Wills vs trusts vs neither

[Anonymous]

I posted a question on testamentary trusts (TT) and of course, no lawyer responded (as is normal).

Digging around and piecing things together, it looks like for Virginia your primary residence can avoid probate whether or not you have a Trust and financial accounts avoid probate if you have named a beneficiary (or TOD).

Now let's say you create a will and incorporate a Trust within it (Testamentary Trust(TT)). According to one post here you should not name a beneficiary for your financial accounts (since the beneficiary designation will supersede the will). Assume $5mil in financial assets and a primary residence. The residence avoids probate but they will milk you to death on the $5mil, not to mention your kids won't have access to the money until probate is complete.

Also, the lawyer will have to spend the same time and effort to craft your TT as they would your revocable trust anyways. Wouldn't it cost you the same? The only reason i can think of for lawyers pushing a TT is that they expect you'd go back to them for the probate process..kinda like back-end fees in crappy mutual funds.

So.. TL;dr -
- Create a Trust and a 'pour over' will. Use boilerplate templates. It's not like every family is in feud mode that you need high priced lawyers for this. Of course, with complicated estates (financial assets, private equity, businesses, etc.) or feuding family situations you should use a good lawyer.
- Real estate and vehicles - Do a TOD.
- Financial assets - Title in the name of your trust or make your trust the beneficiary.

[Anonymous]

Anonymous wrote:Having just gone through this with my Dad’s estate, it’s far better to simply have named beneficiaries on insurance policies, investments, and financial accounts and transfer on death deeds for all real estate. Make sure vehicle titles have a co-owner listed.
In most cases, people can avoid probate completely.

Not all states allow transfer on death deeds for real estate.

[Anonymous]

Anonymous wrote:Net value of around $2 million, we have two adult kids. We're trying to update an old will but all the lawyers are telling us we should get a trust. Apparently trusts cost $6000+, which is not in our budget. Why do we need even need a trust or a will? Why can't we just name our kids as beneficiaries on our bank accounts and retirement accounts, write a letter telling them to sell the house and then divide everything up 50-50?

Our trust cost no where near that amount, was done by a well respected law firm and provides privacy. We didn't want vultures to know amounts and try to target our young adult kids at that time. My opinion is that the trust makes it easier for your decedents if you set it up correctly.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Must have:
Will
POA
Medical directive
Beneficiaries on retirement accounts, insurance policies. TOD/POD on brokerage accounts, bank accounts etc.
Also, DO NOT put children on any of your real estate titles. They will lose stepped up basis and it will be an expensive mistake.

Also, organize your accounts, policies etc. Handling an estate is a alot of work and it is really hard when it is sh&t show in terms of organization.

Optional
Trust. This is for people who want privacy and "control" from the grave. Most people do not need.

"Control" from the grave. Funny. I would be concerned about not have a trust for young kids. I could see a lawyer taking advantage of young 20 somethings dealing with probate.

PP is correct. If you’re concerned about heirs being taken advantage of, the probate of a will has much more oversight than the transfer of trust assets. This board is full of stories of people being ripped off by trustees. If you think your kids can’t handle the money and need a trust long term, you can set up a testamentary trust in the will.

I am a lawyer, and I’ve had several excellent estate specialists tell me I do not need a trust. Lawyers sell them to people because they like them — it makes them feel “rich” to refer to “the trust.”

This 💯. My mother-in-law fell for it hook, line, & sinker. She has no shame and loves telling anyone who’ll listen how well she’s doing as she’s now a millionaire ($500k house with $500k in a savings account, lol). At a neighborhood party, her “rich” friends convinced her that she needed a trust ASAP to protect all her hard-earned wealth. Quite conveniently, their son was a lawyer and could make it happen. $5k later and she’s the proud owner of her very own “trust”. (I hope he tipped his parents $1k for the easiest lead ever.)

Mind you, my wife is an only child and gets everything, so it was completely pointless but the ridic things MIL says now almost makes it worth it. *Imagine Lucille Bluth saying these lines, lolol* When visiting mother-in-law’s house, “Daughter, you have nothing to worry about, this is ALL IN THE TRUST.” While chatting with a relative who likely lives 100% off of Social Security, “Cuz, how could you possibly leave your family unprotected WITHOUT A TRUST?” And when showing me who’s boss, “Son-in-law, whatever may happen to you, daughter can always rely on THE TRUST.”

