and the price quote I received ranges from $2500 to $3500. This is for 2 wills, 1 revocable trust and health care proxies, etc.
...
You may not need the revocable trust. They were common in Massachusetts at one time when the probate procedures were more complicated, and trusts under a Will had to file periodic accountings with the court. However, in 2012, Massachusetts adopted the Uniform Probate Code, which simplified the probate procedures, and the Uniform Trust Code, which eliminated the requirement for trusts to file periodic accountings with the court.

This may not reduce the cost, since a lawyer familiar with these changes might have a higher billing rate than one who isn't.
senex wrote:
Wed Mar 13, 2019 11:57 am
...
Tactics to reduce your current assets include:
- gifts to individuals - under federal rules, you can do all of the following with zero gift-tax filing/tracking (not sure how MA treats these): give $15k/year to an individual (can give to minors via UTMA or 529 plans); directly pay unlimited amounts of medical or education expenses for an individual
...
- buy life insurance - if you setup the proper insurance trust, the payout can be outside your federal estate (not sure about MA). Note: the opacity of life insurance & its attendant uncertainties (hidden fees, the affect of your lifespan on the ratio of premiums paid to benefit collected) make it hard to analyze, so tread very carefully

Tactics to reduce future growth of your estate include:
- move money now into an irrevocable trust ...

Those lists aren't exhaustive or recommended -- I'm not an attorney; they are just a few starting topics you could begin to research. Reading a law school textbook can help, especially with basic principles and terminology. I believe bsteiner once recommended Gerry Beyer's "Wills, Trusts, and Estates" -- I found a cheap copy on Ebay and I found it helpful for learning the framework & terminology, even though large parts of it I skipped as being too detailed or irrelevant to me.
...
Gifts will reduce the state estate tax, but at the cost of giving up the basis step-up. Since the original poster's marginal state estate tax rate is about 10%, it may not make sense to make gifts for this purpose.

If you create a trust and instead of the trustees investing the contributions in life insurance, the trustees invest in other assets, depending on how long you live, your beneficiaries may be better off.

The original poster is in his 50s and has about $3 million. The beneficiaries are nieces and nephews and charity. Depending on how much will go to charity, the state estate tax will be about a couple of hundred thousand dollars or less. It's hard to see how doing anything complicated makes sense. A simple plan would be to leave some or all of the retirement benefits to charity and the rest of the retirement benefits (if any) to or in trust for the nieces and nephews, and the other assets to or in trust for the nieces and nephews.

2015
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Re: Estate Planning

Post by 2015 » Wed Mar 13, 2019 1:51 pm

WoodSpinner wrote:
Wed Mar 13, 2019 10:13 am
2015 wrote:
Tue Mar 12, 2019 12:36 pm
bengal22 wrote:
Tue Mar 12, 2019 12:23 pm
2015 wrote:
Tue Mar 12, 2019 12:05 pm
jebmke wrote:
Tue Mar 12, 2019 11:57 am
A well-qualified estate lawyer would probably have the best suggestions.
+1
There is a difference in being frugal and being cheap. Being cheap is thinking I can "figure out" estate planning myself while hoping I'm not leaving any holes for my executor to have to clean up. I wouldn't attempt to "figure out" how to pull my own teeth, and I'm not going to attempt to "figure out" how to do estate planning from people on the internet.
Equating estate planning and a medical procedure such as pulling teeth is proof positive how the legal industry has mystified estate planning and probate. Everyone's situation is different. Do a little research on your own before committing to a professional. I did my own estate planning and I am not cheap. A lawyer wanted $5000 to do my FIL probate so I filled out the 14 forms and did it myself. All 3 sisters got 1/3 of the estate minus $300 for court filings. I caution everyone that estate planning is not rocket surgery. Even if you do use a professional research fully so you are not given bad service.
Ugh.
I haven't done a little research on estate planning, I did massive research. Read the 500 page Nolo book twice, read the blogs, the links, the threads. I went the whole LegalZoom route. Even downloaded that worthless Willmaker. It wasn't a "mystery" but reality when the estate planning attorney I then visited to amend/restate my trust engaged in scenario planning with me pointing out things I could never have gotten off a post on BH.

I caution not to conflate familiarity with knowledge.
What was the problem with Willmaker?
I wanted to amend a trust and the process with Willmaker was convoluted and even misrepresented to me the the Nolo rep prior to my buying. In their defense, the rep at LegalZoom did the same thing. I will say I liked the LZ interface infinitely better than that of Willmaker.
I found Willmaker about as user friendly as a frisbee on a door knob.

