"Estate Planning Checklist" (for all of us)

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Taylor Larimore
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"Estate Planning Checklist" (for all of us)

Post by Taylor Larimore » Fri Jul 28, 2017 6:45 pm

Bogleheads:

Christine Benz is Director of Personal Finance for Morningstar and a member of our Panel of Experts in the upcoming 2017 Bogleheads Conference. Christine has written an article that is very important for every Boglehead. It is about the one thing that is certain for all of us -- our death -- which could happen tomorrow.

Christine briefly discusses these important documents:

* Create a Master Directory. Christine provides a sample template.

* Designate Beneficiaries.

* Draft a Will.

* Name Guardians for Minor Children If You Have Them.

* Name Custodian for Assets Owned by Minor Children.

* Draft Powers of Attorney for Healthcare and Financial Matters.

* Create a Living Will.

* Create a Trust (if needed).

This is the easiest-to-read summary of estate documents I have read:

An Estate Planning Checklist

Thank you, Christine.

Best wishes.
Taylor
Last edited by Taylor Larimore on Fri Jul 28, 2017 7:34 pm, edited 1 time in total.
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Re: "Estate Planning Checklist" (for all of us)

Post by Thesaints » Fri Jul 28, 2017 6:47 pm

Was there going to be a link ?

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Re: "Estate Planning Checklist" (for all of us)

Post by LadyGeek » Fri Jul 28, 2017 6:58 pm

This thread is now in the Personal Finance (Not Investing) forum (estate planning).
Thesaints wrote:Was there going to be a link ?
I got it: An Estate Planning Checklist, by Christine Benz, Morningstar, July 27, 2017.

The wiki has more information: Estate planning See the "Further reading" section for some fairly comprehensive checklists.

Update: The Morningstar article has been added to the wiki.
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Re: "Estate Planning Checklist" (for all of us)

Post by Thesaints » Fri Jul 28, 2017 7:03 pm

Accessing the "master directory" requires M* registration. Couldn't someone post it here, please ?

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Re: "Estate Planning Checklist" (for all of us)

Post by LadyGeek » Fri Jul 28, 2017 7:06 pm

The article is open without registration, see my previous post.

(Posting content requiring registration usually violates the website's terms of service.)
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Re: "Estate Planning Checklist" (for all of us)

Post by Thesaints » Fri Jul 28, 2017 7:10 pm

Yes, but if I click on the "master directory" link it takes me to the registration page.
If not posting it, at least explain what it is ?
Last edited by Thesaints on Fri Jul 28, 2017 7:21 pm, edited 1 time in total.

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Re: "Estate Planning Checklist" (for all of us)

Post by Peter Foley » Fri Jul 28, 2017 7:18 pm

Thanks for posting Taylor. While you don't say this, I think the order is really important as well. My goodness, if you don't know where things are, how do you begin? Beneficiaries trump wills so it is very important to name them and to keep them up to date. Etc.

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Re: "Estate Planning Checklist" (for all of us)

Post by LadyGeek » Fri Jul 28, 2017 7:25 pm

Thesaints wrote:Yes, but if I click on the "master directory" link it takes me to the registration page.
If not posting it, at least explain what it is ?
Sorry, I misunderstood. You're referring to the master directory list under the article section "Create a Master Directory". That material is indeed subject to Morningstar's User Agreement and can't be posted.

Bummer. I have an account and it won't let me see the content. :annoyed Instead, skip to the link in the second paragraph which goes to a checklist template in PDF format.

Actually, the Schwab checklist is much more detailed. See: Estate Planning Checklist, Charles Schwab. No subscription required. :)

Update: The Schwab website is now in the wiki. An asset inventory worksheet and guide to essential estate planning are available as free downloads.
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Re: "Estate Planning Checklist" (for all of us)

Post by Taylor Larimore » Fri Jul 28, 2017 7:35 pm

Thesaints wrote:Was there going to be a link ?
Thesaints and LadyGeek:

I edited my Opening Post (OP).

Thank you and best wishes.
Taylor
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Re: "Estate Planning Checklist" (for all of us)

Post by InvestingGeek » Fri Sep 13, 2019 2:17 pm

Invaluable. Thanks for the post.

It says trust if you need it. Under what circumstances would that be needed that can't be achieved with a will? Maybe I should ask in a fresh thread or search around first.

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Re: "Estate Planning Checklist" (for all of us)

Post by CABob » Fri Sep 13, 2019 6:13 pm

InvestingGeek wrote:
Fri Sep 13, 2019 2:17 pm
It says trust if you need it. Under what circumstances would that be needed that can't be achieved with a will? Maybe I should ask in a fresh thread or search around first.
A search is certainly warranted and it is a subject that has been discussed extensively. The pros and cons of a will are frequently dependent upon the laws in the states of residence. One reason for a trust is to avoid probate.
Bob

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Re: "Estate Planning Checklist" (for all of us)

Post by bsteiner » Fri Sep 13, 2019 6:29 pm

Peter Foley wrote:
Fri Jul 28, 2017 7:18 pm
... Beneficiaries trump wills so it is very important to name them and to keep them up to date.
Except for life insurance and retirement benefits it’s usually better not to name beneficiaries.

