Author Topic: Next step in being an adult - Writing a will  (Read 10293 times)

Credaholic

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Next step in being an adult - Writing a will
« on: August 03, 2015, 09:28:15 PM »
We should have already taken care of this, but DH and I conquered life insurance last year and this year I want to make sure we get our will in place. I e-mailed a friend of a friend who is an attorney and he told me that they have a bunch of packages, but a basic will, power of attorney, and health care documents and directives costs $499 to draft.

Is this a good deal? Or is there some way to draw the documents up yourself? How do you choose an executor? I've heard of executors being attorneys or being a trusted family member, I assume having an attorney act as executor means part of your estate goes to paying them?

We live in Washington State, have two kids, would leave all our estate to the kids and give custody to my sister. Pretty simple I think, but I don't really know where to start, if we need a POA or health care documents and directives, etc. All advice appreciated!

Zamboni

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Re: Next step in being an adult - Writing a will
« Reply #1 on: August 03, 2015, 09:53:17 PM »
Personally I would not draw it up myself or use some online forms for this because it's just really important that it be done correctly. I would hire a lawyer, and $500 seems very reasonable for all that you list (especially if it is for both of you.) I think I paid about $250 for a single person.

For executor I chose the family member I thought most likely to follow my stated wishes. Really there is only one relative whom I trust enough to do that, and unless some unexpected catastrophe befalls me, she will most likely pre-decease me. And then I will have to find someone else, so like OP I am curious to hear any answers people can provide about having a lawyer as the executor.

GizmoTX

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Re: Next step in being an adult - Writing a will
« Reply #2 on: August 03, 2015, 11:10:08 PM »
If you do it yourself, aka online forms, you run the risk of leaving your heirs a mess if it turns out to be incorrect. This is not a DIY project. However, you can use the forms as a guideline for deciding what you want & then consult an attorney to finish it correctly for your state.

You need to provide for 3 different scenarios: 1) One of you dies. Most people designate the other parent as their heir & executor; 2) Both of you die & one or more children survive. Designate your first, second, & third choices for guardian; in the event that your first choice dies or can't serve, you won't need to update your wills. You'll also need to name a manager of the funds for your minor children; this does not have to be the guardian & should also have 1,2,3 choices named; 3) No one survives, including your children -- you need to specify who gets what (percentage) of your estate.

Credaholic

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Re: Next step in being an adult - Writing a will
« Reply #3 on: August 03, 2015, 11:26:13 PM »
Is there any reason the executor should not be the same as the guardian? How complicated a job is it to be an executor?

Any thoughts on trusts? Is this necessary or worth it?

mxt0133

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Re: Next step in being an adult - Writing a will
« Reply #4 on: August 04, 2015, 12:23:14 AM »
Is there any reason the executor should not be the same as the guardian? How complicated a job is it to be an executor?

The person best to take care of you surviving children isn't always the best person to manage the funds you leave for them.  In my case the executor of our trust is different from the guardians because the people who I think is best capable of caring for my kids aren't the best with money.  Also there is some accountability with the funds as I have specific instructions on the funds should be invested and how much should be used for their upbringing, education, ect.

As for the responsibilities of the executor, depending on the complexity of your estate it can be a full-time job.  Do you have a list of all of your financial accounts, 401k, IRA, bank accounts, brokerage, credit cards, ect so that they don't have to run through all your statements to find them?  Do you own real-estate?  Do you have life insurance?  Do you own vehicles?  Are they titled so that they avoid probate?


Any thoughts on trusts? Is this necessary or worth it?

Trusts are not necessary but if you have a sizable estate that you leave your children are you sure that the funds will be used responsibly for their care?  Even if you leave a instructions to the guardians and you trust them. If you do not leave the money in a trust for your minor children then you need to leave them to the guardian and it is technically now their money and not your children.  So if the guardians encounter hardship then the assets which were to be used for your surviving children are now at risk, what if they get sued or into medical debt, well the assets you left to the guardians are now included as their assets and included in any judgments against them.

This article is a good risk on why leaving your assets to the guardians of your surviving children is not a good idea:

http://www.texaswillsandtrustslaw.com/2012/07/18/should-i-designate-my-childrens-guardian-as-beneficiaries-of-my-life-insurance-policy/

Trusts can be created with instruction how the funds can be used and disbursed when your minor children become adults.  They are protected from any liabilities of the guardian or minor children as they do not belong to them, yet.

MrsPete

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Re: Next step in being an adult - Writing a will
« Reply #5 on: August 04, 2015, 06:55:52 AM »
We should have already taken care of this, but DH and I conquered life insurance last year and this year I want to make sure we get our will in place. I e-mailed a friend of a friend who is an attorney and he told me that they have a bunch of packages, but a basic will, power of attorney, and health care documents and directives costs $499 to draft.

Is this a good deal? Or is there some way to draw the documents up yourself? How do you choose an executor? I've heard of executors being attorneys or being a trusted family member, I assume having an attorney act as executor means part of your estate goes to paying them?

We live in Washington State, have two kids, would leave all our estate to the kids and give custody to my sister. Pretty simple I think, but I don't really know where to start, if we need a POA or health care documents and directives, etc. All advice appreciated!
Since you have small children, I suggest you bite the bullet, hire the lawyer and KNOW that it's all done right.  When we had our wills drawn up (not too long ago), it was $250 for the two of us.  That covered six documents:  For each of us, a medical power of attorney, a financial power of attorney, and a will.   

We had it done through our Credit Union.  It was kind of lucky:  We'd been talking about the need for more than the online forms we'd previously drawn up ... and one day I went into the Credit Union and saw a sign saying that they offer that type of service ... I asked questions, and it was a great deal.  The guy who helped us with our initial interview brought up a number of issues we hadn't considered, and then we had about a month to agree between the two of us before we met with the actual lawyer.  We feel like our paperwork is now solid.  It covers both of us, our children, our assets ... we will probably one day adjust it to include grandchildren, but we wouldn't NEED to re-do the will unless one of us died and the other remarried. 

One problem I note in your question:  You say you'd leave your assets to your children and the care of the children to your sister.  Unless she's very wealthy, I'd think your sister would need your assets to provide care for the children over the years.  I don't think it's fair to ask your sister to rearrange her life to care for your children, using her own funds to do so, and then when they turn 18 the kids will receive all your assets.   

This is something I've thought about a good bit because I'm the "back up guardian" for three children.  Of course, it's unlikely that my family would be so unfortunate as to lose FOUR healthy adults (two sets of parents, these three aren't all siblings), leaving me to raise the three children ... but, if it were to happen, I'd be able to put food on the table and clothes on their backs ... but the youngest of these children is only four years old, so I could potentially spend more years raising her than her parents have ... and then there's three sets of braces, help with three first cars, and then college, not to mention that one of the boys has some special medical needs, and he will likely need help/guidance well into adulthood -- realistically, if he became my responsibility, I'd have to name someone younger than me to "carry on" looking after him.  Before I agreed to this deal, I asked that some life insurance and the sale of their houses would come to me -- not to line my own pockets, but so I'd be able to comfortably care for the kids.  Of course, I'd have some Social Security until they turned 18. 

