If your parent recently died (estate planning)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My spouse and I experienced the deaths of all four of our parents over the last several years. One set of parents had set up a trust with all records easily accessible. The other set had a very simple will.

The estate of the parents with the trust was easy to settle. The siblings simply divided everything into equal portions and the sibling who was executor distributed the funds. There was a little bit of confusion about the personal property and some tax issues with the estate, but those were solved pretty easily. The entire estate was settled within four, maybe five months. The trust was private so there was no court involvement.

The other estate had to go through probate, which meant court paperwork and oversight. In some ways, this was a good thing because the person who was executor has some mental health issues and was having difficulty doing the job, but refused to let anyone help in a way that was actually useful. Discussions of deadlines the court required helped the executor to move along a bit, but it took a very long time to get the executor to make any distributions at all. It has been over three years now and the estate has still not been fully distributed and closed.

So I would say that a trust is a good idea if your adult kids are mature and trustworthy. It can be a quick and private way of handling your estate. If you have any reason to be concerned about the tustworthiness of one or more of your kids, a will that has to go through probate can be a better choice. Wills filed in court are public, so everyone involved can keep an eye on the progress. The oversight provided by the probate court can also help to keep the executor on track, and hopefully, honest.

You should not be blaming the executor for the fact it has taken three years for probate to close. I am the executor for my mom's estate. I am a year in. Our estate lawyer told us the whole process would take about three years.

Interesting. I have discussed this with the lawyer who did the estate plan for my spouse and me and she thought that over three years for such a simple estate was really too long. The executor here is holding on to assets and not answering questions about them. I can see how a complicated estate could take longer to settle, but this is a fairly simple one.

My personal learning from this experience is that if you have any reason all to think any of your kids is not completely trustworthy, I would go with a will that needs to go through probate. And get everything in order while you are still young enough to be fully mindful of what you are doing. The parents in the scenario above had some level of cognitive decline which was taken advantage of by one of their children. Get everything set ahead of time with a lawyer who can take you through the best ways to handle things for your own situation.

Agree with this 100%.

Also, the amount of time it takes to close the estate greatly depends on the jurisdiction and the complexity of the estate. I've handled several estates, and the time frame varied from months to 3 years. In the latter case, it was both he slowness of the probate court in that jurisdiction, plus complex assets and tax issues. Some states are so slow (looking at you, California) that trusts make a lot of sense, but otherwise, they are generally not worth the effort, especially if there are family conflicts that make the oversight of probate court beneficial.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:A lawyer is familiar with federal and state tax law pertaining to inheritance and can help plan the estate to avoid losing 40% in taxes. A lawyer can also help put things in a trust in order to avoid probate.

What percentage of families do you think are subject to estate taxes? Brookings estimated it was 4000 people in 2023 FOR THE ENTIRE COUNTRY.

https://taxpolicycenter.org/briefing-book/how-many-people-pay-estate-tax

That's federal, yeah in some states you might get hit if you have less than $15 million, but the only state in the region with an estate tax is Maryland and that only starts at $5 million, and the marginal rates start at 0.8%.

The vast, vast majority of people do not have to worry about estate taxes.

DC and Pennsylvania have estate taxes.

Absolutely right, I looked at a bad map that didn't properly call out DC. And it only kicks in over $5 million. That I should have such problems.

You might not, but most people I know who live in DC run into problems because $5 million is very low for an entire estate.

What a world to live in that MOST people you know have $5 million+ estates.

[Anonymous]

Anonymous wrote:

Anonymous wrote:A lawyer is familiar with federal and state tax law pertaining to inheritance and can help plan the estate to avoid losing 40% in taxes. A lawyer can also help put things in a trust in order to avoid probate.

What percentage of families do you think are subject to estate taxes? Brookings estimated it was 4000 people in 2023 FOR THE ENTIRE COUNTRY.

https://taxpolicycenter.org/briefing-book/how-many-people-pay-estate-tax

That's federal, yeah in some states you might get hit if you have less than $15 million, but the only state in the region with an estate tax is Maryland and that only starts at $5 million, and the marginal rates start at 0.8%.

The vast, vast majority of people do not have to worry about estate taxes.

You forgot DC. Kicks in at $4,873,200. Considering if you bought a nonextravagant house in DC a while ago, you can easily get to $2 million on that alone, and then over $3 million or more in assets apart from your house, you can easily be subject to estate taxes.