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Re: "Estate Planning Checklist" (for all of us)

Post by CedarWaxWing » Fri Sep 13, 2019 6:42 pm

bsteiner wrote:
Fri Sep 13, 2019 6:29 pm
Peter Foley wrote:
Fri Jul 28, 2017 7:18 pm
... Beneficiaries trump wills so it is very important to name them and to keep them up to date.
Except for life insurance and retirement benefits it’s usually better not to name beneficiaries.
Why would it be best not to name beneficiaries for anything other than life insurance and retirement benefits please?

Savings accounts and CDs?

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Re: "Estate Planning Checklist" (for all of us)

Post by LadyGeek » Fri Sep 13, 2019 7:31 pm

bsteiner wrote:
Fri Sep 13, 2019 6:29 pm
Except for life insurance and retirement benefits it’s usually better not to name beneficiaries.
I'm unclear on your comment. Does your statement apply to trusts?

Otherwise, I would assume beneficiaries should be named in POD /TOD accounts (checking, savings, CDs, employer retirement plans).
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Re: "Estate Planning Checklist" (for all of us)

Post by dwickenh » Fri Sep 13, 2019 8:11 pm

And why not name several beneficiaries for a brokerage account?

From the article link " If you'd like to leave taxable bank or brokerage accounts to multiple beneficiaries, it's smart to do so via your will rather than transfer/payable on death registration."
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Re: "Estate Planning Checklist" (for all of us)

Post by abuss368 » Fri Sep 13, 2019 9:01 pm

This is valuable. Thanks Taylor.
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Re: "Estate Planning Checklist" (for all of us)

Post by FIREchief » Fri Sep 13, 2019 9:22 pm

CedarWaxWing wrote:
Fri Sep 13, 2019 6:42 pm
bsteiner wrote:
Fri Sep 13, 2019 6:29 pm
Peter Foley wrote:
Fri Jul 28, 2017 7:18 pm
... Beneficiaries trump wills so it is very important to name them and to keep them up to date.
Except for life insurance and retirement benefits it’s usually better not to name beneficiaries.
Why would it be best not to name beneficiaries for anything other than life insurance and retirement benefits please?

Savings accounts and CDs?
I don't think it is always a bad idea, but certainly some liquid accounts should be left to the estate if your designated executor will need liquid funds to pay bills and expenses. If all such accounts are left via POD/TOD, there will be no cash to hire a lawyer, pay funeral expenses, pay final bills, pay homeowners insurance/property taxes/HOA fees/utilities/etc. OTOH, I believe it is reasonable to leave some assets via POD/TOD in order to get them quickly and simply to the designated beneficiaries.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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Re: "Estate Planning Checklist" (for all of us)

Post by bltn » Fri Sep 13, 2019 9:40 pm

bsteiner wrote:
Fri Sep 13, 2019 6:29 pm
Peter Foley wrote:
Fri Jul 28, 2017 7:18 pm
... Beneficiaries trump wills so it is very important to name them and to keep them up to date.
Except for life insurance and retirement benefits it’s usually better not to name beneficiaries.
Bsteiner

Would there be a problem with having some cds designate a TOD to a trust established for the care of ones wife and later for the benefit of ones children?

Bltn

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Re: "Estate Planning Checklist" (for all of us)

Post by bsteiner » Sat Sep 14, 2019 8:53 pm

CedarWaxWing wrote:
Fri Sep 13, 2019 6:42 pm
bsteiner wrote:
Fri Sep 13, 2019 6:29 pm
Peter Foley wrote:
Fri Jul 28, 2017 7:18 pm
... Beneficiaries trump wills so it is very important to name them and to keep them up to date.
Except for life insurance and retirement benefits it’s usually better not to name beneficiaries.
Why would it be best not to name beneficiaries for anything other than life insurance and retirement benefits please?
..
It may cause your estate not to have enough money to pay debts, taxes, expenses and cash bequests.

If you provide for your beneficiaries in trust rather than outright (which our clients generally do), unless you coordinate your beneficiary designations with your Will (like you would for your life insurance and retirement benefits), you'll defeat the provisions of your Will.

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Re: "Estate Planning Checklist" (for all of us)

Post by ClaycordJCA » Sat Sep 14, 2019 10:32 pm

In California, the consequences of my uncle having only one of his two Fidelity accounts set up as TOD resulted in the assets in the non-TOD account being passed to my father - my uncle’s sole heir - through my uncle’s will. That requires probate. For his fee in handling the probate, the attorney is entitled to 7% of the account balance - probate fees are set by the court. Not a bad way for the attorney to make $20k. I am not sure why anyone in California would want an investment account’s assets subject to probate.

