Death and Taxes – Estate Planning Mistake #4
This is probably the most frustrating mistake for the executor to have to deal with. You’ve gone through the time, trouble and expense of drafting a bulletproof will. And then it’s left in a household safe to which no one knows the combination or in a safety deposit box to which your executor isn’t granted access. I’ve been told about cases where wills were left in a secret cubby in the closet, behind a wall and under floorboards. Please do not put your executor through this. They will be under enough stress as it is just managing the estate. No one wants to go rifling through someone else’s bookshelves and sock drawers looking for the proper documents, much less obtaining court injunctions for access to bank deposit boxes or cutting through a locked safe.
Give your executor:
- A copy of the will for safe keeping, or
- Signed access to the bank deposit box where the will is kept, or
- Knowledge of where you keep the will in the home – and easy access to it.
Keeping a copy of the will at your lawyer’s office is reasonable. However, if you have the unfortunate luck to pass away while your lawyer is on vacation and the office is closed for the holiday, an unnecessary holdup will happen.
What did we learn?
It only makes sense to have a properly reviewed will, which is drafted with your unique situation in mind. Always sit down with an advisor or estate planner and work out the details before drafting the will. Better yet, if you already have a will, make an appointment to review your current one. Make sure that it makes sense and that your estate will be distributed fairly (note: not necessarily equally, but fairly). And, as I said before, make an appointment to sit down with a competent and qualified estate lawyer. Your children will love you for it.
Many Blessings,
Andray Domise
Independent Financial Advisor
Change your life one dollar at a time, with REAL help for building wealth and reducing debt:
http://www.andraydomise.com
Estate Planning FAQ:
Question: What’s the best way to create a will / estate plan?
I’d like to write a will and develop an estate plan for my wife and daughter. Are the CDROM/online services (eg Quicken Willmaker) good enough, or should I see a lawyer?
Answer: Depends on how much you have to give and if there will be people fighting for it. If not, Quicken will be fine. If you have sufficient assets, setting up a trust is a good idea. It can be costly depending on what you want. I am by no means wealthy, but with the trust, you can be comfortable in knowing that your specific instructions will be followed.
Question: I am looking for information on estate planning and forming a corporation of my parents assets.?
Answer: You need to call a financial planner you can trust. You should also consider getting a book like Nolo’s series of books on such topics. You can then either choose to use the book or at least learn what to ask and discuss with the financial adviser if you hire one. Remember, they are also doing it to make money so your knowing where they’re coming from will help you a lot.
Question: What is AB trust in Estate Planning?
Answer: They are trusts to which estate assets are rolled on the death of the first spouse and are designed to minimize estate tax liability.
Question: How should an estate plan disbursement be structured?
I have one child and am trying to decide how to disburse a sizable estate in the event of my death.
Answer: You probably need to talk to a probate attorney, as you’ll want to set up a trust for your child, along with a guardian. You don’t want some random idiot getting custody of your child, AND having complete access to the sizable estate. They’ll run through your money, and your little darling won’t end up with a thing.
Question: Attorney Overbilling – Probate Attorney – Estate Planning attorney ?
Well it seems we got burned by a nice attorney – he said he would help us settle our Mothers estate and now he has BILLED us “over” $12.000 dollars charging us 295.00 Per Hour on a 25.000 estate and his job is not yet done – we will have fire him today. What could you recommend us to do in hiring another PROBATE ATTORNEY – Estate Planning
attorney – and how we can protect ourselves against law firms overbilling and attorney over billing?
Answer: What I would recommend in your case is to have a simple memorandum of agreement w/ the lawyer you intend to hire indicating a percentage (w/c you and your family will have to decide upon) of the estate’s value as his professional fee. I would think 20% of this percentage could be his initial payment and balance payable upon completion of the entire work. It’s a simple legal form w/c the lawyer of your choice could prepare or even you could do it. You could get a book on legal forms and presto! Just make sure you read closely the contents of the memorandum of agreement if cited lawyer were to prepare it.
Question: Estate Planning / Life Lease?
I am from a family of 2 children (my brother and myself). As a part of their estate planning, my parents deeded their house & the farm to my brother & I – with a life lease (we have to let them live there and use the land, etc. as long as either one of them survives, without charging them for it.) We cannot sell it, etc. as long as either of them survives. However, can one of us (either my brother or myself) sell his future interest in the property to a third party? Could he do this before my parents pass away? After my parents are no longer here, could one person sell their 50% undivided interest to a third party?
Answer: You can absolutely sell your interest. It will be hard to find a qualified buyer who understands these stipulations. Perhaps you should notify your parents of this. I’m sure their intention was for the two of you to keep the land, not sell it to a third party.
Question: Estate Planning – Living Revokable Trust versus Will?
My wife and I are in the process of estate planning. We talked with 2 different lawyers and have 2 different pieces of legal advise:
~1: Establish a Living Revocable Trust. This allows you to avoid probate on assets that do not have beneficiary designations.
~2: Use a Will. Your major accounts and home will pass to your spouse if you ensure the beneficiary designation forms/titles are on file with the correct information. True, any personal property (not held jointly) without a beneficiary may go through probate, but that will be a small portion of your assets.
My question is this: If a couple has a living revolvable trust, one or both of the spouses pass away, is it advisable to have legal council to execute the trust? The way things are being presented, the Trust is a large upfront cost with no back end costs. The Will is a small upfront cost but a large back end cost. I am curious if the Trust is a large upfront cost and has significant costs on the back end too.
Answer: A trust does have large upfront costs, but it does not have “back end” costs for the remaining trustee. The successor trustee should be able to adequately handle things without the help of an attorney. However, depending on your amount of assets and how much you want the CFG–control from the grave–a will may be enough for you.
The lawyer was correct when she/he talked about correctly titling assets. You can put a POD designation on all bank accounts, saying you want to pay a particular beneficiary(s) on death. This does NOT go through probate. You can put a TOD designation on stock accounts, real estate, etc. which will transfer to designated beneficiaries upon your death–also without going through probate. Any annuities, IRA’s, life insurance you hold will also not go through probate, as these vehicles have named beneficiaries.
A trust is great when you have a complicated estate with over a couple of million in assets.
Question: Estate Planning Question?
My friends mom’s name is Mary. Mary creates and funds a revocable trust. She names her son to receive the income for life and her grandson to receive the property upon her son’s death. What are Mary’s powers with respect to the trust and how will the trust be treated in her estate?
Answer: A revocable trust is one that can be modified and changed at will. Mary has complete control and can cnx the trust at any time. Her son will enjoy the income for life and will pay tax on it. Her grandson unfortunately is in the (GST) area. Generation skipping tax and depending on the value of the trust could pay significant taxes upon his dad’s death.