[Anonymous]

My parents both passed away in the last 3 years. They had a family trust and a will but there were still some issues. We learned the following lessons:

1. Have you parents consolidate their 401ks into an IRA. No need to have various separate accounts when one IRA will suffice. When you parents pass, it can be challenging to access the accounts, plus there is a chance there is an increased chance that beneficiary is not accurate reflected.

2. If you are the trustee or executor, have copies of their account information. When my dad moved to assisted living, many of his files were lost.

[Anonymous]

Anonymous wrote:

Anonymous wrote:A lawyer is familiar with federal and state tax law pertaining to inheritance and can help plan the estate to avoid losing 40% in taxes. A lawyer can also help put things in a trust in order to avoid probate.

Do you really need a trust with a house, brokerage accounts with designated beneficiaries, and one adult kid to inherit everything? Would not a will leaving the house to the adult child be sufficient?

The house goes into probate and can take a while-

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My spouse and I experienced the deaths of all four of our parents over the last several years. One set of parents had set up a trust with all records easily accessible. The other set had a very simple will.

The estate of the parents with the trust was easy to settle. The siblings simply divided everything into equal portions and the sibling who was executor distributed the funds. There was a little bit of confusion about the personal property and some tax issues with the estate, but those were solved pretty easily. The entire estate was settled within four, maybe five months. The trust was private so there was no court involvement.

The other estate had to go through probate, which meant court paperwork and oversight. In some ways, this was a good thing because the person who was executor has some mental health issues and was having difficulty doing the job, but refused to let anyone help in a way that was actually useful. Discussions of deadlines the court required helped the executor to move along a bit, but it took a very long time to get the executor to make any distributions at all. It has been over three years now and the estate has still not been fully distributed and closed.

So I would say that a trust is a good idea if your adult kids are mature and trustworthy. It can be a quick and private way of handling your estate. If you have any reason to be concerned about the tustworthiness of one or more of your kids, a will that has to go through probate can be a better choice. Wills filed in court are public, so everyone involved can keep an eye on the progress. The oversight provided by the probate court can also help to keep the executor on track, and hopefully, honest.

You should not be blaming the executor for the fact it has taken three years for probate to close. I am the executor for my mom's estate. I am a year in. Our estate lawyer told us the whole process would take about three years.

DP. And it wouldn't take that long with a trust, which seems to be pp's point.

People are saying the word Trust like there’s only one. That’s why estate attorneys are necessary. Honest attorneys won’t sell you useless trusts that do nothing.

I can’t believe there were only 4,000 people who owed federal estate taxes. My husband’s mother and father died close together and were part of the 4,000. Even with 30 years of paying tuitions, houses, gifting, the estate still owed estate and gift taxes.

The super rich must be hiding their money. That’s why they donate so much money to Trump. He’s corrupt and barely hiding it. The rich have to be given something for all the money they spend on useless crap like a White House ballroom.

[Anonymous]

My parents are in California , where probate can costs 3-6% of the estate. The small cost is a trust is far less than the probate costs alone.

Plus no court filing, less waiting, private. etc.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My spouse and I experienced the deaths of all four of our parents over the last several years. One set of parents had set up a trust with all records easily accessible. The other set had a very simple will.

The estate of the parents with the trust was easy to settle. The siblings simply divided everything into equal portions and the sibling who was executor distributed the funds. There was a little bit of confusion about the personal property and some tax issues with the estate, but those were solved pretty easily. The entire estate was settled within four, maybe five months. The trust was private so there was no court involvement.

The other estate had to go through probate, which meant court paperwork and oversight. In some ways, this was a good thing because the person who was executor has some mental health issues and was having difficulty doing the job, but refused to let anyone help in a way that was actually useful. Discussions of deadlines the court required helped the executor to move along a bit, but it took a very long time to get the executor to make any distributions at all. It has been over three years now and the estate has still not been fully distributed and closed.

So I would say that a trust is a good idea if your adult kids are mature and trustworthy. It can be a quick and private way of handling your estate. If you have any reason to be concerned about the tustworthiness of one or more of your kids, a will that has to go through probate can be a better choice. Wills filed in court are public, so everyone involved can keep an eye on the progress. The oversight provided by the probate court can also help to keep the executor on track, and hopefully, honest.

