Some people like to avoid probate for privacy reasons, since it is public record, and for efficiency.
Everything not titled to beneficiaries and is under your 'will' goes to the probate estate (jewelry, table, chairs), unless your still married. In probate a judge performs the distribution of your assets per your will, which requires an attorney, and their fees i think are set by statute and vary state by state (some states it is a % of value of estate, I think). Usually not a problem if all the beneficiaries agree to distributions.
It is also very useful if your are not distributing your assets equally and your heirs challenge your 'will' or don't get along or have disagreements, probate can drag on and things can get messy.
So, I would use a living trust with a pour-over will if I was making unequal distributions and/or if my children or other heirs did not get along. Also, if I wanted my assets out of the public record.
I am not a lawyer, so take this with a grain of salt....
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Sheepdog
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Steelersfan
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expat
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Honobob
Joined: 26 Sep 2009 Posts: 391
Posted: Wed Sep 14, 2011 1:04 pm?? ?Post subject:
A simple trust with a pour over will should not cost a fortune. A living trust will mostly keep you out of probate which can be very important. Because my fathers wife had a will her idiot children were able to tie my father up in their quest for money utilizing the probate courts idiot judges and lawyers.
Amazing how someone on welfare can get an attorney to work for free if he thinks there is money in the estate for him.
A trust also helps if you become incapacitated where a will won't. _________________ It's slowly dawned on me that we won the real estate lottery!
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investor
Joined: 19 Feb 2007 Posts: 353
Posted: Wed Sep 14, 2011 1:05 pm?? ?Post subject:
expat wrote:
Steelersfan wrote:
The "high costs of probate" argument is highly over rated. For the most part, you can pay the legal fees to set up, maintain and distribute a living trust, or pay the legal fees to create a will and later probate the estate. For normal size estates, there won't be enough dollar difference to make a determination one way or the other.
+1
++1
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dm200
Joined: 26 Feb 2007 Posts: 4407 Location: Washington DC area Born 1946
Posted: Wed Sep 14, 2011 1:08 pm?? ?Post subject:
expat wrote:
Steelersfan wrote:
The "high costs of probate" argument is highly over rated. For the most part, you can pay the legal fees to set up, maintain and distribute a living trust, or pay the legal fees to create a will and later probate the estate. For normal size estates, there won't be enough dollar difference to make a determination one way or the other.
+1
I agree. The peddlars of one-size-fits-all, expensive trusts "oversell" cost of probate. Probate does not have to cost a lot, especially if the executor will do some of thesork and bring in an attorney onlyfor the tasks needed AND pay by task and not by percentage. While there are other benefits of a trust to hold assets while living (incapacity), the thing to do, IMO, is find an attorney who is objective about the pros and cons of wills, trusts, etc.
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dm200
Joined: 26 Feb 2007 Posts: 4407 Location: Washington DC area Born 1946
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joeldfw
Joined: 05 Jul 2011 Posts: 8
Posted: Wed Sep 14, 2011 3:15 pm?? ?Post subject:
Honobob wrote:
A simple trust with a pour over will should not cost a fortune. A living trust will mostly keep you out of probate which can be very important....A trust also helps if you become incapacitated where a will won't.
+1: a revocable living trust is something most can set up on their own and is very easy to modify: it usually doesn't require the formalities that a will might require in a given jurisdiction. After the trust is set up, you fund it with your property. Some jurisdictions may make it harder to have a car and/or house to be in a trust (could tie it up if you try to do something with it), so that's where it could get more involved. But trusts will usually specify the order of succession for the trustees if incapacitation/death occurs.
Durable power of attorney can do a lot that trust can for the incapacitated but its power extinguishes when the principal's life does (unlike the trust) and they can get stale (one might have to reauthorize every so often). There can also be issues about making a 3d party honor the POA, too.
As said above, have a pour over provision in the will so that the residue goes into the trust upon your death and you're set.
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Don Robins
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harrylime
Joined: 24 May 2009 Posts: 29 Location: Vienna
Posted: Thu Sep 15, 2011 8:03 am?? ?Post subject:
Spiral wrote:
In probate a judge performs the distribution of your assets per your will, which requires an attorney, and their fees i think are set by statute and vary state by state (some states it is a % of value of estate, I think).
Actually, in most states, the goal of the probate court is to admit the will as valid, get the administrator appointed, and then stay out of the way unless some interested party brings an issue before the court. The probate judge is not going to distribute assets.
Very few states require an attorney, although an administrator retaining one on an hourly basis is probably a good idea.
Very few states specify estate attorney compensation. In most states, the statutes only provide that it be reasonable. And, despite what attorneys in the few states that specify compensation statutorily (and some attorneys in "reasonable compensation" states) would have you believe, the administrator and the attorney representing him/her can always come to an alternative agreement on compensation.
kyounge1956, have you never been married? There are some ERISA regulations about ex-spouses on 401ks, etc.
As to probate, it really depends on your jurisdiction. In some cases it can be very expensive; in some cases not at all. In some cases it is based on the size of your estate; in some cases a flat fee. Just need to know what the rules are where you live (or more precisely, where you plan to live when you die).
I'm a spinster. Never been married and don't expect I ever will be. I live in Washington state and plan to stay here. I got two books out of the library last night?Nolo's Guide to Estate Planning Basics and a book specifically for Washington state. I have another on hold, In Case Your Pet Outlives You. I don't have any children, but I do have cats and probably always will have at least one unless forced by ill health to move into someplace where they're not allowed.
