If your estate is simple, namely all with a brokerage firm, it sounds like you wouldn’t need a trust to avoid probate. Is that right that all I need to do is set up TODs? We had trusts for our only kid. She is all grown up. I am confident that she will take good care of her inheritance and I don’t feel any need to attach strings through a trust.
We finally got all of these documents taken care of last summer and it’s a great relief. We used an attorney who specializes in estate planning. When we have both died, the trust will divide into three (for our three kids). The trustee (our sibling) will oversee finances for the first five years or until that kid is a certain age. We have one who has a history of bad financial decisions and it makes us feel a little better to know there would be some guidance.
Let me amend a previous comment regarding frozen accounts and probate. In the attempt to summarize the process, I left no room for technical aspects of the transition of passing a brokerage account on to heirs without TOD status. Yes the court will assign an administrator while probate is taking place. However, this can take time (weeks in every single case I’ve been involved in - which is many) and until the administrator is established no trading will occur. If there were no instructions re whom shall receive the account assets, this creates additional problems and delays.
The intent of my original post was to explain TOD = transfer to named beneficiary. No TOD = delays and no account control (buying /selling) until the proper steps within the court system have been achieved. I’ve had many clients wait for weeks before an administrator has been assigned and an account could be opened in their name to receive inherited assets. What happens to the securities in that time frame is up to the market.
Different brokerages and banks vary greatly in how easy/hard it is to get TOD benefits. Schwab and Fidelity were quick and pretty painless. I believe Vanguard was too. Wells Fargo was HORRIBLE and the main reason the estate took two years to be resolved.
I don’t understand why one would have to have attorney’s fees with a living trust, unless there was something problematic or confusing. If, for example, Mom & Dad had a trust with a house, plus a bank account, plus maybe some stock/bond investments, why would the trustee need an attorney?
How are you all dealing with the spouses of children? So far, only one of our children has a spouse. If she were to predecease both of us, it would be terrible, but while we don’t want to take anything away from her H, but we also aren’t sure that we should leave him 100% of her share.
Somehow, this would feel different if they were both in their 50s and had been together for decades, but even now they have been together for 6 years.
Did not address spouses of children in my trust, only offspring of children - per stirpes for them.
My parents left us four pieces of property in four different states. Two we only own fractional shares. One had a never ending lawsuit because of taxes. Another one there’s been a dispute about what it’s worth since we can’t easily sell our 3/13th’s or whatever it is. One we actually only have shares, and the property is actually a 99 year lease from the 1930s. So yeah the attorneys are making money and have no real incentive to wrap this up. We’re fine, we live on what we earn, but it would be nice to be able to do our own estate planning! (Which unless we can get rid of some of this property is likely to be just as convulutod for our kids.
Hi Rickle: perhaps I’m a little slow today, but I had hard time following this par.
Yup, yup and yup (Vanguard). When my step-mom passed last year, all three of the above were easy to deal with. Once they received the certified death cert, assets were transferred within a week, and with the correct cost basis (date of death, not date of transfer). No fuss, no muss.
@greenwitch , we dearly love our SIL. He has been a wonderful part of our family and a positive influence on our daughter. That said, he’s only been in our family for three years. If we get hit by a bus tomorrow along with our D, he’s not getting 1/3 of the money . That makes no sense.
I agree, after decades in the family I hopefully will feel different. (But hopefully there will be grandchildren).
I have separate money because my H is a spendthrift. I am the primary breadwinner and have been for all but about 3 of our 25+ years of marriage. However, the amount of money I have in secret accounts is only about $10K.
The main concern I have right now is making sure that my kids inherit his mom’s house if he predeceases her. Right now, her will leaves it to H and disinherits his sister. I am afraid that if he dies first, his sister will convince their mom to leave it to her and since she has been on public benefits for decades, any inheritance will be seized and the kids will get nothing. I don’t want or need her house for myself, but it would be nice to my kids to have something from grandma, hopefully a long time before they get anything from me, lol! MIL said awhile ago she wanted to leave the house to my oldest son (the spendthrift). HE told her that if she did that, he’d have a house, but no family.
I want to avoid the type of issues that ripped H’s family apart after his mom’s mom died.
So… our situation is, for various reasons we don’t want either of our children to be the executor of our estate. They are the beneficiaries but we need to find someone else to administer the trust. Our grown children understand this and agree that it should be someone else.
Our problem: there really isn’t anyone else in the family that we would trust to do this. I asked our financial advisor if he could do this and he said he can give financial advice but isn’t qualified to administer a trust. Our trust lawyer is our age and is retiring out of state. We do have one nephew that we would trust, and who our sons respect, but he lives several thousand miles away. Ideally, we think it should be someone local.
