Estate Planning

[angie_nrs]

My mom told me a while ago that all of their final arrangements are complete. They have all the required paperwork done and have even paid for their funerals and headstones. She's even already written the obituaries. She called the kids and told us if there is anything we would like, to let her know and she will likely give those things to us now since she is in the process of downsizing and getting rid of things. I thanked her for getting all of this done so that when they pass, things should run smoothly. That was very thoughtful of her. I've seen how things can get messy when things are not pre-planned. I've seen family infighting over such things and it's not good. Even when there is no fighting, there can be a lot of stress involved in the paperwork if things aren't properly planned. I don't think there would be fighting in our family, but it is still nice to know that things are taken care of, to relieve the stress of an already sad situation. If anyone should have an issue when the time comes, it's their own fault since mom has opened the lines of communication on the topic and everything is out in the open. I think we're all good.

I've been giving this topic some more thought recently and decided we should go ahead and do this for our kids. Hubs and I are still relatively young, but you never know when God is going to decide that today is THE day. It IS going to happen, so we might as well plan for it now and be done with it. We've been fortunate enough to gather some fairly significant assets during our lifetime......most of it being our property. We hope that someday the kids might take it over, but who knows? We have put a lot of work and money into it to get it to the point that it is now. Anyways.......I was thinking about how to make the process easier for them when we are gone. So, earlier this year, we made an appt. with a lawyer and got papers drawn up. We have both medical and financial power of attorneys signed, advanced directives signed, and an asset sheet filled out and put in with our end of life packet that's in the safe, which the kids know how to get in to. I also have those papers for all of our parents (when the time comes) put in the same place in the safe.

I was thinking about doing a trust so the kids wouldn't have to go thru probate when we die. The lawyer we went to said to do a Ladybird deed instead. It's cheaper, easier, and has more benefits than a trust. This type of deed will be beneficial to the persons receiving property b/c they allow a stepped up cost basis so that if the kids decided to sell it, they wouldn't have to pay capital gains on it. But, if they decide to live here they are allowed to keep the tax basis that we pay, and not the value of it upon our death. Either way, it is a huge tax savings. It is also super easy to take possession of the property upon our death. All they have to do is take our death certificates to the register of deeds.......that's it. At that time, the house, barn, and all personal possessions immediately go to them. No probate, no fees (that I'm aware of)......no fuss, no muss.

We have not prepaid for funerals since I don't want a traditional funeral. However, we have cash set back for those expenses so that they won't have to worry about how to pay for anything. All of our accounts have beneficiarys listed so all of those assets know where to go. We even have a will as backup in case we missed anything, but they shouldn't even need the will. Still, we did one anyways ourselves just as a backup. I also have an instruction sheet in the packet on what to do upon our passing and who to contact for our accounts.

Now, their biggest problem will be to sell all of our stuff. LOL! They could have a heck of a garage sale or auction if they wanted to. They know we prefer stuff that will hold value over just keeping cash. We have told them many things we have that are valuable and to not sell them for peanuts! I even listed some of those things in the will so that if they forget what we told them, they will be reminded when they go thru our papers. Some things will be best sold on ebay where collectors know their value, although it would be work to get things organized, listed, and shipped out. Still, it would be well worth their time if they wanted to do that.

I guess it's just the "be prepared" for anything mindset that I have that's pushed me to do this. I don't see a negative side to getting things taken care of while we can and are still of sound body and mind. I'm grateful that my mom did this for me and hope someday that our kids will be grateful for it too.

 

[Tootsie]

Thank you for your post. Very thoughtful and comprehensive. I am going to put a copy of it in my room where I can see it first thing every morning so that I might do similar. Better now than later.

 

[Neb]

Thanks.

The Ladybird deed is something we should look at. The Princess owns 7 properties that will have to be dealt with on her passing.

We had started to look at trusts but that stalled when it came time to name an administrator.

Ben

 

[backlash]

My parents had everything planned and paid for so there were no issues when they passed. The only surprise was they hadn't paid for the opening and closing. $1200 to dig a hole and fill it back in. We paid for Dad's and Mom made sure she prepaid for her and my brother. We had the same issue when my SIL died. $1200 or no funeral.
A couple of weeks ago I pre-registered to be buried in a national cemetery.
I did it all online and it was really easy. I did have to include a copy of my DD214 with the form I filled out.
The VA sent me a letter so my family just takes that and my ashes and it's all done. If my wife goes first she has to wait for me then they will put us both in the same place at no cost.
I am going to make myself a wooded box for my ashes. I just need to find some nice Black Walnut.

