Trust (Cost)

[Anonymous]

Anonymous wrote:Likely unpopular opinion: I am generally quite risk averse but my wife and I choose not to have a will/trust at this time. We are both youngish and in good health. Everything of note is in each other's name. We find the very small chance of both of us unexpectedly dying at the same time is not worth the expense and effort of setting up a will where all of our assets will still go to the same parties as the legal default (i.e. our kids).

That being said, if either of us developed a terminal condition or one of us died unexpectedly, we would immediately set up a trust for our kids. Also when we get older with substantially more assets we will also be setting up a trust.

Drive to date night in separate cars!

[Anonymous]

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Anonymous wrote:OP here. We spoke with a small law firm. Turns out we don't need a trust and can go the will route. Total price:

Last Will and Testament - $650
Power of Attorney (Couple) - $175
Medical Directive (Couple) - $175
Total Cost of Estate Plan - $1000

Yeah, most people with holdings like yours (one house, basic retirement accounts) don't need a trust. People on DCUM who respond to posts like this are disproportionally richer, with more complex holdings, so you will see more responses of people who should probably have a trust. Most people don't need one.

We have a NW of est $15M and our attorney continues to assure us we don't need a trust. The attorney is estate planning specialists, well regarded so we trust her.

This board is very anti-trust. If you want to your kids to deal with probate and have creditors or spouses come after them then you do you.

Why would someone with $15 million have creditors? And avoiding probate is very simple with things like setting up beneficiaries for your accounts. If you want a trust, go for it! As stated above, for most people with adult children and basic asset types, it's not necessary.

You do know probate costs $$. It's a percentage of your estate, depending on what state you live in around 4-7%. Does PP want to lose $750K and the time to do probate. I like to do a cost benefit analysis, including time, so for me a trust is the clear winner.

Most of the “cost” of probate is fees that the executor can seek so if a relative in the executor you are just moving money from the estate to them.

Also the question isn’t “should there be a trust to hold money for the benefit of my minor dependents”— anyone can protect their kids that way.

The question (for purposes of this discussion) is “should I set up a trust while I am living or do I only need it once I pass”.

You think the state is doing that for free? Also, what is the downside to someone with $15M spending $5K to set up a revocable trust?

Probate fees are scaled— for example an estate of $1 million - $2.5 million in the probate estate (say the house but not retirement accounts with a beneficiary) would be $2000. That’s not free but it’s 0.08%, not 4-7%.

One downside of revocable trusts are that you have to title things in the name of the trust which can be a pain (and slow down refinancing a mortgage, for example), but if you don’t do it then there’s no point to the trust.

If you have $15 million by all means talk to your lawyer and decide what’s right for you but be clear that any advice you offer is intended for people who have $15 m and don’t mind spending extra and doing more paperwork now to avoid paperwork later.

How is this a downside? People here are claiming the only way out of probate is a Transfer of Deed, which people could also screw up and "is a pain." And, if you change your beneficiaries, you'd have to re-record it.

So bizarre. This is definitely a hot-bottom issue for DCUM, which is odd because everyone here suddenly has $15M.

Hot bottom indeed!

[Anonymous]

Anonymous wrote:Likely unpopular opinion: I am generally quite risk averse but my wife and I choose not to have a will/trust at this time. We are both youngish and in good health. Everything of note is in each other's name. We find the very small chance of both of us unexpectedly dying at the same time is not worth the expense and effort of setting up a will where all of our assets will still go to the same parties as the legal default (i.e. our kids).

That being said, if either of us developed a terminal condition or one of us died unexpectedly, we would immediately set up a trust for our kids. Also when we get older with substantially more assets we will also be setting up a trust.

Some truth to this. Another unpopular opinion is life insurance. I took advantage of work life insurance plans, but we never bought term life insurance. If I had to move because DH dropped dead, I'd move. Probably wouldn't want to live in our shared house anymore anyway. Anyway, we didn't need it and saved a few bucks.

[Anonymous]

i always thought one of the main benefits of putting your real estate into a trust for your beneficiaries was that it reduces the capital gains tax when they sell it because rather than calculating the value of the home from the time it was purchased, it calculates the value from the time of your death. This is the step up basis avoidance.

[Anonymous]

^ but it doesn't need to be in a trust for that. That's the tax law.

[Anonymous]

... as long as it's under some exorbitant amount (not sure of the figure)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here. We spoke with a small law firm. Turns out we don't need a trust and can go the will route. Total price:

Last Will and Testament - $650
Power of Attorney (Couple) - $175
Medical Directive (Couple) - $175
Total Cost of Estate Plan - $1000

Yeah, most people with holdings like yours (one house, basic retirement accounts) don't need a trust. People on DCUM who respond to posts like this are disproportionally richer, with more complex holdings, so you will see more responses of people who should probably have a trust. Most people don't need one.

We have a NW of est $15M and our attorney continues to assure us we don't need a trust. The attorney is estate planning specialists, well regarded so we trust her.

it really depends upon estate taxes at your state level. Ours start at low levels and go up to 35% over $9M, and by $4M it's over 20%. So yes, we are doing things to protect our estate from the government. Trusts are one tool available

[Anonymous]

Anonymous wrote:

Anonymous wrote:Likely unpopular opinion: I am generally quite risk averse but my wife and I choose not to have a will/trust at this time. We are both youngish and in good health. Everything of note is in each other's name. We find the very small chance of both of us unexpectedly dying at the same time is not worth the expense and effort of setting up a will where all of our assets will still go to the same parties as the legal default (i.e. our kids).

That being said, if either of us developed a terminal condition or one of us died unexpectedly, we would immediately set up a trust for our kids. Also when we get older with substantially more assets we will also be setting up a trust.

Some truth to this. Another unpopular opinion is life insurance. I took advantage of work life insurance plans, but we never bought term life insurance. If I had to move because DH dropped dead, I'd move. Probably wouldn't want to live in our shared house anymore anyway. Anyway, we didn't need it and saved a few bucks.

So once you had kids, you had 1-2 years of living expenses set aside? You would want to be forced to deal with selling your family home, moving the kids from the home that provides them comfort, possibly moving schools as well, and finding a new place you can afford all while working full time to pay all the bills?

See we decided we would rather have the surviving parent be able to take it "easy for a bit" with regards to work and focus on the kids dealing with the death of a parent.

We dropped Life insurance once we hit $20-25M, and at that point the kids were in HS and college, with fully funded college and grad school set aside in 529s.