As I said, I've thought about this:  If this were to happen, I would keep good records so no one could ever accuse me of stealing from the children, but I don't think it's unreasonable to expect that the parents would leave me some financial help. 
« Last Edit: August 04, 2015, 07:01:49 AM by MrsPete »

Capsu78

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Re: Next step in being an adult - Writing a will
« Reply #6 on: August 04, 2015, 07:48:20 AM »
From a pricing standpoint, my adult daughters family is much like the OP's.  My wife and I sent her to our attorneys firm because we usually get a repeat client discount.
Nice firm and a bit hoighty toidy but their bill came in around $1200 so I think the $500 you are being quoted is pretty rock bottom...that being said, they put a lot of work into it including not just helping our families come up with the precise wording for beneficiary designations, but having us send them copies of the confirmations of the new changes- a process that took 90 days and multiple followups.
However, in the event a will actually needs to be executed, an additional copy of everything is stored and more importantly retrievable in a catastrophe
resistant storage room at the firm.  Having paid more for this level of organization gives me peace of mind that not just the "what" is covered, but also much of the "how" so that the executor would not have to organize this dead guys financial life.

Credaholic

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Re: Next step in being an adult - Writing a will
« Reply #7 on: August 04, 2015, 08:18:24 AM »
Okay, so this brings up something I didn't realize. I thought if our estate was left to our children then their guardian would have access to the funds to use in raising them. It sounds like this would need to be structured differently to be the case.

How do we title to avoid probate? Is this where a trust comes in, or is it something different?

MM_MG

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Re: Next step in being an adult - Writing a will
« Reply #8 on: August 04, 2015, 08:32:17 AM »
We should have already taken care of this, but DH and I conquered life insurance last year and this year I want to make sure we get our will in place. I e-mailed a friend of a friend who is an attorney and he told me that they have a bunch of packages, but a basic will, power of attorney, and health care documents and directives costs $499 to draft.

Is this a good deal? Or is there some way to draw the documents up yourself? How do you choose an executor? I've heard of executors being attorneys or being a trusted family member, I assume having an attorney act as executor means part of your estate goes to paying them?


I didn't read the other replies, but whether it is a "good deal" or not depends on a lot of factors, not the least of which is whether the documents will accomplish what you want them to accomplish and are legally enforceable.  However, it is inexpensive.  By comparison I have a friend who charges $3000 for the service. 

I would not draft the documents yourself. 

Scandium

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Re: Next step in being an adult - Writing a will
« Reply #9 on: August 04, 2015, 09:03:30 AM »
I don't understand the point of a will, unless you have some wast wealth you want to give away in a complicated fashion. My wife is the beneficiary on all my assets (401k etc), and the life insurance, and my kid secondary. If I die she gets everything, that's the law right and pretty simple? Once we designate someone as his guardian in the event we both die I'll make them the secondary on my life insurance. Then they'd get money to raise him, and he'd get all our assets once he's 18. Easy. Why would I need to get a lawyer involved in this? Other than to line their pockets and make it more complicated than it needs to be..

CommonCents

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Re: Next step in being an adult - Writing a will
« Reply #10 on: August 04, 2015, 09:14:12 AM »
I don't understand the point of a will, unless you have some wast wealth you want to give away in a complicated fashion. My wife is the beneficiary on all my assets (401k etc), and the life insurance, and my kid secondary. If I die she gets everything, that's the law right and pretty simple? Once we designate someone as his guardian in the event we both die I'll make them the secondary on my life insurance. Then they'd get money to raise him, and he'd get all our assets once he's 18. Easy. Why would I need to get a lawyer involved in this? Other than to line their pockets and make it more complicated than it needs to be..

Not necessarily. In my state, if my husband were to die, his parents would inherit 50% of the money over a certain amount where a beneficiary is not named - e.g., cars, "stuff", any accounts with no beneficiary, etc.  Look up the laws on intestacy in your state before relying on them.  Don't assume they'll do what you want - that's what wills are for.

Furthermore, relying on your state laws doesn't allow you to make a specific bequest to someone (or a charity).  Nor does it allow you to designate someone as a guardian or executor.  As noted above, if you directly give the money to the guardians, they can spend it however they like, which may not be on your kids.  Finally, do you want him getting a giant pot of money at 18?  Are you sure he'd handle it right?  This is why some restrict the money for food, clothing, shelter, medical, and education needs before a certain age, or have the money released in stages (e.g. some at 21, 25, 30 and 35).  If you have $1m saved - well, giving that to an 18 yo is a bit scary.

Axecleaver

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Re: Next step in being an adult - Writing a will
« Reply #11 on: August 04, 2015, 09:20:12 AM »
$500 is a good deal, but make sure that covers setting up the trust you want to create. I spent about $1000 recently to create a trust for the care of my daughter in the event of us both dying.

Quote
I thought if our estate was left to our children then their guardian would have access to the funds to use in raising them. It sounds like this would need to be structured differently to be the case.
Not exactly. There are different state laws that apply, but in many cases a guardian must go through the courts to gain access to assets left to minors. A will and trust can avoid this problem. The biggest advantage of setting up a trust in your will, in my view, is that you can structure the trust to provide security to your kids over a long period of time. For example, my trust establishes a monthly stipend for the care of my child which would be paid out to her guardian. When she reaches the age of majority (18 in the US) the payments switch from the guardian to her. When she reaches age 35, the trust dissolves and she gets the rest.

This avoids the "young and foolish" syndrome where she comes into money and doesn't manage it well. She isn't ready for that yet and if I'm not around to see her grow, I have to plan for the worst. The trust documents describe in detail how the money is managed. We designated a bank as trustee (for a fee, if it triggers) to avoid any entanglements with family.

The will also defines exactly who gets what stuff, and what happens in the event we're all killed together. Without these rules your assets may flow back to the government, you definitely don't want that.

Credaholic

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Re: Next step in being an adult - Writing a will
« Reply #12 on: August 04, 2015, 09:22:34 AM »
I don't understand the point of a will, unless you have some wast wealth you want to give away in a complicated fashion. My wife is the beneficiary on all my assets (401k etc), and the life insurance, and my kid secondary. If I die she gets everything, that's the law right and pretty simple? Once we designate someone as his guardian in the event we both die I'll make them the secondary on my life insurance. Then they'd get money to raise him, and he'd get all our assets once he's 18. Easy. Why would I need to get a lawyer involved in this? Other than to line their pockets and make it more complicated than it needs to be..

My understanding is that if you don't have a will designating a guardian the state can legally take your kids into custody. Practically speaking they will probably end up with a family member, not foster care, but the worst case scenario is still pretty scary and in best case the state is probably deciding which family member they should go to instead of you.

I hadn't thought about the stuff about when I would want the kids to inherit (besides necessary funds to raise them) but that's a really good point. I know an 18 year old who inherited and it was NOT the best situation. Although we're not super wealthy, with the life insurance policies if we both die and equity in our house, our estate would be worth $1M today and that number should continue to go up every year. Talking it out like this makes me realize how much we need a will!

Scandium

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Re: Next step in being an adult - Writing a will
« Reply #13 on: August 04, 2015, 09:22:49 AM »
I don't understand the point of a will, unless you have some wast wealth you want to give away in a complicated fashion. My wife is the beneficiary on all my assets (401k etc), and the life insurance, and my kid secondary. If I die she gets everything, that's the law right and pretty simple? Once we designate someone as his guardian in the event we both die I'll make them the secondary on my life insurance. Then they'd get money to raise him, and he'd get all our assets once he's 18. Easy. Why would I need to get a lawyer involved in this? Other than to line their pockets and make it more complicated than it needs to be..

