Wills and/or Trusts etc ... Guide the SkinFlint!

It depends on what your goals and assets are. If you and your wife have enough assets that you'll be triggering estate taxes, there are some things you can do to minimize the impact of them (ie. a trust in order to maximize the use of both spouses exemptions), some things you can do which will help minimize the impact of probate (ie. if you own real estate in more than one state, unless that real estate is held in a trust, your executor may have to go to probate in each state in question), etc. Similarly, if you want a separate trustee to watch over assets your kids inherit while young, that may require appropriate language or another trust as well. (ie. if you died and left your kids $3million, do you want them getting their hands on all of that money at once at 18?)

So really, nobody can tell you if it make sense unless they know a lot more about your situation and your goals.

If your plans and assets are such that a simple will alone will work, a lawyer may be able to boilerplate-fill it for you for as little as $100 or $200. Have you actually *talked* to a lawyer?

If you need several trusts, and two wills (usually separate ones for each spouse), and you want to make sure you have other things in order - health-care proxy, living will, durable power of attorney, etc - yes, it all might add up to two or three thousand dollars - but some of the things that a lawyer can structure for you (especially that A/B trust and ILITs for example) can save your estate hundreds of thousands of dollars or more down the line.

Bear in mind that your estate may, in fact, be a lot larger than your current assets. If you have life insurance on each spouse with the other spouse as the beneficiary, real estate which is getting paid down, 401k plans, etc - all of that adds up fast and bear in mind that in all likelihood, your estate isn't going to be what you have now, but rather what you will have some number of years down the road.

Most estate attorneys will be happy to talk to you at no charge in order to see if your situation warrants the full blown collection of trusts, etc or if a simple will is all you need. And if the latter, again, the charge shouldn't be more than a couple of hundred bucks. Though you might seriously consider some of the other non-financial documents and the value they may add, too.

You are correct that trust documents will have a lot of boilerplate, but a trust drawn up by a competent estate-planning attorney also will have provisions that fit your particular situation. You want it done right, because once you have died, it is too late to fix any problems in the documents.

You don't say how old you are or whether you have minor or adult children, so it is hard to give specific advice. Let me just give you one example of how having a trust can be beneficial to you and to your children. A couple of years ago, my 94 year-old mother started suffering memory loss and became unable to manage her own affairs. For a while, my brother and I paid her bills, but then we ran into a brick wall. Several transactions required her approval, but she was unable to understand them. I could hardly understand the oil lease documents myself. Without a trust, my brother and I would have had to take her to court and have her declared incompetent, something that would have been humiliating for her and difficult for us. Fortunately, she had a trust, and all of her assets were titled in the trust. So all she had to do was resign as trustee, at which point the successor trustee was able to take over smoothly. Seh probably saved the cost of the trust in legal fees right there.

Dave

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But can one say that it's better to have a plain boilerplate document than none at all? Can it go too wrong for the typical, non- millionaire cases?

TIA

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Thanks all. Married, both mid-50's, one 14-year-old child. One house owned outright, and money saved in IRA and 401k.

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I'll second some other's comments. You also need documents to cover when/if you become unable to make decisions for yourself. This includes a durable power of attorney, a living will, and heath care directive. These are named different things in different states, but address the issues of how to handle your money if you are unable to, whether or what live support technology you want, and who can make health care decisions for you if you can't.

My parents have needed those documents during the last year. They had them, and saved endless grief for my siblings and me.

I would suggest you bite the bullet and get a GOOD estate planning attorney. This has to be done right, because a screw up is painful and expensive. My wife and I had all that done, wills for each of us, and some special situation work a few years ago. It was about $3000 and involved about 10 hours of her time. Remember "You can't afford a cheap lawyer."

-- Doug

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[...]

Not just "usually separate" -- there's no such thing as a joint will (but I suspect Bread knows that).

Joe... not sure if you remember, but we traded occasional posts over in the Oracle newsgroups in years past, and now Oracle is your new employer (having bought BEA -- you *are* posting with a work mail address, after all).

California is community property state (stepped up basis on inherited assets from spouse) and last time I checked has no estate tax. You also stated you have kids, I'm guessing they're at or near college age by now, meaning they will not be minors much longer.

