Apparently August is 'Make a Will' month. While this is not an endeavor that most of us would celebrate, it is certainly very important. According to AARP, a recent survey conducted by Rocket Lawyer found that, of 2,000 surveyed people, 64% had not created a will. What were their reasons? Many stated that they never got around to it, while others did not want to think about their demise.
Let's use this thread to shed light on this important topic.
Have you developed a will? Why or why not? Did you do it on your own or with the help of an estate planner?
Although potentially quite a bit more expensive, a trust and all of the related add-ons like pour-over will, medical power of attorney, power of attorney, etc. are very important as your estate grows and the complexity increases. In addition, a will has to go through probate court which can add a substantial fee to closing the estate, thus reducing its value. A trust is private and does not typically require court review which has an added privacy attribute. There are also ways to strongly discourage anybody from contesting a trust such as excluding them if they do.
One thing to be very aware of is that anything that has beneficiaries like IRA's, insurance, bank accounts, etc. are BEYOND the control of either a will or trust. If you have such entities with obsolete or inaccurate beneficiary statements, your estate may go to someone or something that you no longer intended. So I would add check your beneficiary statements every year or better yet every time a life event happens that might affect the beneficiaries on your accounts.
Question? We have a sizable estate . Each has one grown child from a previous marriages 30 years ago now on their own. Aside from Power of Atty and the pull the plug documents, Why should we have a will if all our real estate assets, cars etc. are in both our names and all our money has the other as Beneficiary?? All the lawyers seem to want about 2K to draw up a simple will.
The only kicker is picking someone to be the executor and who gets our estate if we die at the same time. Do we really need this?? Our children are out of the picture. Probably give it to some charity, who cares were dead.
"Question? We have a sizable estate . Each has one grown child from a previous marriages 30 years ago now on their own. Aside from Power of Atty and the pull the plug documents, Why should we have a will if all our real estate assets, cars etc. are in both our names and all our money has the other as Beneficiary?? All the lawyers seem to want about 2K to draw up a simple will.
The only kicker is picking someone to be the executor and who gets our estate if we die at the same time. Do we really need this?"
That is, of course your decision. We have found that considering what we want our estate to do and the desire to avoid the state deciding if we screw up and overlook important things. May I point out a few things in your statement?
it seems that you think you have addressed things while one of you is still alive. What happens after that? The kids? Charities? Etc.?
Indeed we found that our trust did cost in the "2k" range, more in fact. But do you understand that an executor is entitled to maybe 6-7% of the estate and that a lawyer is probably needed to guide the executor through the court process? How much is that? I had a very dear aunt that worked until in her 70's die with just a will. She had only my Mother as a descendant A casual acquaintance that helped her ended up executrix. She used my aunt's lawyer who was near incompetent as I judged and he was paid. She sold the house for a pittance in my estimation and short-changed my Mother and her eventual decedents. Her name was on her only small bank account and she got that. She then collected that fee for this "work". A trust would have bypassed much of the legal work and the judicial process along with the executor's fee (just consider that your entire estate is worth, say, $500,000, what would that fee be?). Since legal, and estate distribution work along with satisfying the IRS is always required, we chose to limit our estate trustee's fee to a specific amount. Since the trustee is one of the kids and the recipient of the estate we chose a much smaller amount as compensation.
Whether you "need this" or not is up to you. But please think through the possible scenarios before committing. :-)))
Life is SO much simpler without a spouse!
And with only one offspring.
Especially when trying to determine where one's assets go upon one's death.
A will, yes, a no brainer for almost everyone with plans for their survivors.A living revocable will also can help
those with significant property, etc., to avoid probate which can be a prolonged and expensive process once
court-appointed folks are involved in your affairs.
Although we have an RLT, wills are fine for people who don't have complex estates. My in-laws had a trust, for example, but with only one child they could easily have saved the expense - it cost $2400 to update that trust when we added my husband as co-trustee - and done everything with a will. What's even more important are the ancillary documents - the healthcare power of attorney and financial PoA.
The danger with a will is that you can DIY in many states, but often people forget to do the other documents, nor do they discuss the POLST instructions (Physician's Orders For Life Sustaining Treatment) with their family members. An advantage of a trust is that a good estate attorney will make sure ALL those documents are done. But keeping them updated -- that's a personal responsibility. Too many people fail to update either will or trust when life-changing events occur (death, birth, marriage, divorce, disability).
Even if we had decided to do a will, an estate attorney would still have been a good idea. We have no children, and had picked two favorite relatives to inherit equally. One was my half-brother, one was my spouse's stepsister. The attorney pointed out that in selecting them, we were disinheriting other family members with equal or closer relation to us. That had not even occurred to us, and she was quite correct in pointing out what a serious lapse that was.
Having decided to do a trust, it also should be pointed out that many people underestimate the time/money it takes to settle any estate. We specifically included language to allow a trustee, irregardless of whether an heir or not, to be paid current rates (determined by what state-appointed trustees charge). Our secondary trustee is not an heir, so it would be a serious imposition to expect them to do so much work for no recompense. I settled a simple estate with a will, no RE involved, and it was time-consuming and emotionally draining! I would be happy to NEVER do it again, but definitely anyone who does it, deserves to be paid for it. But many people don't realize, an executor of a will gets paid automatically, but a trustee to a trust does not.