Not necessarily. In my state, if my husband were to die, his parents would inherit 50% of the money over a certain amount where a beneficiary is not named - e.g., cars, "stuff", any accounts with no beneficiary, etc.  Look up the laws on intestacy in your state before relying on them.  Don't assume they'll do what you want - that's what wills are for.

Furthermore, relying on your state laws doesn't allow you to make a specific bequest to someone (or a charity).  Nor does it allow you to designate someone as a guardian or executor.  As noted above, if you directly give the money to the guardians, they can spend it however they like, which may not be on your kids.  Finally, do you want him getting a giant pot of money at 18?  Are you sure he'd handle it right?  This is why some restrict the money for food, clothing, shelter, medical, and education needs before a certain age, or have the money released in stages (e.g. some at 21, 25, 30 and 35).  If you have $1m saved - well, giving that to an 18 yo is a bit scary.

Ehh, isn't that kinda the point of getting married? We're one unit and share all assets? If something override that it would be idiotic. But knowing politicians I guess it's likely..

My thought is that if I trust someone to raise my child, I'd better also trust them to spend the life insurance money on him, not on a Porsche. And whatever he gets at 18 I'm not so worried about either. If he waste it so what? If he grew up with us he wouldn't get all our money at 18, so the result is the same. If he's that dumb he'll just have to figure it out. But I hope to raise a better child than that.

Cathy

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Re: Next step in being an adult - Writing a will
« Reply #14 on: August 04, 2015, 09:26:03 AM »
... Why would I need to get a lawyer involved in this? ...

There are many reasons, but a good example was recently posted on this forum in the Investor Alley forum. In this thread, the poster received a inheritance and wants to invest it without the income therefrom disqualifying him or her from receiving the earned income tax credit ("EITC"). This is difficult to do, as the poster has discovered. That unfortunate situation could have been avoided with a little estate planning. Instead of leaving the inheritance proceeds to the poster outright, the decadent could have created a testamentary trust for the benefit of the poster, with complete control over distributions vested in the trustee, who would be directed to apply the income of the trust for the maintenance of the beneficiary. Under this scenario, the trustee could avoid distributing too much income so that the poster remains eligible for EITC.

Bob W

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Re: Next step in being an adult - Writing a will
« Reply #15 on: August 04, 2015, 09:29:25 AM »
Not an attorney or financial advisor here but you may want to consider setting up and irrevocable trust prior to a will. 

I would set one up that has very low management fees and that the document stipulates investing for moderate growth (S and P?)  vs. the CDs most trust administrators invest in while charging 2% annual fees.

Your estates and life insurance can then be paid to the trust now or upon your death. 

If you just simply pay your estate to the kiddos there is a substantial chance they will either spend it all within 3 years or mismanage it badly.  In the insurance biz there is a truism  that widows spend all the money within 3 years regardless if it was 5K or 2 mill.   

CommonCents

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Re: Next step in being an adult - Writing a will
« Reply #16 on: August 04, 2015, 09:34:17 AM »
I don't understand the point of a will, unless you have some wast wealth you want to give away in a complicated fashion. My wife is the beneficiary on all my assets (401k etc), and the life insurance, and my kid secondary. If I die she gets everything, that's the law right and pretty simple? Once we designate someone as his guardian in the event we both die I'll make them the secondary on my life insurance. Then they'd get money to raise him, and he'd get all our assets once he's 18. Easy. Why would I need to get a lawyer involved in this? Other than to line their pockets and make it more complicated than it needs to be..

Not necessarily. In my state, if my husband were to die, his parents would inherit 50% of the money over a certain amount where a beneficiary is not named - e.g., cars, "stuff", any accounts with no beneficiary, etc.  Look up the laws on intestacy in your state before relying on them.  Don't assume they'll do what you want - that's what wills are for.

Furthermore, relying on your state laws doesn't allow you to make a specific bequest to someone (or a charity).  Nor does it allow you to designate someone as a guardian or executor.  As noted above, if you directly give the money to the guardians, they can spend it however they like, which may not be on your kids.  Finally, do you want him getting a giant pot of money at 18?  Are you sure he'd handle it right?  This is why some restrict the money for food, clothing, shelter, medical, and education needs before a certain age, or have the money released in stages (e.g. some at 21, 25, 30 and 35).  If you have $1m saved - well, giving that to an 18 yo is a bit scary.

Ehh, isn't that kinda the point of getting married? We're one unit and share all assets? If something override that it would be idiotic. But knowing politicians I guess it's likely..

My thought is that if I trust someone to raise my child, I'd better also trust them to spend the life insurance money on him, not on a Porsche. And whatever he gets at 18 I'm not so worried about either. If he waste it so what? If he grew up with us he wouldn't get all our money at 18, so the result is the same. If he's that dumb he'll just have to figure it out. But I hope to raise a better child than that.

But if you die early, YOU are not raising the child, someone else is.


In this case, they seem to think that because we have no children, we are perhaps less of a unit than people with children.  In reality, they are trying to do what they think people would want - support parents if no kids, and take care of kids if the couple doesn't all share in the kids.

I was wrong though about 50%, they get 25% of the amount after the stated sum.

Section 2-102. [Share of Spouse.]

The intestate share of a decedentís surviving spouse is:

(1) the entire intestate estate if:

(i) no descendant or parent of the decedent survives the decedent; or

(ii) all of the decedentís surviving descendants are also descendants of the surviving spouse and there is no other descendant of the surviving spouse who survives the decedent;

(2) the first $200,000, plus 3/4 of any balance of the intestate estate, if no descendant of the decedent survives the decedent, but a parent of the decedent survives the decedent;

(3) the first $100,000 plus 1/2 of any balance of the intestate estate, if all of the decedentís surviving descendants are also descendants of the surviving spouse and the surviving spouse has 1 or more surviving descendants who are not descendants of the decedent;

(4) the first $100,000 plus 1/2 of any balance of the intestate estate, if 1 or more of the decedentís surviving descendants are not descendants of the surviving spouse.

Scandium

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Re: Next step in being an adult - Writing a will
« Reply #17 on: August 04, 2015, 09:45:37 AM »
I don't understand the point of a will, unless you have some wast wealth you want to give away in a complicated fashion. My wife is the beneficiary on all my assets (401k etc), and the life insurance, and my kid secondary. If I die she gets everything, that's the law right and pretty simple? Once we designate someone as his guardian in the event we both die I'll make them the secondary on my life insurance. Then they'd get money to raise him, and he'd get all our assets once he's 18. Easy. Why would I need to get a lawyer involved in this? Other than to line their pockets and make it more complicated than it needs to be..

Not necessarily. In my state, if my husband were to die, his parents would inherit 50% of the money over a certain amount where a beneficiary is not named - e.g., cars, "stuff", any accounts with no beneficiary, etc.  Look up the laws on intestacy in your state before relying on them.  Don't assume they'll do what you want - that's what wills are for.

Furthermore, relying on your state laws doesn't allow you to make a specific bequest to someone (or a charity).  Nor does it allow you to designate someone as a guardian or executor.  As noted above, if you directly give the money to the guardians, they can spend it however they like, which may not be on your kids.  Finally, do you want him getting a giant pot of money at 18?  Are you sure he'd handle it right?  This is why some restrict the money for food, clothing, shelter, medical, and education needs before a certain age, or have the money released in stages (e.g. some at 21, 25, 30 and 35).  If you have $1m saved - well, giving that to an 18 yo is a bit scary.

Ehh, isn't that kinda the point of getting married? We're one unit and share all assets? If something override that it would be idiotic. But knowing politicians I guess it's likely..