Here's my take: the worst possible scenario is both your wife and you dying simultaneously and unexpectedly, say a car crash. Much more likely are the following: you will both live a long time from now, or only one of you will die prematurely, and if due to a health problem, there would be some advance warning. Or, only one of you will become incapacitated. These scenarios would give you time to set up something fancy if it seemed appropriate, assuming you set up the basics now.

So, I suggest you stick with the basics and get for you and your spouse:

1) health care power of attorney ("living will") 2) springing durable power of attorney for each other 3) basic living trust, specifying at what age(s) your child(ren) might receive distributions. 4) pour-over will

Shop around, but I'd be surprised if you couldn't get all this for $2,000 or less, and you shouldn't need to do anything further for another ten or twenty years unless your situation changes drastically, so on an annual basis the cost is pretty small. And you should definitely expect an hour or two of the lawyer's time to be included!

You asked, what are the financial benefits? I'd say mostly the benefits are indirect, in that you or your spouse would be able to manage things with very little extra cost in the future (in other words, you're paying something now to save a lot more in the future). You also asked, what are the cost-effective ways of setting this up? Since this is something you may only do once or twice in your life, I'd say it's not a do-it-yourself project, and even though the lawyer may seem expensive, it's probably worth it.

-Mark Bole

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You have received a lot of good advice, and I would like to add that you are right to be a "skinflint" and to be suspicious of charges in the area of wills and estates. There is a lot of hanky-panky in this area, and otherwise honest professionals of various kinds sometimes have the attitude: "There is a lot of money there, so nobody will notice if I take my cut."

You might also consider how money can be saved for the benefit of heirs during the probate process and how to keep things honest and upfront during that period. One thing that comes to mind is to be very careful and specific in the will about who serves as an executor and under what conditions. Be aware that an executor is entitled to a reasonable fee for the services he or she performs. Sometimes a bank or other institution will offer to take over all the work of the executor for a percentage, say 5% or 6%, or even more, of the total value of the estate. Run away fast from any deal like that. As you mentioned, it is not worth that kind of money for filling in boilerplate and performing various minor tasks. Better that one of your heirs or a trusted family member take over the job as executor (and collect a reasonable fee for doing it).

Also be aware that an executor who is a family member with limited experience can hire professionals, such as lawyers, accountants, tax advisors, stock brokers, and so on, for particular duties that require special expertise as they arise. And their fees are paid from the money in the estate before the heirs receive distributions. The executor should pay these experts their usual reasonable hourly fees for the particular duties they perform. They should not be paid inflated fees or some percentage of the total estate just because an estate is involved and "There is a lot of money there for everybody." Best of luck.

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Hi Mark, thanks (changed the hinting-at-work-address). Thanks all for the advice.

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Actually, there is, but nobody really uses them. Google for "Joint will" or "mutual will".

And any decent estate attorney should recommend all of those documents anyway. Definitely should come out to less than $2000, especially without ILITs. Much of this stuff is state-specific and I'd be wary of any off-the-shelf packages for anything but the most simple will.

Oh, while we're at it, do check the way your various investment accounts are set up. You'll need to know what's your, what's your spouse's, what's jointly held, etc. And in many cases, accounts (especially retirement accounts like 401ks and IRAs) have designated beneficiaries already set up. Note that such designated beneficiaries (a) avoid probate; and (b) override your will. This may be good or bad - it's convenient, certainly - but you'll want to take this all into consideration when you set up the wills.

Lastly, note that life insurance proceeds may or may not be part of your estate depending on who is the *owner* and who is the beneficiary of the policy. This is the time to review that stuff, too.

Attorneys can and do make mistakes, including in will preparation. I would not say they are superior to Do-It-Yourself in this area. You know what you want (maybe with a little fine tuning from continuing to read); you know your assets; and you are going to be more aggressive in getting exactly what you want. I would try some of the low cost online sites. I would also check to see whether your state offers free online forms. Some states do.

I do think this is largely boilerplate. Evidence is the increasing number of firms that offer an automated way of doing your will, and at competitive costs. I don't care how large your estate is. Though maybe do factor in how likely there is to be contentiousness after you die. Where possible, announcing the contents of your will to relatives in advance might not be a bad idea.