Gee, thanks, MIL. We did gross $600k last year, I think we’ll be fine. And my wife maybe receiving a million bucks sometime in the future would be wonderful and we’d be very thankful, but it wouldn’t exactly be life-changing. After doing my own research, trusts definitely seem to be a product that’s sold, not bought…quite similar to unnecessary and often bad life insurance policies.

You sound like a huge a hole.

+100

Someone here has such a vested interest in stopping people from using trusts. You know there is manipulation going on when they try to insult people who use them as being ego driven and wanting to brag about having a trust. I've never known anyone who bragged about it.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Must have:
Will
POA
Medical directive
Beneficiaries on retirement accounts, insurance policies. TOD/POD on brokerage accounts, bank accounts etc.
Also, DO NOT put children on any of your real estate titles. They will lose stepped up basis and it will be an expensive mistake.

Also, organize your accounts, policies etc. Handling an estate is a alot of work and it is really hard when it is sh&t show in terms of organization.

Optional
Trust. This is for people who want privacy and "control" from the grave. Most people do not need.

"Control" from the grave. Funny. I would be concerned about not have a trust for young kids. I could see a lawyer taking advantage of young 20 somethings dealing with probate.

PP is correct. If you’re concerned about heirs being taken advantage of, the probate of a will has much more oversight than the transfer of trust assets. This board is full of stories of people being ripped off by trustees. If you think your kids can’t handle the money and need a trust long term, you can set up a testamentary trust in the will.

I am a lawyer, and I’ve had several excellent estate specialists tell me I do not need a trust. Lawyers sell them to people because they like them — it makes them feel “rich” to refer to “the trust.”

This 💯. My mother-in-law fell for it hook, line, & sinker. She has no shame and loves telling anyone who’ll listen how well she’s doing as she’s now a millionaire ($500k house with $500k in a savings account, lol). At a neighborhood party, her “rich” friends convinced her that she needed a trust ASAP to protect all her hard-earned wealth. Quite conveniently, their son was a lawyer and could make it happen. $5k later and she’s the proud owner of her very own “trust”. (I hope he tipped his parents $1k for the easiest lead ever.)

Mind you, my wife is an only child and gets everything, so it was completely pointless but the ridic things MIL says now almost makes it worth it. *Imagine Lucille Bluth saying these lines, lolol* When visiting mother-in-law’s house, “Daughter, you have nothing to worry about, this is ALL IN THE TRUST.” While chatting with a relative who likely lives 100% off of Social Security, “Cuz, how could you possibly leave your family unprotected WITHOUT A TRUST?” And when showing me who’s boss, “Son-in-law, whatever may happen to you, daughter can always rely on THE TRUST.”

Gee, thanks, MIL. We did gross $600k last year, I think we’ll be fine. And my wife maybe receiving a million bucks sometime in the future would be wonderful and we’d be very thankful, but it wouldn’t exactly be life-changing. After doing my own research, trusts definitely seem to be a product that’s sold, not bought…quite similar to unnecessary and often bad life insurance policies.

You sound like a huge a hole.

+100

Someone here has such a vested interest in stopping people from using trusts. You know there is manipulation going on when they try to insult people who use them as being ego driven and wanting to brag about having a trust. I've never known anyone who bragged about it.

+1000. Of course! See my post above 11:23

[Anonymous]

Anonymous wrote:

Anonymous wrote:Net value of around $2 million, we have two adult kids. We're trying to update an old will but all the lawyers are telling us we should get a trust. Apparently trusts cost $6000+, which is not in our budget. Why do we need even need a trust or a will? Why can't we just name our kids as beneficiaries on our bank accounts and retirement accounts, write a letter telling them to sell the house and then divide everything up 50-50?

Our trust cost no where near that amount, was done by a well respected law firm and provides privacy. We didn't want vultures to know amounts and try to target our young adult kids at that time. My opinion is that the trust makes it easier for your decedents if you set it up correctly.

