Bumping this thread because there was at trust question elsewhere. I feel like in principle trusts are a good thing… but we’ve heard a few situations where they had unanticipated complications, which makes me leery.
I am puzzling over this, as well.
Agree a trust in principle is good.
Important to understand goals served by a trust, such as privacy, and scheduled disbursements to surviving spouse and other beneficiaries.
Who would be the trustee making decisions? I’ve heard of trusts being helpful for safeguarding inheritance of minors.
There can be significant expenses in administering a trust.
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The point of hiring a lawyer is to anticipate the unanticipated!
Do not hire your brother-in-law’s frat brother who is trying to pivot from DUI’s and fender-benders into Trust and Estates. Do not hire your best friend even if he or she is an experienced Trust and Estates lawyer (your best friend is not likely to be objective about your relationships with siblings, children, in-law children, etc.). And do not hire someone out of the state which is your legal domicile, even if you’ve been promised “I read up on your state’s laws and they are similar to what I’m used to” even if you’re getting a break on the legal fees.
The unanticipated issues are rarely “black swan” events- i.e. rare, unheard of, defy expectations. From what I’ve observed with friends, colleagues, and family members, these issues could have been anticipated and predicted by someone with experience, who is an objective observer of the family dynamic, who is not afraid to tell you when you are behaving like a jerk w/r/t your adult child who favored your ex-spouse when you divorced her mom when she was 8 years old.
Interview anyone you are considering. Don’t make them tease out the relevant information- prepare a spreadsheet with all your assets and how they are currently titled, prepare a family tree showing the names, domicile, profession and ages of your kids/grandkids/steps if relevant, highlight any specific issues (kid with substance issues, kid with chronic medical problems on partial disability, etc.)
You will likely pay for a one hour consultation (it will take three hours if you don’t prepare ahead of time, but unless you are Elon Musk it won’t take that long if you are well organized and send everything ahead of time). The firm will likely “eat” the cost of the one hour consultation if you end up retaining them, but better to stipulate up front that you want to be billed so you don’t end up hiring the wrong lawyer because “she was so nice and did so much work for free”.
I was executor for an estate which ended up paying to fix the mistakes made by the firm that prepared the wills and trust documents. By the end we were in a defensive crouch- not so much fulfilling the wishes of the deceased, but me trying to limit the clock ticking to preserve as much of the estate and the trust assets as possible for the heirs.
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Makes sense. But over the years I’ve heard about various difficulties from trusts that were created by reputable lawyers. But the other concern I have is you have to have a Trustee for a trust. Supposedly lawyers/banks can be very pricey, but assigning a person (especially if you want somebody nuetral, not named in the trust) could be tricky. And requires tax filings etc.
In our case, simple 2 kids (most assets with spouse beneficiary, kids alternate) I can’t yet justify a trust. We could have lawyer services for free with our FA, but so far a simple will seems enough. My father has a situation where perhaps he should have created a trust, but I think too late now.
Your trustee (no matter who you name) is going to hire a CPA to handle the tax filings. So don’t worry about that. If that person is well organized and doesn’t show up with a garbage bag filled with statements (yes, that happens) the costs just to file the K-1 will not be exorbitant.
If you don’t need a trust then you don’t need one. But don’t let the mechanics hold you back if they seem too complicated to deal with. And anyone you name as trustee can ask to be released (when the time comes-- you should live to 120 in good health) if their own situation has changed so you aren’t sticking someone with a lifetime commitment they can’t get out of…
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Unless the estate is complex, no need for a CPA. (I did my folks final return and the Trust return.)
You could name your child or children as Trustees, which is what many/most families do.
btw: , a Will works great in many states, where probate is inexpensive and fast, so a Trsut may not be necessary. However, in a state like CA where probate can take months just to get a hearing, a Trust is a whole lot easier and faster.
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My state of Colorado seems pretty easy for probate (at least compared to the reading I’ve done about parent in NY). One advantage pitched for Trusts is privacy of probate - that has not been a concern for us.
And here I thought you might be an A-lister or making bank blogging…hahaha
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I cannot recall the exact timing, but I think it was almost upon approval of the Letters Testamentary—I started receiving unsolicited texts from random individuals asking about the sale of my mother’s house in NYS. The house was the only reason we needed to go through probate.
I will still periodically receive a text from someone even though we sold the house years ago.
Is your privacy concern about someone knowing the size of the estate? The only info anyone could learn from probate was the value of the house, and Zillow will provide that info. The brokerage accounts were handled TOD, so did not involve the lawyer or probate.
I suppose if the siblings could not have agreed about how to divide up jewelry, silver, etc, perhaps that would have become part of probate? I honestly do not know.
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The financial advisor said some of their clients viewed privacy of trust (vs probate) an advantage. I assumed those were cases were beneficiaries might be offended by the terms of a will (?). In our case, no worries about the two kids knowing the other gets the exact same 50%.