That line about "the person who represents himself in legal matters has a fool for an attorney" came from either (1) decades ago, when people were less educated and info, less available; or (2) the legal industry. They know a good advertising slogan.

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Advice worth considering. The ideal solution might be to do the bulk of the work yourself and then have a professional check it over for glaring errors, but I don't think most lawyers would offer that service.

I neglected to mention in my previous post, one of the services typically included when using an attorney is actually putting assets INTO the living trust, without which the whole exercise becomes pretty meaningless.

Even that may be something you can do yourself; however it also comes down to how you value your spare time, and whether you would like to become an arm-chair expert in these topics to help prepare yourself for a new career in estate/financial/tax planning when you "retire" from your main job.

-Mark Bole

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"Mark Bole" wrote

I second consideration of this and, more generally, the advice to always do much homework on the topic at hand before meeting with an attorney. For one, it's more likely than not to cut down on how much time the attorney will bill you. Though not all attorneys charge by the hour.

We need a misc.DIY.legal.moderated, run by those attorneys, paralegals, legal secretaries and the more experienced laypeople, who believe in empowering people and letting them know when they are approaching the limits of DIY-ism. Plenty of low income people might benefit, for one. Legal information simply is not as arcane as it once was, given the internet and increased literacy.

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Estate planning is a fairly common task in my business. I've seen estate plans drawn up by both sides and the DIY plans consistently fall short, IMO. There's simply too many exceptions, caveats, and changes in the law for the layperson. As I said, I'm "in the biz" and I still went to a lawyer for my estate planning (albeit I knew exactly what I wanted when I walked in). Without cites and sources, I guess we'll have to agree to disagree on this point.

Another point, attorney's have E&O/malpractice coverage to potentially indemnify any mistakes. A do-it-yourselfer only has himself to blame.

Lastly, and I don't think you disagree, the comlexity probably plays a large role. A simple will or power of attorney may be DIY, but it also only saves you a couple hundred dollars. Drafting credit shelter trusts, QTIPs, ILITs, and the like are difficult to do and thus cost the most.

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"kastnna" wrote

Not to give you a hard time, but more for clarification: Fell short how? Did you see any of the DIY plans tested, say by legal challenge? Did you feel they were very open to legal challenge, or only somewhat open to legal challenge? Or did they "fall short" in seeming not to cover all bases?

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Well, doctors also make mistakes. But I am not going to start doing my own medical diagnosis.

But estate planning lawyers do much more than just give you a boilerplate set of forms.

And very often from people who think they can do it themselves, and were too late to come to a realization that they have screwed themselves by trying to save money.

I am not a lawyer, nor am married to one.

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I am a DIY type by nature. I've always handled my own investing, financial planning (thanks, guys), home repairs, and most of my hobbies involve building things. But a key to successful DIY is knowing your limits.

As I mentioned earlier, we hired one of the best estate attorneys in the area to handle our wills and other bad-news documents. It might not have been necessary to go that far, white shoe law firms have a lot of overhead. But our situation was moderately complex. Looking back, I know we would have made some serious mistakes if we had gone DIY.

In other contexts, you have talked about the value of buying piece of mind. I think that is some of what we bought. Mistakes here can be costly. You won't be around to say "What I really meant was..."

-- Doug

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I think you will find that a lot of the legal work, not only in drafting wills, but also in probating estates and related duties, actually is done by legal secretaries with minimal involvment of the lawyer, who perhaps checks the document in a cursory way at the end of the process.

Be that as it may, I would say that the analogy between do-it-yourself will-writing and medical diagnosis is not very convincing. Medical diagnosis is a vastly more complicated procedure, requiring consideraby more years of training and experience than routine legal work. Do-it-yourself will-drafting would be more comparable to going to a drug store with a cold and trying to decide which brand of cold medication to pick up off the shelf. You could go a doctor's office to get medicine to be really safe, or even go to the ER and waste people's time there, but how many people think that is really necessary?

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You got that right. When reading a first draft of my health care POA regarding whether or not to take "heroic measures", what was on the page was the exact opposite of what I had stated during the interview!

Just for fun, here is the first relevant thing I could find in a search on "heroic measures will" (item #4 in the search results):

and so on and so forth.

-Mark Bole

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