+1. After my BIL passed away, we advised SIL to signup for the legal plan with her company ($10/pp). She worked with the lawyer to add specific language to set aside an amount for medical needs (one kid needs it), withdrawal amounts restricted to a certain % per year with full payout at a certain age, etc. She paid an extra $1000 or so for that. $1,240 in total for a complex setup.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Having just gone through this with my Dad’s estate, it’s far better to simply have named beneficiaries on insurance policies, investments, and financial accounts and transfer on death deeds for all real estate. Make sure vehicle titles have a co-owner listed.
In most cases, people can avoid probate completely.

Not all states allow transfer on death deeds for real estate.

You can have JTWROS.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Must have:
Will
POA
Medical directive
Beneficiaries on retirement accounts, insurance policies. TOD/POD on brokerage accounts, bank accounts etc.
Also, DO NOT put children on any of your real estate titles. They will lose stepped up basis and it will be an expensive mistake.

Also, organize your accounts, policies etc. Handling an estate is a alot of work and it is really hard when it is sh&t show in terms of organization.

Optional
Trust. This is for people who want privacy and "control" from the grave. Most people do not need.

"Control" from the grave. Funny. I would be concerned about not have a trust for young kids. I could see a lawyer taking advantage of young 20 somethings dealing with probate.

PP is correct. If you’re concerned about heirs being taken advantage of, the probate of a will has much more oversight than the transfer of trust assets. This board is full of stories of people being ripped off by trustees. If you think your kids can’t handle the money and need a trust long term, you can set up a testamentary trust in the will.

I am a lawyer, and I’ve had several excellent estate specialists tell me I do not need a trust. Lawyers sell them to people because they like them — it makes them feel “rich” to refer to “the trust.”

This 💯. My mother-in-law fell for it hook, line, & sinker. She has no shame and loves telling anyone who’ll listen how well she’s doing as she’s now a millionaire ($500k house with $500k in a savings account, lol). At a neighborhood party, her “rich” friends convinced her that she needed a trust ASAP to protect all her hard-earned wealth. Quite conveniently, their son was a lawyer and could make it happen. $5k later and she’s the proud owner of her very own “trust”. (I hope he tipped his parents $1k for the easiest lead ever.)

Mind you, my wife is an only child and gets everything, so it was completely pointless but the ridic things MIL says now almost makes it worth it. *Imagine Lucille Bluth saying these lines, lolol* When visiting mother-in-law’s house, “Daughter, you have nothing to worry about, this is ALL IN THE TRUST.” While chatting with a relative who likely lives 100% off of Social Security, “Cuz, how could you possibly leave your family unprotected WITHOUT A TRUST?” And when showing me who’s boss, “Son-in-law, whatever may happen to you, daughter can always rely on THE TRUST.”

Gee, thanks, MIL. We did gross $600k last year, I think we’ll be fine. And my wife maybe receiving a million bucks sometime in the future would be wonderful and we’d be very thankful, but it wouldn’t exactly be life-changing. After doing my own research, trusts definitely seem to be a product that’s sold, not bought…quite similar to unnecessary and often bad life insurance policies.

You sound like a huge a hole.

+100

Someone here has such a vested interest in stopping people from using trusts. You know there is manipulation going on when they try to insult people who use them as being ego driven and wanting to brag about having a trust. I've never known anyone who bragged about it.

I am not that PP but it’s so weird that you go from “there was a
DCUM post hating on a MIL” to “someone is trying to manipulate people to not use trusts”.

The fact is trusts make money for lawyers but I can’t prove that to you so if you want to think otherwise feel free. But the idea that lawyers are spending their time trying to manipulate you into using their services is pretty crazy.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Having just gone through this with my Dad’s estate, it’s far better to simply have named beneficiaries on insurance policies, investments, and financial accounts and transfer on death deeds for all real estate. Make sure vehicle titles have a co-owner listed.
In most cases, people can avoid probate completely.

Not all states allow transfer on death deeds for real estate.

You can have JTWROS.