I am very pleased I am using an attorney to amend the trust. I will say doing the massive due diligence and reading in preparing the original trust in LZ helped greatly in my understanding when meeting with the attorney this time.

senex
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Re: Estate Planning

Post by senex » Wed Mar 13, 2019 2:33 pm

fittan wrote:
Wed Mar 13, 2019 11:23 am
I live in MA and have been researching extensively about wills and trusts. I called up several law firm that specialized in Estate Planning and the price quote I received ranges from $2500 to $3500. This is for 2 wills, 1 revocable trust and health care proxies, etc.
That is the price range I've heard from friends in larger metro areas.

Note that some states have statutory health care proxy documents available for free download (not sure about MA). I'm not sure if bsteiner knows any nuances/caveats about those, but I always assumed that a statutory form is going to be pretty legally solid & appropriate for common cases.
bsteiner wrote:
Wed Mar 13, 2019 1:11 pm
Gifts will reduce the state estate tax, but at the cost of giving up the basis step-up. Since the original poster's marginal state estate tax rate is about 10%, it may not make sense to make gifts for this purpose.

If you create a trust and instead of the trustees investing the contributions in life insurance, the trustees invest in other assets, depending on how long you live, your beneficiaries may be better off.

The original poster is in his 50s and has about $3 million. The beneficiaries are nieces and nephews and charity. Depending on how much will go to charity, the state estate tax will be about a couple of hundred thousand dollars or less. It's hard to see how doing anything complicated makes sense. A simple plan would be to leave some or all of the retirement benefits to charity and the rest of the retirement benefits (if any) to or in trust for the nieces and nephews, and the other assets to or in trust for the nieces and nephews.
Yes, thank you for saying that. I think I mentioned most of those caveats in my last paragraph. I like the simple route personally (3 fund portfolio, pay estate tax, get step-up basis).

I mentioned those tactics because when I was new to this topic, I would hear rumors of such things and I felt I was missing out on something important, some kind of secret advanced techniques that "rich people use." By giving him names that he can google, I was giving him a chance to understand the contours of the whole space (including the stuff with unsuitable costs/complexity given the size of his estate -- because some attorneys may try to push him into such stuff, so it's good for him to read about it & its downsides ahead of time).

I appreciate all the knowledge you've poured into this forum. I started as a boglehead in legal matters (do it all yourself, Nolo Press etc) and your posts have both (a) increased my own knowledge and (b) illuminated the areas in which I should use professional counsel. Much thanks, bsteiner.

Topic Author
nun
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Re: Estate Planning

Post by nun » Thu Mar 14, 2019 12:12 pm

FBN2014 wrote:
Tue Mar 12, 2019 8:20 pm
nun wrote:
Tue Mar 12, 2019 6:48 pm
I'm not worried about the federal estate taxes...$11M threshold is more than enough. But in MA the estate tax kicks in for a single tax payer at $1M. If I was to die today with my estate valued at around $2M then there would be a $200k MA state estate tax bill to pay. I'm already doing IRA to ROTH rollovers and I think I'll look at insurance as a way to pass on wealth tax free, but maybe the long term plan will be to hope I live a while longer and can move to NH when I'm 80.
You mentioned that you would be gifting money to relatives. Are you aware that gifts get added back into the estate to calculate the MA estate tax? Since no one knows when death will occur, I would do your planning according to MA law and amend later if you move to NH. Message me if you want the names of several estate planning attorneys in MA that I have found to be very helpful.
If I keep the gifts below $15k/year/person there won't be any tax issues and they won't get added back into the estate when I die. Doing this is really very similar to putting money into a life insurance policy inside an irrevocable trust with multiple beneficiaries as far as reducing the value of the estate...the difference is it's simpler just to gift the money and the beneficiaries get the money immediately. Because I'm not married the usual spousal trust strategy that can shelter $2M from MA estate tax isn't an option for me. I could put my house into an irrevocable trust and that would take a lot out of the estate and also any capital gain would not be included. But I'd have to make sure I outlived the term of the trust and then pay rent after that.

The bottom line for me is gifting money or doing something with an irrevocable trust....or moving to NH. As the house is appreciating and I'm not touching any of my retirement or taxable accounts and I'm 57 I expect my estate to increase substantially in value, but probably not get up to the Federal Estate Tax level. So I think just gifting to family members and then having an optimistic plan to move out of MA when I'm quite a bit older is what I'll do.

