Trusts
Trusts
I do not know whether my wife and I need a trust. My situation is our retirement income will allow for us to do what we want or need to do. We have $285000 that we have in IRA’s. We plan on taking four percent of this for extra travel money each year or most years. Forty percent of this is in a Roth IRA. We have land valued at $50,000 and our house is valued at $400000. The only debt we have is on our car. We owe $14000 on it. In the future there will probably be around $350,000 additional money from an inheritance. Our daughter is married with 2 children. Our son is married and he is not going to have kids. When my wife and I die there will be an additional $650000 from insurance proceeds. Our wishes are for my son and daughter share equally in the inheritance. We love our son-in-law and daughter-in-law. How is the best way to take care of our estate and potentially see that our grandkids have something left over. I do not know if the value of what we have is great enough for a trust. Any advice or help would be appreciated.
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Re: Trusts
You need to talk to an estate planning attorney. Everyone’s situation is unique. The value in a trust to me atleast is it simplifies the process and your heirs, if done correctly, can avoid the probate process. There’s a million variables so speaking with an attorney is your best course of action.
Re: Trusts
You could set up UTMA accounts for the grandkids outside of the inheritance and fund them separately. Then your 2 children split the inheritance 50/50.
As soon as you start making uneven distributions in the inheritance you are creating the conditions for potential estrangement of your two children.
As soon as you start making uneven distributions in the inheritance you are creating the conditions for potential estrangement of your two children.
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
Re: Trusts
I'd suggest talking to your children and an estate planning professional.
Last edited by Lee_WSP on Thu Apr 22, 2021 6:15 pm, edited 1 time in total.
- Sandtrap
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Re: Trusts
1. Seek legal counsel for estate planning.
2. Read "Beyond the Grave" by Condon, to get additional insight into family dynamics and various inheritance scenarios. (while the legalities may not apply, which is why you talk to legal counsel, the scenarios of inheritance and so forth are interesting).
j
2. Read "Beyond the Grave" by Condon, to get additional insight into family dynamics and various inheritance scenarios. (while the legalities may not apply, which is why you talk to legal counsel, the scenarios of inheritance and so forth are interesting).
j
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Re: Trusts
As another poster said, every situation is so unique you really need to talk it out with a lawyer in your state.tmp123 wrote: ↑Thu Apr 22, 2021 7:42 am I do not know whether my wife and I need a trust. My situation is our retirement income will allow for us to do what we want or need to do. We have $285000 that we have in IRA’s. We plan on taking four percent of this for extra travel money each year or most years. Forty percent of this is in a Roth IRA. We have land valued at $50,000 and our house is valued at $400000. The only debt we have is on our car. We owe $14000 on it. In the future there will probably be around $350,000 additional money from an inheritance. Our daughter is married with 2 children. Our son is married and he is not going to have kids. When my wife and I die there will be an additional $650000 from insurance proceeds. Our wishes are for my son and daughter share equally in the inheritance. We love our son-in-law and daughter-in-law. How is the best way to take care of our estate and potentially see that our grandkids have something left over. I do not know if the value of what we have is great enough for a trust. Any advice or help would be appreciated.
A few general thoughts:
1. If you have a reason to control the assets after your death beyond their initial distribution or the timing of that distribution then a trust is an answer.
2. You can set up a trust in your will (a testamentary trust) or in your lifetime (a living trust); they are not that expensive to create.
3. Some trustees will only accept trusts of certain sizes. VNTC I believe has a $1m minimum but I am sure your local bank may do it.
4. Because you are talking about the proceeds from life insurance, you could be talking about a second trust, as described here: https://www.legalandgeneral.com/life-co ... ce-trusts/
Good luck.
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Re: Trusts
I don’t think a trust is necessarily required in your situation. The value of a trust for me is avoiding probate if my wife and I die with minor children, and allowing our successor trustee to give money to our kids guardian immediately after our death to start caring for our kids. If your kids are all adults, then a simple will should suffice to accomplish what you want.