Does anyone have experience selecting someone outside the family to be executor of the estate?
@calla1 We debated between using a hired executor ( a younger member of the law firm) or our kids. We weighed the pros and cons and decided to use the kids after all instead of a paid executor we don’t really know.
Do you have a bank or trust department at a local community trust fund that you can start a relationship with? I’ve heard it can be helpful to have a beloved family member provide suggestions to the institutional trustee as to how to support the beneficiaries health, education and welfare and let the institutional folhs file the paperwork and provide disbursements.
For us, we’ve designated my brother (md) who is excellent with money and gets along well with my kids. Niece (attorney) is alternate. Both kids get along well with her and she’s not all that much older than them.
Both can decline and the kids will get the funds outright if they’re old enough (35, I think). At this rate, it looks like the kids will get funds we don’t give to them soon outright (they’re 28 and 30 and we’re in pretty good health).
Of course this can and may change, especially if grandkids appear.
First a living trust does not necessary avoid probate. It only avoids probate for what is in the trust. If everything isn’t in the trust probate maybe necessary. So first thing you need to do is compile all the assets and figure out how they are held. Then you need to figure out how to handle any of the deceased’s debts. Anything transferred out of the living trust needs transfer documentation. So that house needs a deed. Some will create “receipts” for personal items. The lawyer will provide guidance and advice on all of it.
Bottom line you need to stay on top of your lawyer and don’t let them drag it out. Unfortunately death is expensive.
We’ve handled several deaths where everything that was supposed to be in the trust was in, no probate was required, there was some deed signing at the sale of any real estate, but no attorney was used, though an accountant was used for the returns. Same accountant who’d been doing the deceased’s taxes did the finals.
Here’s another reason to avoid probate: privacy. I was executor of my dad’s estate. After the probate was announced in a legal publication (as required by law), I started getting lots of letters from realtors offering to buy “his” house. I am still getting them regularly from one realtor two and a half years later. The house in question belongs to my mother who is living in it! I find it painful and intrusive to get these letters and no way in hell would I ever consider working with that particular realtor who just won’t let up with the letters.
@calla1 –
If I were looking for an outside trustee, I’d choose Vanguard’s trust services. Here’s their brochure -
https://personal.vanguard.com/pdf/s341.pdf?2210071322
So if all assets are in trust or set to transfer via beneficiary, what happens to debt? When my dad died, he had CC debt in his own name but he didn’t own anything. Mom was concerned she would have to pay off his debt but she didn’t as it wasn’t her debt. They didn’t own a home. Essentially there was nothing to probate so the debt just went away.
What would have happened if they owned a home (not in trust)?
@calla1 What we did for an trustee when our kids were small was have two advisors plus the bank trust department, Because of having heard of abuses by banks, we had it written in that yearly oversight would be provided by a trusted friend. It made us feel like there were checks and balances then, but our friend wouldn’t have the burden of day to day management but he had power to move the trust if needed. So your attorney could potentially do something like that. And for the professional, yes, we would go with either a local bank and trust company or Schwab (or possibly Vanguard but we talk to Schwab in their office more often). And the bank we talked to about it said to put a letter in (remember that this was for when our kids were small, but it would work anytime I’d think) . The letter would give guidelines for our standards such as, yes, when our kids could drive, they could ask the trust for money for a car, but it would be a good used car not a fancy hot rod was our terms. The letter became a great talking point and was sealed and given to our kids’ guardian (separate from the trustee) as well.
I’m glad that worry is over now our kids are grown and turned out great.
Proper estate planning is such a gift to the remaining family. My mom’s estate so far is not settled a year later, but is humming along with no problems. We have everything up for sale but no takers yet.
One thing I am worried about and maybe the TOD people might know (aside… the TOD stock account from my mom to my brother was SEAMLESS and easy) But the 3 kids were granted an undivided 1/2 interest in our childhood farm when our folks got divorced. The other 1/2 is mom’s (also undivided). My sister died and BIL inherited her interest. When Mom remarried, the kids formed a partnership to have a stronger means of protecting our interests against her new husband and we transferred the title into the name of the partnership. So the title is held XXTrust and XXLLC . My BIL is updating his trust and will and happened to talk about it while we were at a wedding recently and said he was changing the title to be TOD to his son… but I don’t think he can do that because he doesn’t hold the title! I think that the partnership interest can be willed, but the deed/title can’t just be changed. I know he could if he owned it himself. But I don’t want to rock the boat too much and he is a great guy. I just don’t understand… Any thoughts out there wise CC?