My thought is that if I trust someone to raise my child, I'd better also trust them to spend the life insurance money on him, not on a Porsche. And whatever he gets at 18 I'm not so worried about either. If he waste it so what? If he grew up with us he wouldn't get all our money at 18, so the result is the same. If he's that dumb he'll just have to figure it out. But I hope to raise a better child than that.

But if you die early, YOU are not raising the child, someone else is.


In this case, they seem to think that because we have no children, we are perhaps less of a unit than people with children.  In reality, they are trying to do what they think people would want - support parents if no kids, and take care of kids if the couple doesn't all share in the kids.

I was wrong though about 50%, they get 25% of the amount after the stated sum.

Section 2-102. [Share of Spouse.]

The intestate share of a decedentís surviving spouse is:

(1) the entire intestate estate if:

(i) no descendant or parent of the decedent survives the decedent; or

(ii) all of the decedentís surviving descendants are also descendants of the surviving spouse and there is no other descendant of the surviving spouse who survives the decedent;

(2) the first $200,000, plus 3/4 of any balance of the intestate estate, if no descendant of the decedent survives the decedent, but a parent of the decedent survives the decedent;

(3) the first $100,000 plus 1/2 of any balance of the intestate estate, if all of the decedentís surviving descendants are also descendants of the surviving spouse and the surviving spouse has 1 or more surviving descendants who are not descendants of the decedent;

(4) the first $100,000 plus 1/2 of any balance of the intestate estate, if 1 or more of the decedentís surviving descendants are not descendants of the surviving spouse.

wtf? Why in the world would my parents inherit anything?? That makes no sense.

In any case, I looked up the law in MD. With a spouse and a child they'd get half each. Not optimal, but ok. But, important parts was that this does not apply to:

Quote
Many valuable assets donít go through your will, and arenít affected by intestate succession laws. Here are some examples:

    -property youíve transferred to a living trust
    -life insurance proceeds
    -funds in an IRA, 401(k), or other retirement account
    -securities held in a transfer-on-death account
    -payable-on-death bank accounts, or
    -property you own with someone else in joint tenancy or tenancy by the entirety.

That's pretty much all my assets! Assuming our joint vanguard and bank accounts are "transfer-on-death accounts".

Just reading all this legalese makes my head hurt. So, if I have a deep distaste for lawyers and state meddling in what should be simple private inheritance; should I get a will, or not and hope it works out?

I'm also not a US citizen, but my wife is. I wonder if that would complicate things? Our son is a dual citizen so potentially two countries laws could apply? This sounds worse by the minute..

lol; there's a Quicken WillMaker.. I wonder how well that works.
« Last Edit: August 04, 2015, 09:49:32 AM by Scandium »

Credaholic

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Re: Next step in being an adult - Writing a will
« Reply #18 on: August 04, 2015, 10:42:05 AM »
This sounds worse by the minute..

lol; there's a Quicken WillMaker.. I wonder how well that works.

Sorry my thread is ruining your day, Scandium ;) I was thinking it was probably a simple enough situation that there might be options to handle it myself (like Quicken) but now I'm thinking we definitely need an attorney!

CommonCents

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Re: Next step in being an adult - Writing a will
« Reply #19 on: August 04, 2015, 10:47:19 AM »
Scandium, despite the mess, understand that the law isn't "meddling" in "private inheritance" but rather trying to establish default rules for when people DON'T set their own rules by writing a will, based on what the majority of the people would likely want.  Without a will, a state is stuck with a dead person and no way to know their preferences.  You can complain about a lot of things (and clearly quibble over whether that's how the majority would want it), but I wouldn't call it meddling!

Just be warned, Quicken and other online forms often have mistakes.  They also don't ask questions that you might want to consider, such as ones posed in this thread.
« Last Edit: August 14, 2015, 08:51:41 AM by CommonCents »

Credaholic

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Re: Next step in being an adult - Writing a will
« Reply #20 on: August 04, 2015, 11:04:28 AM »
My own husband doesn't want his dad to inherit a dime...yet hasn't bothered to write a will, despite me telling him his dad could get money otherwise.

That is really frustrating! I think people just don't like thinking about this stuff. I know it took DH and I a long time to decide where the kids should go, and before that answer came to us naturally we basically didn't want to deal with it.

I've gotten a couple quotes from attorneys now, and it seems like the base package includes a will or trust, powers of attorney, and medical directives. Is the POA and medical directives something easy enough that I could do it myself to try to chisel the flat rate down a bit?

CommonCents

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Re: Next step in being an adult - Writing a will
« Reply #21 on: August 04, 2015, 12:04:42 PM »
My own husband doesn't want his dad to inherit a dime...yet hasn't bothered to write a will, despite me telling him his dad could get money otherwise.

That is really frustrating! I think people just don't like thinking about this stuff. I know it took DH and I a long time to decide where the kids should go, and before that answer came to us naturally we basically didn't want to deal with it.

I've gotten a couple quotes from attorneys now, and it seems like the base package includes a will or trust, powers of attorney, and medical directives. Is the POA and medical directives something easy enough that I could do it myself to try to chisel the flat rate down a bit?

They aren't what's driving the bulk of the rate - it's the time spent with you to ask you questions, understand your situation, and draft your specific documents.  The POA is likely just a straightforward form; cutting it out probably won't change the baseline much if anything.  Medical directives is more possible to save a few dollars, but a good one would cover many possibilities, which means you probably don't want just a form appointing a person, but a set of instructions to someone.  (For example, a lot of people say "No extraordinary measures."  Well, does that mean just no resuscitation?  Or no feeding tube as well?  What if you are projected to make a full recovery after a short period in a coma?  Does your expected prognosis make a difference?  What if you'll be in a lot of pain?)  And please, talk through what you want with whomever you're appointing.

KittyCat

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Re: Next step in being an adult - Writing a will
« Reply #22 on: August 04, 2015, 12:31:58 PM »
My situation is pretty simple and straightforward so far (single, never married, a few bank accounts, and a some assets and investments) so I set one up through Willing. It's simple and does not have some options like donating the body to science (which they say will be an option in the future), and I'll probably switch it over to another method as my situation becomes more complicated, but I think it will work just fine for me at this point in time. I have yet to set up a living will through them so I don't know how robust those forms are.

Instead of leaving the inheritance proceeds to the poster outright, the decadent could have created a testamentary trust for the benefit of the poster, with complete control over distributions vested in the trustee, who would be directed to apply the income of the trust for the maintenance of the beneficiary. Under this scenario, the trustee could avoid distributing too much income so that the poster remains eligible for EITC.
Hmm... I guess I'll have to look into that.
« Last Edit: August 04, 2015, 12:35:47 PM by KittyCat »

Scandium

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Re: Next step in being an adult - Writing a will
« Reply #23 on: August 04, 2015, 02:42:27 PM »
Scandium, despite the mess, understand that the law isn't "meddling" in "private inheritance" but rather trying to establish default rules for when people DON'T set their own rules by writing a will, based on what the majority of the people would likely want.  Without a will, a state is stuck with a dead person and no way to know their preferences.  You can complain about a lot of things (and clearly quibble over whether that's how the majority would want it), but I wouldn't call it meddling!

My own husband doesn't want his dad to inherit a dime...yet hasn't bothered to write a will, despite me telling him his dad could get money otherwise.  I'm on the house and most of the accounts, but...  I don't even think I'm on his work insurance, because he started there just before we got engaged, although that would pass separately.