Looks like wealthier families may have concerns about the size of the inheirited money - “Trusts, on the other hand, provide an added layer of privacy. They do not go through the probate process so the assets held in a trust can be managed and distributed without the same level of public disclosure. This means that the specifics of your estate and your beneficiaries can remain confidential, known only to the trustee and the beneficiaries themselves. This inherent privacy feature of trusts can be particularly appealing for individuals with substantial assets or those who wish to keep their estate planning matters out of the public eye.”
from Privacy Concerns: Trusts vs. Wills
I guess my point is that the only asset subject to probate was the house, and anyone can look up its value easily. (Although NY values are not as accurate as CT values, but close enough.)
Since the brokerage (IRA, Roth, and post-tax) accounts all had beneficiaries named, the values of those accounts were not published.
For me personally, the value of the trust is staggered distribution of funds. I need to revisit as the document is almost ten years old. On the To Do list!
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My FIL (who passed at 92) did not have a trust, a will or even an executor and he had a sizable estate (brokerage and IRA accounts at one financial institution, and several properties. He did not like to spend money on anything, except an accountant.) We were quite worried how all will work out, but the process was surprisingly quite efficient. FIL named beneficiaries for the financial assets and transfer on death for properties. After receiving the death certificate (3 weeks ish), H and brother submitted the DC to the financial institution and was accepted without a hassle. Transfers were made easily. Main home sold as is within 3 months, another property will be sold in next month. The other properties will be held by H and BIL. Even filing taxes was smooth, because FIL kept his files in order. I really didn’t think their experience was possible.
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There was another estate planning thread last year that is now closed. So I’ll ask a question here.
For POA and Health Care POA, what are pros/cons of a single name (with alternate; Joe, alternate Ron) vs an “or” setup (Joe or Ron). This is a situation where one sibling Joe lives closer (about 4 hours by car) and is still working…. with another sibling Retired-Ron who has more time but lives a plane ride away. In this situation, Joe and Ron are like minded and unlikely to disagree on decisions.
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I was advised to name someone and then add successors in the event that person cannot act at that time. I have a Trust Executor, a POA, and a Health Care Proxy. Each of my three children are primary on one of those roles, secondary on another and tertiary on the last one.
With electronic signatures, I do not worry about distance (currently 3, 3000 and 9000 miles away from me) but I do worry about life events that may impact their ability to assist (their own injury or illness, a special needs child, etc.
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That is interesting that an”OR” POA is possible. I don’t believe that was possible in MD. If there are two POAs, they have to sign everything together.
Well you may be right, Hippobirdy. I was thinking that two signatures was only needed with AND. Will investigate further, state is MA.
@mominva - You bring up a great point. Perhaps in these days of electronic signtures distance is a moot point.
Note - In some cases people opt to name two POA agents… must both sign / agree. For this situation, there is no need for that complexity. It could make sense to make one sibling financial POA. And another for healthcare POA / living will (though many sibs would be consulted regardless of the paperwork setup).
For both my mother and my in laws, our siblings are medical POA’s (both are/were in healthcare), my husband and I are the financial POA’s.
When we did our will and trust, we named one child as the medical and financial POA. One kid gets very stressed out and has a hard time making decisions. We decided to gift the child who is better at this to be the POA. lol
In our parent’s families, it was easy to figure out who would do what. In our nuclear family, not so much
We were advised to only name one person in each role. In fact with the attorney who redid my mom’s, he said he won’t work with clients who insist on naming 2 POA’s for each role.
We don’t have alternates, I’m not sure that was presented to us unless one child had passed away
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D requested that S be named POA for medical & financial, as he is better at making decisions that can be emotional. He is also very used to handling substantial sums of money and growing said sums. S is OK with being named POA for both as well and will do it well.
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My sister and I are both POAs for our mother as either/or - not “and”. My sister and I are very close. We’ve talked about how we’d divide responsibilities should the need arise. My sister lives locally, but I am more analytical. We assigned “roles” based on our strengths but we know we would work together.
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My M’s attorney also advised the same as @mominva - name one person, then add successors. For things like real estate sale, electronic signatures are fine, but I believe trust executive, POA and healthcare proxy, in person is required(?) if I recall correctly. I am the designated person for all three items. I’m the eldest so all responsibilities fall on me (expected of me). The other local sib may want a role in one of the those things, but that sib is generally not “available’“ when help is needed. Waiting for things to get done will be frustrating for mom and me. Far away sib is not also not good choice bc that sib doesn’t have a regular ongoing communication with mom.
For FIL who passed away without any POA, trusts or will, the process of transferring assets was simple because his assets were not complex - assets with named beneficiaries or transfer on death. When FIL was not well health wise during this last 2 years, the issues how to help him was very challenging since he didn’t have POA or healthcare proxy set up. My H (or older B) could not and would not make recommendations or decisions for FIL which was sad to watch from my POV. Their past relationships did not allow for conversation in depth.
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