If you wanted to keep them from inheriting anything until they were older then you could do a trust, but if they are responsible enough to inherit money now then you probably just need a will and to make sure your beneficiaries are set up correctly on your accounts.
That said, talk to a lawyer to confirm but make sure to ask pointed questions about what benefits a trust would give you in your situation. Depending on the lawyer, some will just push you towards a trust because it costs more than a will.
If you wanted to keep them from inheriting anything until they were older then you could do a trust, but if they are responsible enough to inherit money now then you probably just need a will and to make sure your beneficiaries are set up correctly on your accounts.
That said, talk to a lawyer to confirm but make sure to ask pointed questions about what benefits a trust would give you in your situation. Depending on the lawyer, some will just push you towards a trust because it costs more than a will.
Re: Trusts
Another purpose of trust is to reduce estate tax. Each state has its own limits. For example, in MA it is $1 million. If you include life insurance pay out, most people can hit this $1 million easily. With proper estate planning, you can save $$$ when both you and spouse die. One such "method" is to use AB trust. Below is an article that describes this process. It costs about $3K to $4K to create an estate plan (i.e. wills, trusts, healthcare proxy) but can potentially shield uncle sam from your hard earn money and leave ten if not hundreds of thousands more to your family.mnsportsgeek wrote: ↑Thu Apr 22, 2021 2:24 pm I don’t think a trust is necessarily required in your situation. The value of a trust for me is avoiding probate if my wife and I die with minor children, and allowing our successor trustee to give money to our kids guardian immediately after our death to start caring for our kids. If your kids are all adults, then a simple will should suffice to accomplish what you want.
If you wanted to keep them from inheriting anything until they were older then you could do a trust, but if they are responsible enough to inherit money now then you probably just need a will and to make sure your beneficiaries are set up correctly on your accounts.
That said, talk to a lawyer to confirm but make sure to ask pointed questions about what benefits a trust would give you in your situation. Depending on the lawyer, some will just push you towards a trust because it costs more than a will.
https://www.maheritagelawcenter.com/wha ... b-trust-2/
Re: Trusts
A good point. You may want to provide for each other in trust to save state estate taxes, especially if you're in a state like Massachusetts or Oregon with a low state estate tax exclusion amount. You may also want to provide for each other in trust to protect the spouse's inheritance from future spouses and Medicaid.fittan wrote: ↑Thu Apr 22, 2021 3:56 pm ...
Another purpose of trust is to reduce estate tax. Each state has its own limits. For example, in MA it is $1 million. If you include life insurance pay out, most people can hit this $1 million easily. With proper estate planning, you can save $$$ when both you and spouse die. One such "method" is to use AB trust. ... It costs about $3K to $4K to create an estate plan (i.e. wills, trusts, healthcare proxy) but can potentially shield uncle sam from your hard earn money and leave ten if not hundreds of thousands more to your family.
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Since each child's share will be about $800,000 or so, you may want to provide for your children in separate trusts for their benefit rather than outright, for similar reasons.
In most states, you would most likely do this in your Wills.
This should be a routine matter for any law firm with a good trusts and estates group. However, depending on where you're located, the cost may be more than the figures mentioned.
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Re: Trusts
A couple of points on what you said:mnsportsgeek wrote: ↑Thu Apr 22, 2021 2:24 pm I don’t think a trust is necessarily required in your situation. The value of a trust for me is avoiding probate if my wife and I on die with minor children, and allowing our successor trustee to give money to our kids guardian immediately after our death to start caring for our kids. If your kids are all adults, then a simple will should suffice to accomplish what you want.
If you wanted to keep them from inheriting anything until they were older then you could do a trust, but if they are responsible enough to inherit money now then you probably just need a will and to make sure your beneficiaries are set up correctly on your accounts.
That said, talk to a lawyer to confirm but make sure to ask pointed questions about what benefits a trust would give you in your situation. Depending on the lawyer, some will just push you towards a trust because it costs more than a will.
"The value of a trust for me is avoiding probate if my wife and I on die with minor children" to which I would add the word "AND" in the middle, to "The value of a trust for me is avoiding probate AND if my wife and I on die with minor children." Avoiding probate by itself is a goal.