Just be warned, Quicken and other online forms often have mistakes.  They also don't ask questions that you might want to consider, such as ones posed in this thread.

Well, then can I write a piece of paper saying "Give our money and kid to X if both of us die", have some sort of judge/lawyer witness us sign it and then we're good? If not then it's just the state unduly complicating the process (because it's run by lawyers). That's really all I need, I don't understand what all the complications would be, to involve a $900/hr lawyer..

CommonCents

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Re: Next step in being an adult - Writing a will
« Reply #24 on: August 04, 2015, 03:13:44 PM »
Scandium, despite the mess, understand that the law isn't "meddling" in "private inheritance" but rather trying to establish default rules for when people DON'T set their own rules by writing a will, based on what the majority of the people would likely want.  Without a will, a state is stuck with a dead person and no way to know their preferences.  You can complain about a lot of things (and clearly quibble over whether that's how the majority would want it), but I wouldn't call it meddling!

My own husband doesn't want his dad to inherit a dime...yet hasn't bothered to write a will, despite me telling him his dad could get money otherwise.  I'm on the house and most of the accounts, but...  I don't even think I'm on his work insurance, because he started there just before we got engaged, although that would pass separately.

Just be warned, Quicken and other online forms often have mistakes.  They also don't ask questions that you might want to consider, such as ones posed in this thread.

Well, then can I write a piece of paper saying "Give our money and kid to X if both of us die", have some sort of judge/lawyer witness us sign it and then we're good? If not then it's just the state unduly complicating the process (because it's run by lawyers). That's really all I need, I don't understand what all the complications would be, to involve a $900/hr lawyer..

$900/hr is an exaggeration.  But that aside, yes, your state should allow you to write your own will.  You need to make sure you have the right elements such that it's self-proving (e.g. appropriate number of people witnessing it (varies by state), documentation such as notary).  A self-proving will makes it easier to go through probate because you don't have to haul your witness into court to ask them if they remember you signing it.  Also, you don't need a lawyer to witness it.  (Just avoid having someone witness who could benefit or whose spouse could benefit, because in some states, that could mean they lose their share.)  Note: This is not intended to be an exhaustive list of the things to pay attention to.  There are some pretty simple wills out there that have worked just fine. 

The legalese in the documents stems from problems that people have encountered (aka other lawsuits).  For example:
- Which Jane Smith?  So they add in social security numbers or addresses for beneficiaries to make it easier to identify and track down the beneficiaries. 
- You and your spouse were in a car crash together.  One survives the other by a day before dying.  Does your money pass to them and then according to their will?  Or does it treat them as having passed?  (In the will I haven't finished drafting yet, I have a 30 day survival clause.)
- Was an heir born after the will was written but before you were deceased intentionally omitted or not?  With a clause stating which way, the court knows.

The lawyer is there to make sure you consider "what ifs" such as - What if one child predeceases you - do you want that kids share split between his/her children, or do you want the share split between your other living children?  Do  you want per stirpes or per capita (quick google search: http://wills.about.com/od/estateplanning101/a/perstripvpercap.htm).  What if you have a child after you wrote the will?  And then to make sure you wrote up what you mean to write.  I recently worked on a contract amendment where many of the things the program staff wrote up were not what they had intended. 

So in sum, you don't need a lawyer to do it, but it's handy to avoid problems for your beneficiaries after you pass.  And the problems are likely because your instructions were not sufficiently clear or didn't cover all possibilities (and one of those possibilities then happened).  Maybe you'll be lucky, but if you are not, then it's pennywise and poundfoolish approach.

Scandium

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Re: Next step in being an adult - Writing a will
« Reply #25 on: August 04, 2015, 03:20:20 PM »
Mostly unrelated, but yes, a slight exaggeration. I got a quote from a tax lawyer last year, for $450/hr.

Credaholic

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Re: Next step in being an adult - Writing a will
« Reply #26 on: August 04, 2015, 03:28:17 PM »
Mostly unrelated, but yes, a slight exaggeration. I got a quote from a tax lawyer last year, for $450/hr.

I've sent out a number of feelers today and it seems that for a basic will, POA and health directives everyone charges a flat fee somewhere between $500-1000, more for a trust.

So going back to the trust question, is that something I need? I asked my attorney friend who was quoting in the middle of that range if he could match the cheapest quote I got and he said yes for a basic will, but that if I needed "a children's trust, credit trust,  marital trust, Washington state credit trust, special needs trust or something that has to be tailored to your needs then no." I don't even know what differentiates all of these, let alone what I'd need...

If I do stick with a very basic will, no trust, does anyone have an opinion on using LegalZoom?

mxt0133

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Re: Next step in being an adult - Writing a will
« Reply #27 on: August 04, 2015, 05:12:36 PM »
You are getting into analysis paralysis zone here.  Get the will, POA, and medical directives.  You can address the need for a trust at a later date.  It might cost more but at least you got the basics done.

With regard to cost.  Look up what it costs for probate costs.  In CA an estate of 400k would cost around 20k in attorney fees.

http://www.nolo.com/legal-encyclopedia/california-probate-an-overview.html

I took a CFP course and I spend about 50 hours in estate planning.  I know the basics of how one should title their assets but I still feel the need for a lawyer with 10+ years of experience to ensure that I have it correct.  So doing the math paying $1000-$1500 for a will/trust that you can be confident in is worth the price.


h2ogal

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Re: Next step in being an adult - Writing a will
« Reply #28 on: August 04, 2015, 05:40:39 PM »
Quote
a basic will, power of attorney, and health care documents and directives costs $499 to draft.

We live in a small town.  We recently had our lawyer create all these documents for $250.   I thought that was surprisingly low - he spent at least 2 hours with us by the time we got the final drafts made up.

By contrast, my nurse practitioner recently spent 7 minutes with me, and I paid $120 for the visit.

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Re: Next step in being an adult - Writing a will
« Reply #29 on: August 04, 2015, 06:11:04 PM »
I cannot speak to legal matters with setting everything up, but I do know you do not need a lawyer to set up your advance directives. Any doctor, hospital, or can be found online for your state, can provide you with healthcare proxy forms and in some states, MOLST forms.  Each of you choose your proxy and a back up, get two witnesses, make multiple copies, give to all docs and hospital stays, etc.  If you are each other's proxy, copy it (shrink it down) and seriously, carry it in your purse.  MOLST is like a hyped-up proxy, you state your wishes on it, your doc signs it and do the same thing copying.  IDK about other states, but in NY, I had lots of patients pay for living wills, for whatever reason, they were rarely regarded, proxy and MOLST and if you have a DNR (don't want to be resuscitated) was plenty.  Because your proxy (if you've had the all important convo when filling it out of what each other's wishes are) has been specifically chosen by you to make care decisions when you cannot.  The only catch in NY, the proxy's power does not cover artificial nutrition and hydration wishes, so write your wishes regarding that on the proxy form. In my state, I would not waste money on a living will, and I certainly would not pay one to do a proxy or MOLST.  A DNR in the community, your doc fills out, but it is not valid if you are hospitalized, a new one needs to be completed.

I would pay for a Durable POA healthcare and financial, but I would first check if proxy and MOLST are plenty and you don't really need a healthcare POA. 

when you get all this nonsense done as a couple, I would highly recommend helping your parents through the healthcare piece, at least.  Especially if there are several siblings who may not agree in a crisis, proxy is key here.  Have the hard discussions and decision making before they get sick.  When they do get sick, you have the comfort of knowing clearly what they wanted and what they did not.