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Re: "Estate Planning Checklist" (for all of us)

Post by bsteiner » Sun Sep 15, 2019 7:13 am

ClaycordJCA wrote:
Sat Sep 14, 2019 10:32 pm
In California, the consequences of my uncle having only one of his two Fidelity accounts set up as TOD resulted in the assets in the non-TOD account being passed to my father - my uncle’s sole heir - through my uncle’s will. That requires probate. For his fee in handling the probate, the attorney is entitled to 7% of the account balance - probate fees are set by the court. Not a bad way for the attorney to make $20k. I am not sure why anyone in California would want an investment account’s assets subject to probate.
For such a small amount passing to one beneficiary outright a TOD account is just fine. There aren't any cash bequests or estate taxes, and with only one beneficiary there isn't any problem of one beneficiary not wanting to contribute toward paying any debts, income taxes or funeral expenses.

But for larger amounts it would often be better to provide for the beneficiaries in trust rather than outright, and with more than one beneficiary you have to make sure that debts, expenses, taxes and cash bequests are paid. That's why we have estates and executors.

The statutory attorney's fee in California is 4% on the first $100,000, 3% from $100,000 to $200,000, 2% from $1 million to $10 million, 1% from $10 million to $25 million, and reasonable compensation above $25,000: https://law.justia.com/codes/california ... ion-10810/. So that statutory fee on a $300,000 estate is $10,000 rather than $20,000. There are some lawyers in California who will limit their fees to a time basis rather than the statutory fee. But not only would many lawyers not want to negotiate fees on a $300,000 estate, many lawyers wouldn't want to handle a $300,000 estate absent an existing relationship with the decedent, the family, the named executor, or the referring lawyer. On such a small estate the risk that the time far exceeds the percentage fee outweighs the possible benefit of the time being less than the percentage fee.

The other $10,000 would have been the personal representative's (executor's) fee: https://law.justia.com/codes/california ... ion-10800/. But if your uncle left his estate to your father outright, presumably your father would have been the personal representative, and presumably he would have waived his fee since it would have come out of his inheritance.

Nevertheless, the common workaround in California is a revocable trust. There's still some work for the lawyer and for the trustee, both of whom have to get paid (unless the trustee is the spouse or a child and waives his/her compensation). And in a small estate like this, assuming there's one beneficiary who won't need the protection of having his share in trust (no special needs, an estate that won't be large enough to pay estate tax nor small enough to get Medicaid, and no concern about creditors and spouses), then the TOD account works fine.

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Re: "Estate Planning Checklist" (for all of us)

Post by bengal22 » Sun Sep 15, 2019 7:16 am

ClaycordJCA wrote:
Sat Sep 14, 2019 10:32 pm
In California, the consequences of my uncle having only one of his two Fidelity accounts set up as TOD resulted in the assets in the non-TOD account being passed to my father - my uncle’s sole heir - through my uncle’s will. That requires probate. For his fee in handling the probate, the attorney is entitled to 7% of the account balance - probate fees are set by the court. Not a bad way for the attorney to make $20k. I am not sure why anyone in California would want an investment account’s assets subject to probate.
Why do you need a lawyer? I would investigate requirements for probate before throwing away 20K.
In Ohio probate forms are easy.
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Re: "Estate Planning Checklist" (for all of us)

Post by ClaycordJCA » Sun Sep 15, 2019 11:45 am

bengal22 wrote:
Sun Sep 15, 2019 7:16 am
ClaycordJCA wrote:
Sat Sep 14, 2019 10:32 pm
In California, the consequences of my uncle having only one of his two Fidelity accounts set up as TOD resulted in the assets in the non-TOD account being passed to my father - my uncle’s sole heir - through my uncle’s will. That requires probate. For his fee in handling the probate, the attorney is entitled to 7% of the account balance - probate fees are set by the court. Not a bad way for the attorney to make $20k. I am not sure why anyone in California would want an investment account’s assets subject to probate.
Why do you need a lawyer? I would investigate requirements for probate before throwing away 20K.
In Ohio probate forms are easy.
Not so easy when one is 90, at least not for my father.

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Re: "Estate Planning Checklist" (for all of us)

Post by bengal22 » Sun Sep 15, 2019 12:32 pm

ClaycordJCA wrote:
Sun Sep 15, 2019 11:45 am
bengal22 wrote:
Sun Sep 15, 2019 7:16 am
ClaycordJCA wrote:
Sat Sep 14, 2019 10:32 pm
In California, the consequences of my uncle having only one of his two Fidelity accounts set up as TOD resulted in the assets in the non-TOD account being passed to my father - my uncle’s sole heir - through my uncle’s will. That requires probate. For his fee in handling the probate, the attorney is entitled to 7% of the account balance - probate fees are set by the court. Not a bad way for the attorney to make $20k. I am not sure why anyone in California would want an investment account’s assets subject to probate.
Why do you need a lawyer? I would investigate requirements for probate before throwing away 20K.
In Ohio probate forms are easy.
Not so easy when one is 90, at least not for my father.
Help him. Not that hard.
"Earn All You Can; Give All You Can; Save All You Can." .... John Wesley

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