My son is a tax attorney and financial planer in Atlanta. He learned a lot with his 3 college degrees which cost me about $150,000 over 9 years and he still has another $50,000 in debt..I learned everthing I know about money from my ex-father -in-law and I past it to my son. They don't teach everthing in college. I am a microbiologist an don't have a head for numbers. My father was a structural steal designer and hea made lots of money building casinos in Atlanta City. He offered my a job right out of college making $150,000/year in 1972, but I turned it down, becaue it was not what I was interested in. I spent 9 years in college on scholarships and never regretted my decision.
Back to subject. From my first day on my first job in 1977 unitl the present I had a plan and have stucked to it. I was told from day one to not spend any salary increase place the money in long term diversefied investments. I don't follow the daily stock market it will only upset your stomach and keep you up at night. I read the Wall Street Journal, New York Times, Money Magazine, Bloomberg Magazine, Morningstars, Kiplingers, Forbs, only for the stores and trends. I do not follow their opon any other financial adisors advice, but go with my intincts.
For insurance purposes I awalys keep 6 months of salary liquid to pay for unforseen bills. I don't place money in Ceds. they don't even cover inflation. I place from 10 to 15 % in an IRA and don't touch it. I maximize my social security benefits, have a Roth and College IRA. I have insurance to cover everything (health, term life only to 65, whole life policies for children to 18, cancer, eye, car, home, dental, long term care for 3 years, umbrella policy, if you have assets over 1 million, etc.), but no mortgage insurance. I don't leave any thing to chance.
Have 2 benificeries for all you investments, have a pre-nupt for a second marriage, get a lawyer to have a living will, regular will, power of attorney, how and where you want to be buried, and name someone for everything you own. Have an executer of the will with a key to your bank box. Keep all your legal papers in the box and valuables in a safe in your home. Have all your financial investments on computer program with IDs and password know only by your person with power of attorney.
Thats all for now.
IMO Revocable Living Trust is even more important for those who don't have that much, especially if they have a home. The reason is that the entire house and not merely the equity you may have in it will be counted as an asset when it comes to probate charges.
August was my "make-a-will month" because I was suddenly scheduled for major surgery. Since I had last made a will, I had moved to a different state, retired, sold and bought a house, consolidated TIAA-CREF funds from many jobs, my son was over 21, etc.
I discovered by talking to a lawyer and a TIAA-CREF representative that it was best to leave amounts to several charities and educational institutions by naming them as percentage beneficiaries of my IRA. I change beneficiaries online fast, but it took most of a day to come up with the correct contact information to insert for 6 entities. I also needed to do (as noted by others above) both revised power of attorney and health care power of attorney. Because my son would not understand the difference between original art works and inexpensive reproductions, in doing my will I wanted to have an out-of-state friend (actually an artist and attorney herself) be co-executor. It turns out that she would need to receive a special status with a local "legal supervisor" at least in the Commonwealth of Virginia. My son already lives in Virginia.
Obviously, I have survived my surgery, but I wish I had done all the legal stuff in a less hurried/harried way, as I had all of 16 days to get all my prep work (including this legal stuff) taken care of...but better 16 days than no time in an emergency, Have learned my lesson. Will have to some revisions after my son marries next year and especially when the next generation starts arriving.
"I discovered by talking to a lawyer and a TIAA-CREF representative that it was best to leave amounts to several charities and educational institutions by naming them as percentage beneficiaries of my IRA."
It took me several years on and off trying to understand the implications of a very large trust document. I finally discovered that the lawyer had misunderstood that I wanted to leave percentages of our ENTIRE estate to named charities and not just the trust. You see, large accounts like IRA's and Roth's with named beneficiaries are NOT part of the trust and thus excluded from the gift intentions. Fixing that involved a long and heated debate with the lawyer(s) over who screwed up. But you know who won that one, even in the face of supporting emails that explicitly described the intent. For a mere good chunk of extra money, they got it correct.
After much research and thought, I created what I call a "Charitable IRA" that split off roughly the amounts that at the point of creation covered the intended percentage gifts to all named charities and applied the necessary percentages of beneficiary to each. Since our intent is to insure that both spouses get the full benefit until they die, the other spouse is the primary beneficiary with the charities as secondary beneficiaries.
This creates a number of difficulties. First, the primary intent of this IRA is to avoid a fire sale of assets including the house to fund these gifts and it is uncertain how or if one could gather funds back from legal beneficialness to cover these intentions. And the value of the IRA can either leave too much or too little to each charity. The value should be tweaked, especially when the last survivor is near the end. A small error is probably of little consequence.
Next, the IRA belongs to the spouse should the original owner pass first. One needs to have agreement with that spouse on the intention of the IRA and assurances that he/she will not modify the charity beneficiaries once they inherit it.
Next, you need to realize that this IRA is still really yours and that it must be included in the calculation of Required Minimum Distributions.
Be sure to always review your beneficiaries of any such account should your life circumstances ever change to make sure that the intent is maintained.
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