Credaholic

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Re: Next step in being an adult - Writing a will
« Reply #30 on: August 04, 2015, 10:03:37 PM »
You are getting into analysis paralysis zone here.  Get the will, POA, and medical directives.  You can address the need for a trust at a later date.  It might cost more but at least you got the basics done.

With regard to cost.  Look up what it costs for probate costs.  In CA an estate of 400k would cost around 20k in attorney fees.

http://www.nolo.com/legal-encyclopedia/california-probate-an-overview.html

I took a CFP course and I spend about 50 hours in estate planning.  I know the basics of how one should title their assets but I still feel the need for a lawyer with 10+ years of experience to ensure that I have it correct.  So doing the math paying $1000-$1500 for a will/trust that you can be confident in is worth the price.

But analysis paralysis is my specialty! ;)

Okay, so you're saying I probably do want a trust, but I definitely want to talk to a lawyer to get it figured out. On it! Now I just have to pick an attorney...

ETA I've officially picked an attorney who will set up a children's trust along with the basics for $600. Feeling good about finally getting this handled!
« Last Edit: August 04, 2015, 10:25:50 PM by Credaholic »

MrsPete

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Re: Next step in being an adult - Writing a will
« Reply #31 on: August 05, 2015, 07:11:58 AM »
Okay, so this brings up something I didn't realize. I thought if our estate was left to our children then their guardian would have access to the funds to use in raising them. It sounds like this would need to be structured differently to be the case.

How do we title to avoid probate? Is this where a trust comes in, or is it something different?
Not to put off your question, but I think those queries are better directed at a lawyer in your own state.  In general, a child can't inherit until he's 18, which you now realize could put your sister in a tough financial position! 

Our lawyer brought up a number of things we hadn't considered at all:  What if all four of us were to die together?  Who's the back-up recipient?  What if one of your children dies before you?  What if that child had children already?  Would you want everything to go to the remaining child, or would you want that child's children to receive what would've gone to their mother/father?  Do you want the children to receive it all at 18, or do you want to stagger it?  Or do you want to make inheritance based upon college graduation?  What if your spouse dies, you remarry and have another child -- will that new child inherit a part of the original spouse's assets?

And the living will (health power of attorney) brought up questions of a different nature, which we also had not considered in depth. 

I'm telling you, the money we spent on the lawyer who drew up our will was money well spent.  He brought up possibilities we had not considered, and he forced us to make decisions we hadn't realized could impact our family in the future.  We didn't take his advice on everything, but we listened and learned, and we made informed decisions. 

A last thought:  You can leave the financial assets to your sister NOW, and you can write her a personal letter -- to be left with your will -- specifying things you'd want to happen with it.  For example, you might ask that she set aside a portion for the kids' college education.  If you trust her to raise the kids, you'll trust her to care for your money too.  Then when your kids are adults, you'll want to CHANGE your will so that they would, indeed, inherit. 

MrsPete

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Re: Next step in being an adult - Writing a will
« Reply #32 on: August 05, 2015, 07:20:17 AM »
wtf? Why in the world would my parents inherit anything?? That makes no sense.
That's something our lawyer brought up as well!  In certain circumstances, our parents could inherit -- even though we'd want our money to go to our children. 

Here's another twist that seems like common sense, but our lawyer advised us to spell it out in our will: 

I own a piece of land together with my brother.  We both have children, and we both assumed that the two of us will retain ownership for our lives ... then our children will inherit when we die.  But we never considered that in some circumstances 100% ownership can go to the surviving owner, and children of the first to die get nothing.  Neither of us is out to screw over our nieces/nephews by trying to live longer and "keep ownership".  So we each specified in our wills that upon our death, 50% ownership will go to our children.  This means that at some point one of us will hold co-ownership with nieces/nephews. 

MrsPete

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Re: Next step in being an adult - Writing a will
« Reply #33 on: August 05, 2015, 07:32:44 AM »
I don't understand the point of a will, unless you have some wast wealth you want to give away in a complicated fashion. My wife is the beneficiary on all my assets (401k etc), and the life insurance, and my kid secondary. If I die she gets everything, that's the law right and pretty simple? Once we designate someone as his guardian in the event we both die I'll make them the secondary on my life insurance. Then they'd get money to raise him, and he'd get all our assets once he's 18. Easy. Why would I need to get a lawyer involved in this? Other than to line their pockets and make it more complicated than it needs to be..
Partially right:  Our lawyer explained that "beneficiary trumps wills", and since our kids are both adults now, we have already named them beneficiaries on our bank accounts, life insurance, etc.  We have written them a lengthy document giving them the locations, account numbers, etc. about HOW to go about clearing out these accounts.

However, since your son is a minor you need to specify who will raise him.  In our family, if this should come to pass, I know that it'll be a fight: I am named guardian of a niece and nephew ... and I know (and have discussed with the children's parents) that other family members would oppose this.  I am 8 years older than the parents, and my children are already grown.  In contrast, the aunt/uncle who would expect to take in the children have same-aged children, cousins to whom these children are close.  But the parents have chosen me because my values and parenting style is more similar to their own.  THEIR CHOICE, not the aunt/uncle's.  Hopefully I'll never have to fight this battle, but their will specifies their choices, so -- if it comes to pass -- I will raise those children. 

Also, no, you say the guardian would get your money to raise the child, then at 18 it'd become his.  No.  If you give the money to the guardian, it is his or hers FOR LIFE.  This might be fair, if, say, they inherited $100,000 and took in your five-year old.  They'd probably need that money (and more) to raise him.  On the other hand, if they inherited $1,000,000 when your child was 16, they'd have money leftover -- money that they could share with him, if they chose, or they could keep. 

A will makes inheritance SURE and FAST.  It assures us that no nere-do-wells will be able to step in and make false claims.  I don't think it's a waste at all.  As I said, we paid $250 for the two of us to have wills, medical power of attorneys, and financial powers of attorneys drawn up through the credit union -- and because my children are adults, we never have to do this again, though we probably will have a codcil (is that the word?) written in once we have grandchildren.  Not a lot of expense to protect a lifetime's assets. 

MrsPete

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Re: Next step in being an adult - Writing a will
« Reply #34 on: August 05, 2015, 07:36:32 AM »
Mostly unrelated, but yes, a slight exaggeration. I got a quote from a tax lawyer last year, for $450/hr.
I bought an hour of a lawyer's time -- not the guy who wrote up our wills, unrelated issue -- and it cost me $100.  He was a nice guy, and I walked out fully understanding my options (and the consequences of all my possible choices). 

He took no action on my part:  He just gave me advice on a Friday afternoon.  Money well spent.

MrsPete

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Re: Next step in being an adult - Writing a will
« Reply #35 on: August 05, 2015, 07:40:54 AM »
My own husband doesn't want his dad to inherit a dime...yet hasn't bothered to write a will, despite me telling him his dad could get money otherwise.

That is really frustrating! I think people just don't like thinking about this stuff. I know it took DH and I a long time to decide where the kids should go, and before that answer came to us naturally we basically didn't want to deal with it.

I've gotten a couple quotes from attorneys now, and it seems like the base package includes a will or trust, powers of attorney, and medical directives. Is the POA and medical directives something easy enough that I could do it myself to try to chisel the flat rate down a bit?
Speaking only for me and my husband, we didn't find these questions difficult to deal with; however, we did discuss that we find it easy because at 48/50 and in good health, these things feel far away.  We agreed that it'd be harder to do it if one of us had just been diagnosed with cancer, or if we were in our 90s and felt that death was near. 