You should not be blaming the executor for the fact it has taken three years for probate to close. I am the executor for my mom's estate. I am a year in. Our estate lawyer told us the whole process would take about three years.

DP. And it wouldn't take that long with a trust, which seems to be pp's point.

People are saying the word Trust like there’s only one. That’s why estate attorneys are necessary. Honest attorneys won’t sell you useless trusts that do nothing.

I can’t believe there were only 4,000 people who owed federal estate taxes. My husband’s mother and father died close together and were part of the 4,000. Even with 30 years of paying tuitions, houses, gifting, the estate still owed estate and gift taxes.

The super rich must be hiding their money. That’s why they donate so much money to Trump. He’s corrupt and barely hiding it. The rich have to be given something for all the money they spend on useless crap like a White House ballroom.

Exactly. The truly rich feel truly entitled to hide their assets by planning to do so for years / decades.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My spouse and I experienced the deaths of all four of our parents over the last several years. One set of parents had set up a trust with all records easily accessible. The other set had a very simple will.

The estate of the parents with the trust was easy to settle. The siblings simply divided everything into equal portions and the sibling who was executor distributed the funds. There was a little bit of confusion about the personal property and some tax issues with the estate, but those were solved pretty easily. The entire estate was settled within four, maybe five months. The trust was private so there was no court involvement.

The other estate had to go through probate, which meant court paperwork and oversight. In some ways, this was a good thing because the person who was executor has some mental health issues and was having difficulty doing the job, but refused to let anyone help in a way that was actually useful. Discussions of deadlines the court required helped the executor to move along a bit, but it took a very long time to get the executor to make any distributions at all. It has been over three years now and the estate has still not been fully distributed and closed.

So I would say that a trust is a good idea if your adult kids are mature and trustworthy. It can be a quick and private way of handling your estate. If you have any reason to be concerned about the tustworthiness of one or more of your kids, a will that has to go through probate can be a better choice. Wills filed in court are public, so everyone involved can keep an eye on the progress. The oversight provided by the probate court can also help to keep the executor on track, and hopefully, honest.

You should not be blaming the executor for the fact it has taken three years for probate to close. I am the executor for my mom's estate. I am a year in. Our estate lawyer told us the whole process would take about three years.

DP. And it wouldn't take that long with a trust, which seems to be pp's point.

People are saying the word Trust like there’s only one. That’s why estate attorneys are necessary. Honest attorneys won’t sell you useless trusts that do nothing.

I can’t believe there were only 4,000 people who owed federal estate taxes. My husband’s mother and father died close together and were part of the 4,000. Even with 30 years of paying tuitions, houses, gifting, the estate still owed estate and gift taxes.

The super rich must be hiding their money. That’s why they donate so much money to Trump. He’s corrupt and barely hiding it. The rich have to be given something for all the money they spend on useless crap like a White House ballroom.

Exactly. The truly rich feel truly entitled to hide their assets by planning to do so for years / decades.

To see some of these old guys still amassing multi millions of dollars I always wonder why they just can’t relax. Trump and Kushner come to mind as greedy I’m above the law types. They aren’t taking the money with them. Pass it on already to a part of the world that can use it or even your own neighborhood.

[Anonymous]

My dad passed away last year, and he had a pour-over will along with a complex trust. The situation was further complicated by his remarriage after the trust was established and his lack of a prenuptial agreement. He and his wife never lived together, as she resided several states away, and they were only married for three years when he died. His will did not list her as a beneficiary.

Although not named in the will, his wife was legally entitled to one-third of his estate due to the lack of a prenuptial agreement. However, she needed to make an elective share claim to receive this portion. Fortunately, she missed the nine-month deadline to file, for reasons that remain unclear.

While I don’t offer specific advice on setting up a will, I would strongly discourage second marriages if you and your wife ever divorce or one of you passes. Definitely don't remarry without a prenup. My parents were married for 50 years until my mom passed away ten years ago. My dad took a significant gamble that could have screwed my sibling and me.

Protect the children from your first marriage at all costs is my only advice. My mom probably turned in her grave this last year from all the things she built with my dad being inches away from going to another woman and her children.