NP and you lose a portion of the step up in basis with that set up. Expensive way to avoid probate.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Having just gone through this with my Dad’s estate, it’s far better to simply have named beneficiaries on insurance policies, investments, and financial accounts and transfer on death deeds for all real estate. Make sure vehicle titles have a co-owner listed.
In most cases, people can avoid probate completely.

Not all states allow transfer on death deeds for real estate.

You can have JTWROS.

NP and you lose a portion of the step up in basis with that set up. Expensive way to avoid probate.

It would have to be an extremely unusual situation before I advised someone in a marriage to give up joint tenancy for tax reasons

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Having just gone through this with my Dad’s estate, it’s far better to simply have named beneficiaries on insurance policies, investments, and financial accounts and transfer on death deeds for all real estate. Make sure vehicle titles have a co-owner listed.
In most cases, people can avoid probate completely.

Not all states allow transfer on death deeds for real estate.

You can have JTWROS.

NP and you lose a portion of the step up in basis with that set up. Expensive way to avoid probate.

It would have to be an extremely unusual situation before I advised someone in a marriage to give up joint tenancy for tax reasons

Wait what? No the other PP is talking about setting up joint tenancy with an heir, not a spouse. The tax exemption is portable between spouses so that is not an issue with joint tenancy for spouses.

[Anonymous]

I can't advise OP, but to me it sounds relatively uncomplicated. in our situation, we dont have particularly high net worth or complicated assets, but are in the process of setting up trusts because we have a blended family, two of our kids are not yet adults, and there are inheritances that will go directly to different grandkids from different sides, so its easiest to keep these separate.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Having just gone through this with my Dad’s estate, it’s far better to simply have named beneficiaries on insurance policies, investments, and financial accounts and transfer on death deeds for all real estate. Make sure vehicle titles have a co-owner listed.
In most cases, people can avoid probate completely.

Not all states allow transfer on death deeds for real estate.

You can have JTWROS.

NP and you lose a portion of the step up in basis with that set up. Expensive way to avoid probate.

It would have to be an extremely unusual situation before I advised someone in a marriage to give up joint tenancy for tax reasons

Wait what? No the other PP is talking about setting up joint tenancy with an heir, not a spouse. The tax exemption is portable between spouses so that is not an issue with joint tenancy for spouses.

Scenarios where you can establish JTWROS with an heir are pretty uncommon.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Having just gone through this with my Dad’s estate, it’s far better to simply have named beneficiaries on insurance policies, investments, and financial accounts and transfer on death deeds for all real estate. Make sure vehicle titles have a co-owner listed.
In most cases, people can avoid probate completely.

Not all states allow transfer on death deeds for real estate.

You can have JTWROS.

NP and you lose a portion of the step up in basis with that set up. Expensive way to avoid probate.

It would have to be an extremely unusual situation before I advised someone in a marriage to give up joint tenancy for tax reasons

Wait what? No the other PP is talking about setting up joint tenancy with an heir, not a spouse. The tax exemption is portable between spouses so that is not an issue with joint tenancy for spouses.

Scenarios where you can establish JTWROS with an heir are pretty uncommon.

Are they? You can do it in VA. You can either be tenants in common (% split) or joint tenants with anyone. Tenancy by the entirety is only for married people.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Having just gone through this with my Dad’s estate, it’s far better to simply have named beneficiaries on insurance policies, investments, and financial accounts and transfer on death deeds for all real estate. Make sure vehicle titles have a co-owner listed.
In most cases, people can avoid probate completely.

Not all states allow transfer on death deeds for real estate.

You can have JTWROS.

NP and you lose a portion of the step up in basis with that set up. Expensive way to avoid probate.

It would have to be an extremely unusual situation before I advised someone in a marriage to give up joint tenancy for tax reasons

Wait what? No the other PP is talking about setting up joint tenancy with an heir, not a spouse. The tax exemption is portable between spouses so that is not an issue with joint tenancy for spouses.

Scenarios where you can establish JTWROS with an heir are pretty uncommon.

Are they? You can do it in VA. You can either be tenants in common (% split) or joint tenants with anyone. Tenancy by the entirety is only for married people.

You have to buy it together you can’t add them later. So maybe it works if you are buying a second home and decide you want your kid as coowner but it’s going to be pretty unusual for nost people.