Jack FFR1846
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Re: Massachusetts Estate Planning

Post by Jack FFR1846 » Thu Mar 14, 2019 12:31 pm

A perfectly reasonable strategy is to maybe be a bit less frugal. Don't be afraid to spend some money on yourself. My mom's financial guy (yah, I know) reminded her of the $1M point and said that if she wanted to avoid her estate being taxed, she needed to spend some money. I helped her buy herself a new car (she mentioned that she could buy a Maserati.....she bought a Subaru) and helped with my son's tuition at college, paying the college directly (thus going around the $15k/yr limit). She's doing similar things for my sister. Not only is this ease her mind (she hates paying taxes), both my sister and I are getting help when we can use it.
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janezoey
Posts: 30
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Re: Estate Planning

Post by janezoey » Thu Mar 14, 2019 12:40 pm

nun wrote:
Tue Mar 12, 2019 12:18 pm
2015 wrote:
Tue Mar 12, 2019 12:05 pm
jebmke wrote:
Tue Mar 12, 2019 11:57 am
A well-qualified estate lawyer would probably have the best suggestions.
+1
There is a difference in being frugal and being cheap. Being cheap is thinking I can "figure out" estate planning myself while hoping I'm not leaving any holes for my executor to have to clean up. I wouldn't attempt to "figure out" how to pull my own teeth, and I'm not going to attempt to "figure out" how to do estate planning from people on the internet.
I'll use a professional to set up trusts etc. I can gift money to my heirs before I die and to charities in my will. So I have an idea of some strategies, but I'd like to learn a bit more before I walk into a lawyers office so I know that I'm getting good advice. So I'm interested in what others have done so I don't make any big mistakes.
Do you have a spouse or life insurance, or do you or your spouse expect to use Medicaid one day if all your resources are exhausted?

In MA, usually, a married couple will create trusts so that if one dies before the other, then the $1 million exemption will be protected by the trust. That means when the second person passes away, he or she can carry over an additional $1 million exemption. Therefore, the heirs will inherit $2 million tax-free. You can also create an ILIT to remove $1 million of insurance proceeds from your estate, but there's a waiting period before that can take effect if you already have life insurance. Then there's a couple of other things you can do to your house to protect it from the Medicaid lookback period, but at that point, you might also have to look into elder care law.

My spouse is an attorney but it's not his area of practice. So we paid $6,000 to have everything done in one fell swoop (e.g. medical directives, assigning guardians for our children). We're in our 30s. We should at least have a decade or two before we have to update our estate planning again. The attorney will ask you to list all your assets in a worksheet, and from there will give you options on how you can legally shield your assets from estate taxes. We talked to a couple of attorneys before we settle on one and they both basically said the same thing. We have substantial assets and theoretically large insurance proceeds but opted not to do an ILIT or put our house into a trust. We just did the two spousal trusts and some other smaller ones to take care of our elderly parents. We've also moved money into 529 plans because they are considered gifts and not taxed as part of an estate in MA.
Last edited by janezoey on Thu Mar 14, 2019 1:04 pm, edited 1 time in total.

Topic Author
nun
Posts: 223
Joined: Wed Mar 12, 2008 9:51 pm

Re: Estate Planning

Post by nun » Thu Mar 14, 2019 12:56 pm

janezoey wrote:
Thu Mar 14, 2019 12:40 pm
nun wrote:
Tue Mar 12, 2019 12:18 pm
2015 wrote:
Tue Mar 12, 2019 12:05 pm
jebmke wrote:
Tue Mar 12, 2019 11:57 am
A well-qualified estate lawyer would probably have the best suggestions.
+1
There is a difference in being frugal and being cheap. Being cheap is thinking I can "figure out" estate planning myself while hoping I'm not leaving any holes for my executor to have to clean up. I wouldn't attempt to "figure out" how to pull my own teeth, and I'm not going to attempt to "figure out" how to do estate planning from people on the internet.
I'll use a professional to set up trusts etc. I can gift money to my heirs before I die and to charities in my will. So I have an idea of some strategies, but I'd like to learn a bit more before I walk into a lawyers office so I know that I'm getting good advice. So I'm interested in what others have done so I don't make any big mistakes.
Do you have a spouse or life insurance, or do you or your spouse expect to use Medicaid one day if all your resources are exhausted?

In MA, usually, a married couple will create trusts so that if one dies before the other, then the $1 million exemption will be protected by the trust. When the second person passes away, he/she uses a $1 million exemption in another trust, and then the heirs will inherit $2 million tax-free. You can also create an ILIT to remove $1 million of insurance proceeds from your estate, but there's a waiting period before that can take effect if you already have life insurance. Then there's a couple of other things you can do to your house to protect it from the Medicaid lookback period, but at that point, you might also have to look into elder care law.

My spouse is an attorney but it's not his area of practice. So we paid $6,000 to have everything done in one fell swoop (e.g. medical directives, assigning guardians for our children). We're in our 30s. We should at least have a decade or two before we have to update our estate planning again. The attorney will ask you to list all your assets in a worksheet, and from there will give you options on how you can legally shield your assets from estate taxes. We talked to a couple of attorneys before we settle on one and they both basically said the same thing. We have substantial assets and theoretically large insurance proceeds but opted not to do an ILIT or put our house into a trust. We just did the two spousal trusts and some other smaller ones to take care of our elderly parents. We've also moved money into 529 plans because they are considered gifts and not taxed as part of an estate in MA.
I'm single so don't get to use the spouse trust strategy. I have just $50k of life insurance as I have no dependents and it is the minimum that comes with my retirement plan. I don't plan on using Medicaid as I have very good health insurance and also long term care insurance.

