Wills vs trusts vs neither

[Anonymous]

I have one child and no spouse.

She is in her early 20’s. I am not sure I would want her to receive a million dollars in one fell swoop. How could I titrate the outflow (like some for a wedding , some for a house down payment, maybe some for grandkids college costs, if she has kids)?

And would she be taxed upon my death or only as the distributions were made?

[Anonymous]

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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.

I agree it's unusual and generally a bad idea which is why I told the poster upthread they shouldn't do it. It's different if it's their spouse but i think most spouses title tenancy by the entirety already.

[Anonymous]

Anonymous wrote:I have one child and no spouse.

She is in her early 20’s. I am not sure I would want her to receive a million dollars in one fell swoop. How could I titrate the outflow (like some for a wedding , some for a house down payment, maybe some for grandkids college costs, if she has kids)?

And would she be taxed upon my death or only as the distributions were made?

If your total estate is 1 million, there won't be estate tax on it under current law.

[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?

Read the book, "Beyond the Grave: The Right Way and the Wrong Way of Leaving Money to Your Children (and Others) by Jeffrey Condon for an understanding of why a trust is in everyone's best interest. At the bare minimum a will, but a trust makes things so much simpler for your kids, avoids probate, and ensures the bulk of your money goes to your heirs and not taxes. My husband and I went through the process of creating a trust last year - it's a bit of homework to get everything in place, but the peace of mind is priceless.

[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?

Read the book, "Beyond the Grave: The Right Way and the Wrong Way of Leaving Money to Your Children (and Others) by Jeffrey Condon for an understanding of why a trust is in everyone's best interest. At the bare minimum a will, but a trust makes things so much simpler for your kids, avoids probate, and ensures the bulk of your money goes to your heirs and not taxes. My husband and I went through the process of creating a trust last year - it's a bit of homework to get everything in place, but the peace of mind is priceless.

Unless you're setting up an irrevocable trust (which is more complicated and has drawbacks of its own), having a revocable trust vs. a will has zero tax advantages.

The only thing a revocable trust does is avoid probate, IF you set it up and title all your assets correctly. That's a benefit if you live in a state where probate is difficult (i.e., California). In most states, probate isn't a big deal. The hassle of being an executor is sending out death certificates to banks, etc, and a trustee has to do that part, as well. Further, a trust is not a panacea -- when things get contentious, a trust can be more of a mess than probate.

[Anonymous]

Anonymous wrote:

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?

Read the book, "Beyond the Grave: The Right Way and the Wrong Way of Leaving Money to Your Children (and Others) by Jeffrey Condon for an understanding of why a trust is in everyone's best interest. At the bare minimum a will, but a trust makes things so much simpler for your kids, avoids probate, and ensures the bulk of your money goes to your heirs and not taxes. My husband and I went through the process of creating a trust last year - it's a bit of homework to get everything in place, but the peace of mind is priceless.

Unless you're setting up an irrevocable trust (which is more complicated and has drawbacks of its own), having a revocable trust vs. a will has zero tax advantages.

The only thing a revocable trust does is avoid probate, IF you set it up and title all your assets correctly. That's a benefit if you live in a state where probate is difficult (i.e., California). In most states, probate isn't a big deal. The hassle of being an executor is sending out death certificates to banks, etc, and a trustee has to do that part, as well. Further, a trust is not a panacea -- when things get contentious, a trust can be more of a mess than probate.

While this may be the case, why add an extra step and expense under the circumstances of a loved one's death? Even when accounts are properly setup with beneficiaries, we had to go through hoops to get the accounts transferred properly to a surviving spouse. Each institution had different requirements (death certificate, death cert + affidavit, death certificate notarized, death certificate certified by a bank, etc.) and it was a PIA. Adding probate and associated legal and filing fees not to mention the time associated with probate (however short) is unnecessary overhead.

[Anonymous]

Have a minor still living in the home - almost 18 not but not yet. In the event husband and I both passed away would our child still be able to live in the house? What is best and easiest way to avoid probate court etc...?

[Anonymous]

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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.

NP. I liked his post. I have seen this type of bragging, and yes its cringe. He was also touching on IL dynamics that can exist.

This is a good discussion because trusts can have benefits and drawbacks. Yes, it is true estates attorneys will keep trying to push their own services.

[Anonymous]

Anonymous wrote:We have more but under $5m, and I have a will with a straightforward testamentary trust. Everything but the house would avoid probate because we have beneficiaries/successors listed. The house has a mortgage with a due-on-sale clause, so it's not going into a trust any time soon. Until someone can convince me otherwise, I see no need for a trust.

^ we are the same.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We have more but under $5m, and I have a will with a straightforward testamentary trust. Everything but the house would avoid probate because we have beneficiaries/successors listed. The house has a mortgage with a due-on-sale clause, so it's not going into a trust any time soon. Until someone can convince me otherwise, I see no need for a trust.

^ we are the same.

PPP - If in VA, you can register a TOD at the county for the real estate to pass. Also, RE does not go through probate in VA.

"Real property, which is not held jointly or left to a beneficiary through a Transfer on Death Deed, passes directly to the beneficiaries named in the will or to the legal heirs, and is not part of the probate estate in Virginia unless the will authorizes the executor to sell it."

https://www.vaela.org/probate-process-virginia

A trust just gives you more flexibility with distributions compared to just naming a beneficiary. For example, 18 y.o. son will get 5% of assets each year vs. a lumpsum access to $5M. I realize you can do this through a testamentary trust but I'm not sure of the mechanics. Will the executor of the will have to file the will in court and get a judge's approval before assets can be titled in the name of the Trust?

[Anonymous]

Anonymous wrote:Do a will and put your kids on the accounts.

That gives them the most flexibility.

Some people don’t have trustworthy kids like you.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Do a will and put your kids on the accounts.

That gives them the most flexibility.

Some people don’t have trustworthy kids like you.

For most of us it's based on our concerns about their lack of maturity, higher levels of gullibility/stupidity, potential for scammy life partners, etc. vs. trustworthy.

I can leave $5M to my kids in one shot and run the risk of them blowing it on frivolous things, putting into a joint account and their spouses taking half of it away or I can set up things so they get $200K/yr. for a looong time. Only an idiot would choose the former.

[Anonymous]

Anonymous wrote:

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?

Read the book, "Beyond the Grave: The Right Way and the Wrong Way of Leaving Money to Your Children (and Others) by Jeffrey Condon for an understanding of why a trust is in everyone's best interest. At the bare minimum a will, but a trust makes things so much simpler for your kids, avoids probate, and ensures the bulk of your money goes to your heirs and not taxes. My husband and I went through the process of creating a trust last year - it's a bit of homework to get everything in place, but the peace of mind is priceless.

Unless you're setting up an irrevocable trust (which is more complicated and has drawbacks of its own), having a revocable trust vs. a will has zero tax advantages.

The only thing a revocable trust does is avoid probate, IF you set it up and title all your assets correctly. That's a benefit if you live in a state where probate is difficult (i.e., California). In most states, probate isn't a big deal. The hassle of being an executor is sending out death certificates to banks, etc, and a trustee has to do that part, as well. Further, a trust is not a panacea -- when things get contentious, a trust can be more of a mess than probate.

Everyone who lives in DC needs to reference the other trust thread and see the article about people having issues going through probate in DC.