"Depending on the lawyer, some will just push you towards a trust because it costs more than a will." If you tote up the total costs of drafting a trust on one side versus drafting a will and going through probate with all your assets, which do you think will cost you more money?
Not a probate lawyer, so do not have an agenda, but as an individual I have pretty much everything possible avoiding probate through trusts, designated beneficiaries, payable on death designations, etc. Keeping things out of probate is the better strategy.
Re: Trusts
I appreciate all the input. This gives me considerations that will help me plan for the future.
Re: Trusts
In most cases in most states, probating a Will isn't difficult, expensive or burdensome. It's usually a small part of the work involved in an estate administration.restingonmylaurels wrote: ↑Thu Apr 22, 2021 4:58 pmA couple of points on what you said:mnsportsgeek wrote: ↑Thu Apr 22, 2021 2:24 pm I don’t think a trust is necessarily required in your situation. The value of a trust for me is avoiding probate if my wife and I on die with minor children, ....
"The value of a trust for me is avoiding probate if my wife and I on die with minor children" to which I would add the word "AND" in the middle, to "The value of a trust for me is avoiding probate AND if my wife and I on die with minor children." Avoiding probate by itself is a goal.
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Not a probate lawyer, so do not have an agenda, but as an individual I have pretty much everything possible avoiding probate through trusts, designated beneficiaries, payable on death designations, etc. Keeping things out of probate is the better strategy.
To probate a Will we file the Will with the court together with some forms, a death certificate, and the filing fee.
Why are you concerned about it?
There are more important issues to consider.
There are exceptions. In some states such as California probating a Will and dealing with the court is more difficult. In some states the court fee is significant, such as Delaware where it's 1.75% of the probate estate (not counting the real estate).
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Re: Trusts
+1 for "Beyond the Grave" - very helpful book.Sandtrap wrote: ↑Thu Apr 22, 2021 11:40 am 1. Seek legal counsel for estate planning.
2. Read "Beyond the Grave" by Condon, to get additional insight into family dynamics and various inheritance scenarios. (while the legalities may not apply, which is why you talk to legal counsel, the scenarios of inheritance and so forth are interesting).
j
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General George S. Patton
Re: Trusts
It seems like people are split close to 50/50 on the need for a trust. If I ask a lawyer who specializes in trusts I assume he will recommend one.
I spoke with "advisors" at Fidelity and TIAA (casual conversations over Zoom-I am not paying either of them a fee) and they were both of the mindset that a trust was not worth it.
I spoke with "advisors" at Fidelity and TIAA (casual conversations over Zoom-I am not paying either of them a fee) and they were both of the mindset that a trust was not worth it.
Re: Trusts
If you’re referring to revocable trusts a lawyer should recommend one if there’s a reason for it. They’re appropriate in some cases and in some states. But they’re overhyped and oversold and for most people in most states they aren’t necessary and tend to be a distraction.Dregob wrote: ↑Thu Apr 22, 2021 10:19 pm It seems like people are split close to 50/50 on the need for a trust. If I ask a lawyer who specializes in trusts I assume he will recommend one.
I spoke with "advisors" at Fidelity and TIAA (casual conversations over Zoom-I am not paying either of them a fee) and they were both of the mindset that a trust was not worth it.
If you’re referring to providing for children in trust rather than outright, a good lawyer will usually recommend doing so.
Re: Trusts
I was not thinking of young children. Agreed.
Re: Trusts
I think some lawyers see it as an upsell and rightly or wrongly, believe that avoiding probate is a worthy end goal in itself. I disagree that the costs are worth the benefit, but that's my opinion.Dregob wrote: ↑Thu Apr 22, 2021 10:19 pm It seems like people are split close to 50/50 on the need for a trust. If I ask a lawyer who specializes in trusts I assume he will recommend one.
I spoke with "advisors" at Fidelity and TIAA (casual conversations over Zoom-I am not paying either of them a fee) and they were both of the mindset that a trust was not worth it.