I hate the idea of just spending for it's own sake but between my brothers and their wives, nieces and their husbands and their kids there are around 20 individuals so I could gift $300k/year, of course that would be dangerous for my own finances right now. So rather than getting involved with irrevocable trusts and life insurance etc I think the best option is to do some sensible gifting now, spend a bit more on myself and hope that I see the end coming in enough time to move to NH and also to do larger gifts and also to leave quite a bit to charity.
Last edited by nun on Thu Mar 14, 2019 1:09 pm, edited 2 times in total.

fittan
Posts: 217
Joined: Wed Mar 30, 2016 1:58 pm

Re: Estate Planning

Post by fittan » Thu Mar 14, 2019 1:01 pm

janezoey wrote:
Thu Mar 14, 2019 12:40 pm
nun wrote:
Tue Mar 12, 2019 12:18 pm
2015 wrote:
Tue Mar 12, 2019 12:05 pm
jebmke wrote:
Tue Mar 12, 2019 11:57 am
A well-qualified estate lawyer would probably have the best suggestions.
+1
There is a difference in being frugal and being cheap. Being cheap is thinking I can "figure out" estate planning myself while hoping I'm not leaving any holes for my executor to have to clean up. I wouldn't attempt to "figure out" how to pull my own teeth, and I'm not going to attempt to "figure out" how to do estate planning from people on the internet.
I'll use a professional to set up trusts etc. I can gift money to my heirs before I die and to charities in my will. So I have an idea of some strategies, but I'd like to learn a bit more before I walk into a lawyers office so I know that I'm getting good advice. So I'm interested in what others have done so I don't make any big mistakes.
Do you have a spouse or life insurance, or do you or your spouse expect to use Medicaid one day if all your resources are exhausted?

In MA, usually, a married couple will create trusts so that if one dies before the other, then the $1 million exemption will be protected by the trust. When the second person passes away, he/she uses a $1 million exemption in another trust, and then the heirs will inherit $2 million tax-free. You can also create an ILIT to remove $1 million of insurance proceeds from your estate, but there's a waiting period before that can take effect if you already have life insurance. Then there's a couple of other things you can do to your house to protect it from the Medicaid lookback period, but at that point, you might also have to look into elder care law.

My spouse is an attorney but it's not his area of practice. So we paid $6,000 to have everything done in one fell swoop (e.g. medical directives, assigning guardians for our children). We're in our 30s. We should at least have a decade or two before we have to update our estate planning again. The attorney will ask you to list all your assets in a worksheet, and from there will give you options on how you can legally shield your assets from estate taxes. We talked to a couple of attorneys before we settle on one and they both basically said the same thing. We have substantial assets and theoretically large insurance proceeds but opted not to do an ILIT or put our house into a trust. We just did the two spousal trusts and some other smaller ones to take care of our elderly parents. We've also moved money into 529 plans because they are considered gifts and not taxed as part of an estate in MA.
I think you're referring to the AB trust (self padding my back as I am talking like lawyer) :) Yes with the AB trust or "2 trust" setup, you can effectively double the MA estate tax to $2 million. I learned about this 2 days ago. That said, it is a lot of pain because you need to separate ALL your assets into 1/2 in advance. And honestly I have no idea what this entails. Say for a house, does it mean when I retitle (to put it in trust) to make sure both wife and my name are listed? Does this "split" the house in 1/2?

User avatar
TomatoTomahto
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Joined: Mon Apr 11, 2011 1:48 pm

Re: Estate Planning

Post by TomatoTomahto » Thu Mar 14, 2019 1:17 pm

celia wrote:
Tue Mar 12, 2019 1:49 pm
If there's a chance you will hit the estate tax exemption in the future (currently $11M per person) and you will be leaving at least some of your estate to people, you should know that a dollar in a pre-tax account is counted the same as a dollar in a Roth account. But a beneficiary will be able to get more spending power from the Roth dollar. This is where Roth conversions can come in handy. Spend some of your taxable dollars while you are alive on "Roth conversion taxes". This can bring down the value of your estate while giving something more valuable to your heirs.
It’s so obvious, but it wasn’t until I realized this that I switched 401k contributions to Roth. Moving to MA swung me off the fence on this question. I haven’t quite made the mental leap to Roth conversions, although I do understand that if I’m willing to make Roth contributions, I should be willing to do Roth conversions. :annoyed

It’s a similar thought about gifting, or as I described it to one child who was reluctant to accept it: “premature incremental inheritance.” If we live long enough, a lot can be transferred this way, but of course, the fiscal maturity of the recipient has to be considered; it might not be a wise plan with every heir.
Okay, I get it; I won't be political or controversial. The Earth is flat.

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