[Anonymous]

Anonymous wrote:My dad passed away last year, and he had a pour-over will along with a complex trust. The situation was further complicated by his remarriage after the trust was established and his lack of a prenuptial agreement. He and his wife never lived together, as she resided several states away, and they were only married for three years when he died. His will did not list her as a beneficiary.

Although not named in the will, his wife was legally entitled to one-third of his estate due to the lack of a prenuptial agreement. However, she needed to make an elective share claim to receive this portion. Fortunately, she missed the nine-month deadline to file, for reasons that remain unclear.

While I don’t offer specific advice on setting up a will, I would strongly discourage second marriages if you and your wife ever divorce or one of you passes. Definitely don't remarry without a prenup. My parents were married for 50 years until my mom passed away ten years ago. My dad took a significant gamble that could have screwed my sibling and me.

Protect the children from your first marriage at all costs is my only advice. My mom probably turned in her grave this last year from all the things she built with my dad being inches away from going to another woman and her children.

You can add in a trust that a pre-nup is required. Or deceased spouse’s portion will be distributed to beneficiaries.

[Anonymous]

Anonymous wrote:I’d like to add a possible counterpoint.

I’m aware of the recent death of a mom (a few years after her husband). The next generation is 4 “kids” in their 60s and early 70s. Two are married with kids. Two are “spinsters”.

The financial accounts were all transfer on death. The house remains the problem. The house was willed to the four kids jointly.

The daughter who is unmarried and cared more for her mother (while working remotely) would like to stay in the house. (She gave up a great deal of personal time, at significant expenses).

The eldest (and wealthiest) wants this daughter (his sister) to pay for the house. Because the case was already distributed, the least affluent has to come up with the cash to buy out her siblings.

Has the bank and investment accounts not been already distributed, they could have shifted the cash payments to the others and allocated the house to the daughter.

So…. Just another thought.

It’s not the wealthy sibling’s fault that the caretaker sibling felt entitled to, essentially, her siblings purchasing a house for her after the death of their parent. Caretaker sibiling could have saved the cash from the accounts that were distributed to her so she could by her siblings out. Caretaker sibling could also take her portion of the sale of the house and buy herself a condo or something else to live in.

[Anonymous]

If you want to set up beneficiaries on account, can you divide among four children equally? Or different percentages to different people like in a will? In a will you can also stipulate that the estate passes to children of child if child dies. Account beneficiary I’m assuming doesnt have that option. In other words, can beneficiary designations mirror the will?

[Anonymous]

Anonymous wrote:Do a transfer on death deed for real estate and name beneficiaries in your investment accounts. Compile a list of all accounts, credit cards, insurance provider, etc. If you have any assets more exotic than a home and investment accounts, you may need a lawyer.

For power of attorney - get several copies with your original signature notarized. Having the original *in ink* is important for your children. Trust.

If I do that, name beneficiaries and do a transfer on death deed, what is the procedure for the beneficiaries to get the funds? Is it as simple as providing a death certificate to the bank? Or even that not required as bank monitors death rolls itself? Would that be simpler than going through the trust which would require renaming it as beneficiary as additional step?

What is procedure for getting the real estate transfer through the death deed?

What is the advantage of having a trust in this situation if taxes are not an issue?
Limiting a big lump sum payment to relatively young beneficiaries to make sure it is not squandered? Protecting funds from future spouses? Anything else?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Do a transfer on death deed for real estate and name beneficiaries in your investment accounts. Compile a list of all accounts, credit cards, insurance provider, etc. If you have any assets more exotic than a home and investment accounts, you may need a lawyer.

For power of attorney - get several copies with your original signature notarized. Having the original *in ink* is important for your children. Trust.

If I do that, name beneficiaries and do a transfer on death deed, what is the procedure for the beneficiaries to get the funds? Is it as simple as providing a death certificate to the bank? Or even that not required as bank monitors death rolls itself? Would that be simpler than going through the trust which would require renaming it as beneficiary as additional step?

What is procedure for getting the real estate transfer through the death deed?

What is the advantage of having a trust in this situation if taxes are not an issue?
Limiting a big lump sum payment to relatively young beneficiaries to make sure it is not squandered? Protecting funds from future spouses? Anything else?

Generally yes provide the death certificate and your ID, etc. It's a pretty simple process.

For the deed, you do the same with the registrar of deeds.