Our Credit Union offered only a package deal with the three documents for each of us.  We felt it was best to go ahead and get ALL the documents done at once, and then we don't have to think about them again later.  Since the discussions overlapped a great deal, I don't see that you could "chisel the rate".

Scandium

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Re: Next step in being an adult - Writing a will
« Reply #36 on: August 05, 2015, 07:41:51 AM »
I don't understand the point of a will, unless you have some wast wealth you want to give away in a complicated fashion. My wife is the beneficiary on all my assets (401k etc), and the life insurance, and my kid secondary. If I die she gets everything, that's the law right and pretty simple? Once we designate someone as his guardian in the event we both die I'll make them the secondary on my life insurance. Then they'd get money to raise him, and he'd get all our assets once he's 18. Easy. Why would I need to get a lawyer involved in this? Other than to line their pockets and make it more complicated than it needs to be..
Partially right:  Our lawyer explained that "beneficiary trumps wills", and since our kids are both adults now, we have already named them beneficiaries on our bank accounts, life insurance, etc.  We have written them a lengthy document giving them the locations, account numbers, etc. about HOW to go about clearing out these accounts.

However, since your son is a minor you need to specify who will raise him.  In our family, if this should come to pass, I know that it'll be a fight: I am named guardian of a niece and nephew ... and I know (and have discussed with the children's parents) that other family members would oppose this.  I am 8 years older than the parents, and my children are already grown.  In contrast, the aunt/uncle who would expect to take in the children have same-aged children, cousins to whom these children are close.  But the parents have chosen me because my values and parenting style is more similar to their own.  THEIR CHOICE, not the aunt/uncle's.  Hopefully I'll never have to fight this battle, but their will specifies their choices, so -- if it comes to pass -- I will raise those children. 

Also, no, you say the guardian would get your money to raise the child, then at 18 it'd become his.  No.  If you give the money to the guardian, it is his or hers FOR LIFE.  This might be fair, if, say, they inherited $100,000 and took in your five-year old.  They'd probably need that money (and more) to raise him.  On the other hand, if they inherited $1,000,000 when your child was 16, they'd have money leftover -- money that they could share with him, if they chose, or they could keep. 

A will makes inheritance SURE and FAST.  It assures us that no nere-do-wells will be able to step in and make false claims.  I don't think it's a waste at all.  As I said, we paid $250 for the two of us to have wills, medical power of attorneys, and financial powers of attorneys drawn up through the credit union -- and because my children are adults, we never have to do this again, though we probably will have a codcil (is that the word?) written in once we have grandchildren.  Not a lot of expense to protect a lifetime's assets.

Yes, the guardian for our minor son is an issues. Unfortunate I think that means we need to set up a will at some point. We just feel a bit awkward asking the people we have chosen, they're not even family. But we don't think either of my wife's or my siblings would fit.

Anywho, just to clarify; I meant that the guardians would get the life insurance, $1 mill or so, to raise him, and our son would get the rest of our assets. Once he's late teens I'll probably go with a lower life insurance anyway since we/they wouldn't need that much at that point.

Credaholic

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Re: Next step in being an adult - Writing a will
« Reply #37 on: August 05, 2015, 10:00:06 AM »
Speaking only for me and my husband, we didn't find these questions difficult to deal with; however, we did discuss that we find it easy because at 48/50 and in good health, these things feel far away.  We agreed that it'd be harder to do it if one of us had just been diagnosed with cancer, or if we were in our 90s and felt that death was near. 

Interesting! Funnily enough I feel the opposite. Because my children are so young (both under 3 years old) and there is so much ahead of them, so many changes (both for them and the people we'd consider as guardians) it made it hard for us to make a firm decision. In fact initially when we just had our son we were looking at a different aunt and uncle to potentially be guardian, but never pulled the trigger and I think it's because subconsciously I realized it wasn't quite right. Once our daughter was born it was obvious we wouldn't send two kids to be with this particular aunt and uncle - they have an only child and could have adapted to one more if we faced a tragedy, but more than that would be overwhelming to them. Now that we're done having kids and know what our family unit looks like, we're able to actually make the decision of who we'd want our kids raised by if we weren't there to do it.

If I was 60 and diagnosed with cancer I think it would be easier for me to survey the existing landscape and make some quick decisions. I'm all about analysis paralysis when given all the time in the world to mull a decision over from every which way, but when under a deadline I can pull the trigger!

AlwaysLearningToSave

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Re: Next step in being an adult - Writing a will
« Reply #38 on: August 05, 2015, 10:40:10 AM »
Not an attorney or financial advisor here but you may want to consider setting up and irrevocable trust prior to a will. 
 

This may have been just a typographical error to say irrevocable rather than revocable, but it is worth pointing out that most people do not need an irrevocable trust. 

Most of the time a revocable trust is sufficient, and in fact preferable.  An irrevocable trust is a permanent gift effective as of the time the trust is created.  A revocable trust allows more flexibility for the grantor to change the trust. Irrevocable trusts are usually used in complex tax and estate planning for individuals with a high net worth (at least 5 million individually, or 10 million for a couple).

For most young families with children, a will that creates a testamentary trust will suffice.  The testamentary trust only comes into effect upon death. 

GizmoTX

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Re: Next step in being an adult - Writing a will
« Reply #39 on: August 05, 2015, 12:50:16 PM »
For most young families with children, a will that creates a testamentary trust will suffice.  The testamentary trust only comes into effect upon death.
+1
This works for grandparents, too. My grandmother left some college money to my younger minor brothers in a testamentary trust & asked me to be the trustee. It was to be invested, used for college expenses, & any residual paid out when each reached 25.

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Re: Next step in being an adult - Writing a will
« Reply #40 on: August 05, 2015, 01:00:54 PM »
Yes, the guardian for our minor son is an issues. Unfortunate I think that means we need to set up a will at some point. We just feel a bit awkward asking the people we have chosen, they're not even family. But we don't think either of my wife's or my siblings would fit.

Anywho, just to clarify; I meant that the guardians would get the life insurance, $1 mill or so, to raise him, and our son would get the rest of our assets. Once he's late teens I'll probably go with a lower life insurance anyway since we/they wouldn't need that much at that point.

I'm not sure how "legal" they are; but for all my family members who I am either the primary guardian upon their death, or in line- they don't have an actual will. They just typed up documents and had us all sign them and had them notarized. There was no talk about money to raise the kids. I'm not concerned about that. I'd take in the kids whether or not their expenses were paid.  If they have life insurance, I assume the child is the beneficiary. Our assets are significantly more than theirs, so we will have an official will.


$1 million sounds like a lot to raise a child; I don't think that needs to go to the guardians in total. Is it possible to set it up in trust allowing them to withdraw a certain percentage per year, with the rest going to the child upon a certain age?



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Re: Next step in being an adult - Writing a will
« Reply #41 on: August 05, 2015, 01:29:45 PM »
Yes, the guardian for our minor son is an issues. Unfortunate I think that means we need to set up a will at some point. We just feel a bit awkward asking the people we have chosen, they're not even family. But we don't think either of my wife's or my siblings would fit.

Anywho, just to clarify; I meant that the guardians would get the life insurance, $1 mill or so, to raise him, and our son would get the rest of our assets. Once he's late teens I'll probably go with a lower life insurance anyway since we/they wouldn't need that much at that point.