My estate will probably not be large. Almost all of my assets ares in retirement accounts with designated beneficiaries, which will not become part of my estate. Other than the money, I have a house (not completely paid for), a car, small bank account and assorted personal property. When I retire (aiming at mid-2013) I plan to sell this house and move to a less-expensive part of the state, so I will own the house free & clear, but other than that my estate will be the same as now. I don't think it will ever be large enough that I need to consider estate taxes.
For your situation, a well drafted will, done in consultation with an attorney, would be just the ticket.
The "high costs of probate" argument is highly over rated. For the most part, you can pay the legal fees to set up, maintain and distribute a living trust, or pay the legal fees to create a will and later probate the estate. For normal size estates, there won't be enough dollar difference to make a determination one way or the other.
I asked this same question on another forum, and one of the people who replied there pointed out that it can make a big difference to your heirs, with a trust being a lot easier for them than taking an estate through probate. That has me leaning toward a trust. Unless I pre-decease my parents, which is unlikely, my heirs are at least two states away, and lots of them are on the east coast.
My estate will probably not be large. Almost all of my assets ares in retirement accounts with designated beneficiaries, which will not become part of my estate.
Don't confuse your estate with what will be probated. Insurance proceeds from a contract you own pass outside probate, but the dollar value is part of your estate. The same is true of retirement assets in general.
Quote:
What is included in the Estate?
The Gross Estate of the decedent consists of an accounting of everything you own or have certain interests in at the date of death (Refer to Form 706 (PDF)). The fair market value of these items is used, not necessarily what you paid for them or what their values were when you acquired them. The total of all of these items is your "Gross Estate." The includible property may consist of cash and securities, real estate, insurance, trusts, annuities, business interests and other assets. Keep in mind that the Gross Estate will likely include non-probate as well as probate property.
http://www.irs.gov/businesses/....43,00.html _________________ The opinions expressed here are those of the author and do not necessarily reflect the positions of Alex Frakt, Larry Auton, and bogleheads.org
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PaddyMac
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CABob
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cdwood
Joined: 31 May 2007 Posts: 117
Posted: Thu Sep 15, 2011 8:48 pm?? ?Post subject:
CABob wrote:
Quote:
I asked this same question on another forum, and one of the people who replied there pointed out that it can make a big difference to your heirs, with a trust being a lot easier for them than taking an estate through probate.
I'm not sure this is true. It might be faster with a trust since the courts wouldn't be involved, but, I'm not sure it would be easier. Perhaps someone more knowledgeable could respond.
I've been waiting for someone who has received assets via a revocable living trust to weigh in with comments. No one has, so I will. My two brothers and I received our parents assets (seven figures) via a revocable living trust in 2002 (Mom died last) and the process could not have been faster or easier. We never darkened a courthouse door. Except for shelling out $75 to an attorney for a duplicatable "memorandum of trust," we didn't even incur attorney expense. (The memorandum of trust was demanded by mutual fund custodians to prove that we three brothers were indeed the successor trustees named in the trust.)
My wife and I are in our 60's and have set up an RLT so our adult children can receive their inheritance as seamlessly as we received the inheritance from my parents. One of my brothers has followed suit with DW's and my example. The youngest brother has not. If my divorced youngest brother (who is an insulin-dependent diabetic who drinks and smokes), dies before I do and I have to handle his estate via probate because he never bothered to set up a trust, I'm going to be ticked. Every probate-related check I write will be money that could have gone to his daughter (or other designated grantee.)
The relevant question to those who have set up a recoverable trust is how much cost was there to set it up and maintain it for the years that it was in force.
I have only had mine for 4 years, but I don't know of any maintenance costs. Once I had my account at Vanguard transferred from one in my name to one in the name of the trust, I have had nothing to do. They don't charge extra for buying and selling within the trust account, and they don't ask for any extra paperwork. The phone and internet both work. If you call in an order, they ask your name and address and SSN, but not the date your trust was established. Well, I guess they do ask which account you want to buy in, so you can either give them the account number or a name, so I guess you might mention the name of the trust if you don't like repeating long number sequences.
The same is true of my checking accounts, CDs, and other accounts at various banks. I file my taxes using my own social security number, and the IRS never asks for any extra paperwork because I have a trust; I doubt they even know about it. Perhaps they do, because Vanguard sends them information using my SSN on various 1099s. On the other hand, I expect they submit the information to the IRS electronically, and I don't know what fields are populated (Does the IRS care what your name is, as long as they have your SSN?).
Now it would cost me if I were to change the terms of the trust, but then it would also cost me to change the terms of a will.
What sort of maintenance are you thinking of? _________________ The opinions expressed here are those of the author and do not necessarily reflect the positions of Alex Frakt, Larry Auton, and bogleheads.org
For your situation, a well drafted will, done in consultation with an attorney, would be just the ticket.
The "high costs of probate" argument is highly over rated. For the most part, you can pay the legal fees to set up, maintain and distribute a living trust, or pay the legal fees to create a will and later probate the estate. For normal size estates, there won't be enough dollar difference to make a determination one way or the other.
I asked this same question on another forum, and one of the people who replied there pointed out that it can make a big difference to your heirs, with a trust being a lot easier for them than taking an estate through probate. That has me leaning toward a trust. Unless I pre-decease my parents, which is unlikely, my heirs are at least two states away, and lots of them are on the east coast.
The remarks were based on his personal experience of both processes. His parents had a living trust, while his father in law's estate went through probate. Reading his post again this was probably a much larger estate than mine, which may have contributed to the difficulties, and probably wasn't the same state. But just the fact that the executor had to appear personally, which I think is also true in WA, is a point against probate in my case.
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