I'm not sure how "legal" they are; but for all my family members who I am either the primary guardian upon their death, or in line- they don't have an actual will. They just typed up documents and had us all sign them and had them notarized. There was no talk about money to raise the kids. I'm not concerned about that. I'd take in the kids whether or not their expenses were paid.  If they have life insurance, I assume the child is the beneficiary. Our assets are significantly more than theirs, so we will have an official will.


$1 million sounds like a lot to raise a child; I don't think that needs to go to the guardians in total. Is it possible to set it up in trust allowing them to withdraw a certain percentage per year, with the rest going to the child upon a certain age?

From the discussion here and elsewhere I guess the problem might occur if another family member decide to go to court to get the kids instead of you. The document might not hold up vs the legal "chain of custody"..

The $1 mill was mainly for my wife. So she can keep the house, pay for childcare for x years, college, still save for her retirement, other costs etc. And it's not indexed to inflation either so $1MM in 10 or 20 years is a bit less than now. Plus, the cost difference between a $500k and a $1MM policy wasn't all that much anyway.

Yes I read about trusts, but I sounded pretty complicated. I know the people we want as guardians and will just trust that they will give him what he needs if it comes to it. The odds are so low and they're good parents so with a kid and a million bucks I don't think they could go very wrong :)

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Re: Next step in being an adult - Writing a will
« Reply #42 on: August 05, 2015, 01:41:30 PM »
Quote
The $1 mill was mainly for my wife.

Oh, $1million in life insurance makes a TON of sense.

But if your child was going to another guardian (so presumably your wife pre-deceased your or you went together), it seems excessive to give the guardian the $1 million.   I would think the will needs to be written in a way that it is specific to the child's expenses with the remainder going to the child.  Probably they would do the right thing; but they could just take the million, much of which won't be needed for the kid.  (You might want to be very specific about college being paid for, for example- as that is something a lot of people do not do for their own kids.)
« Last Edit: August 06, 2015, 08:07:09 AM by iowajes »

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Re: Next step in being an adult - Writing a will
« Reply #43 on: August 05, 2015, 03:03:04 PM »
Yes, the guardian for our minor son is an issues. Unfortunate I think that means we need to set up a will at some point. We just feel a bit awkward asking the people we have chosen, they're not even family. But we don't think either of my wife's or my siblings would fit.

Anywho, just to clarify; I meant that the guardians would get the life insurance, $1 mill or so, to raise him, and our son would get the rest of our assets. Once he's late teens I'll probably go with a lower life insurance anyway since we/they wouldn't need that much at that point.

I'm not sure how "legal" they are; but for all my family members who I am either the primary guardian upon their death, or in line- they don't have an actual will. They just typed up documents and had us all sign them and had them notarized. There was no talk about money to raise the kids. I'm not concerned about that. I'd take in the kids whether or not their expenses were paid.  If they have life insurance, I assume the child is the beneficiary. Our assets are significantly more than theirs, so we will have an official will.


$1 million sounds like a lot to raise a child; I don't think that needs to go to the guardians in total. Is it possible to set it up in trust allowing them to withdraw a certain percentage per year, with the rest going to the child upon a certain age?

From the discussion here and elsewhere I guess the problem might occur if another family member decide to go to court to get the kids instead of you. The document might not hold up vs the legal "chain of custody"..

The $1 mill was mainly for my wife. So she can keep the house, pay for childcare for x years, college, still save for her retirement, other costs etc. And it's not indexed to inflation either so $1MM in 10 or 20 years is a bit less than now. Plus, the cost difference between a $500k and a $1MM policy wasn't all that much anyway.

Yes I read about trusts, but I sounded pretty complicated. I know the people we want as guardians and will just trust that they will give him what he needs if it comes to it. The odds are so low and they're good parents so with a kid and a million bucks I don't think they could go very wrong :)

A very common setup for young families is to have a will with a testamentary trust set up such that if one spouse dies, surviving spouse gets everything.  If both spouses die and one or more children survive, the testamentary trust (a trust that only comes into effect upon death) holds the assets.  Mandatory income distributions from the trust are used for support of the children (mandatory distributions for tax reasons), and the trustee is given discretionary authority to reach principal for child's health, education, maintenance, and support.  The trust then terminates when children reach a predetermined age (often at least 25 years old) and the children receive the rest of the value of the trust.  Sometimes there are two distributions (i.e. 50% of residue at age 25, the rest at age 30). 

This is often used in conjunction with joint ownership of real estate, deposit accounts, and securities accounts as well as beneficiary designations designed to avoid probate.  Life insurance beneficiary designations often list surviving spouse as primary beneficiary with secondary beneficiary being the owner's estate (which ultimately flows into the testamentary trust).

Actually, the greater concern I have with life insurance proceeds going to the kids is not the custodian of the funds but the danger that the kids pose to themselves-- when they reach the age of majority (18 in most states), they get the money outright.  Do you really want an 18 year old trying to manage a $500,000 to $700,000 portfolio?  Sure, an institutional trustee will eat into investment returns but you can at least rest assured there's a better chance your kids will be mature enough to handle the money when they get unfettered access to it. 

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Re: Next step in being an adult - Writing a will
« Reply #45 on: August 06, 2015, 06:44:21 AM »
Quote
The $1 mill was mainly for my wife.

Oh, $1million in life insurance makes a TON of sense.
I don't know that it needs to be a million, but for someone with children, a substantial policy makes sense. 

If one spouse dies, the remaining spouse is going to need some financial help, and it's not only about keeping the house and paying for college.  When our kids were small, my husband took them to school in the morning, and I was home in time to see them off the bus, then I took care of homework and dinner and kids' activities.  Take either one of us out of that equation, and you probably need to add in a paid caregiver.  And since the remaining parent's focus should be the kids, help with housekeeping and/or cooking might come into play too, at least temporarily while the family's becoming adapted to the "new normal". 

If both parents are gone, the guardians may need that money for more than just food on the table.  I know that when my sister-in-law and I were talking about this seriously, she made two comments at which I initially bristled, but then I realized she was right:  First, she said that she'd immediately take my money and buy a larger house.  Huh?  But then she pointed out that she and her husband are happily raising two kids in a 1000ish square foot house, and it won't accommodate the addition of two kids.  She's right to say that the kids would need rooms, and it's not reasonable to set up the card table for additional seating every night for dinner.  Second, she said that she'd use the money for all four kids' college educations.  At the point she said that, all the kids were 5-6.  And she's right that if she'd put in a decade or more treating our four kids equally as cousin-siblings, it would not make sense to say to her own "all we can afford is community college", while saying to ours "you have $50,000 per year for school".  (In our case, this would've been even worse because our oldests will graduate the same year AND our youngests will graduate the same year.)  She'd have put her heart and soul into raising my kids, and dividing the college money by four would be a way of paying them back for their efforts. 

Also, consider that before you brought your child into your home, you had time to prepare -- perhaps years.  A guardian might literally be told tonight that you've died, and he needs to pick up the children from day care by 6:00 tonight.  Something like this happened to friends of mine, and they were forced to buy a new house FAST (their old house was fine for themselves + two boys, but when three additional children were added overnight, it wasn't enough).  These are church friends of ours.  The kids came with nothing but the clothes on their backs, so our Sunday School class bought each child a bed/bedding and spent a Saturday painting the kids' rooms and putting together their new beds.  Another class bought them back to school clothes.  That family was lucky to have extended family to help.