 

[Weedygarden]

I cannot say how important it is to have wills written in detail about who gets what. Having good executors is also extremely important. One of the heirs is not necessarily a good option, but it depends on who it is.

Just talking to my uncle about a more distant family situation where children were left out, not by their biological parents, but by a step parent. Lots of land and property was left to two half brothers, while 4 other siblings got nothing.

We may all know stories of one adult child who takes hold of the whole estate and squeezes everyone else out. I know of too many stories of this happening. I know someone whose mother needed care and he was left executor. No one else ever saw a dime from him. There was lots of money left after her death and he kept it all. He retired early with this money. Then he tried to get his father's. By then, the family was aware of the fact that he would keep that as well, so someone who was not going to be an heir was made executor.

 

[Bacpacker]

MY parents have done the same thing. It will make it easier when they pass.
Wife and I have no kids and have discussed this. Still haven't came to a good decision on what to do with what we have. It's not that much, but will still need to be dealt with

 

[Haertig]

We have all our assets owned by a trust. My wife and I are co-trustees. Upon our death, the trust is split up into two individual trusts, one for each or our kids. These kids trusts are managed by a separate company until the kids hit 40 years of age, at which time their trust is totally turned over to them. While the trusts are managed for them, there are specific instructions on how money can be disbursed. Education: yes. Down payment for a house: yes. Reasonable amounts for normal expenses: yes. A new Lamborghini: no. The spin-off kids trusts are also protected so that if they are married (one of our kids is), then the trust money "stays in the family", e.g., if our child subsequently dies then the money goes to our grandchildren rather than our kid's spouse. The money in the kids trusts is also protected (somehow - you'd have to ask our lawyer how they did this) so that it can't be sued out from under them. i.e., Say our kid is involved in an auto accident and another party in the accident sues them - the trust money is not available as a target for that lawsuit. You can do a lot of things with trusts. Keeping money out of probate is what most people are familiar with, but there is much more. And there are no worries about family fights over inheritance.

Basically, each of our properties are owned by their own separate LLC. Our renters pay rent to the LLC, not to us directly. That way, if a renter ever decides to sue about something, they can only sue the LLC. All our other assets are untouchable. Then these LLC's are owned by our trust, other items have been signed over to the trust, our bank accounts are owned by the trust, my wife and I are co-trustees - and the trust has specific rules set for how it will split into individual trusts for our kids, and what they can and cannot do with the trust money (until they reach 40 years of age). We figured at some point you gotta turn them loose as a full responsible adult, 40 was our choice. Our assets outside of the trust are minimal. So if you take away the trust, we are paupers with nothing to show for ourselves. Which is what keeps things out of probate when we die. If you have less than XXX dollars in assets, then you are exempt from probate (at least here in Colorado this is true). I think XXX here in Colorado is $50,000 but don't quote me on that. Note that owning property in another state can force you to go into probate in THAT state. Our lawyer advised us to sell our land in other states, keeping the mineral rights, to avoid this. Which is exactly what we did. Our property in other states was not a big income earner or of sentimental value, so we had no emotional resistance to dumping it. Luckily the farm had been in the family forever, so we were able to retain the mineral rights upon sale.

One other thing to note (more for US dealing with OUR aging parents): Remember that Power of Attorney ceases at time of death. The Executor will take over (often times this is the same person). However, the Executor is hamstrung at the beginning waiting for assets to open up. You'll need a death certificate, and these can sometimes take a while. Banks will freeze the accounts of the deceased. So don't go thinking you can waltz in there and take $20k out of a parents account to pay for a funeral, even if you're PoA (which is useless at that point). You'll probably have to pay for it yourself, then get reimbursed later, once assets get unfrozen. So my advice is to move funds out of parents accounts into accounts that you control BEFORE they die (if you can predict that), so you can move these funds very simply using your PoA as opposed to delaying things waiting for your Executorship to take over after they're gone. Things like being a co-signer on a checking account may make you think you are in good shape upon their death. But it doesn't help to be a co-signer on an account that is frozen. Financial institutions tend to get their panties in a wad around death time, and they will freeze access to things that you wouldn't think they could do. And they may not legally be able to, but that will take weeks to months to sort out. You will eventually get access to the funds, but "eventually" may be too late if your kids need the money NOW for funeral expenses. Discuss with your kids that they need to use PoA, or co-signer on an account, or whatever, BEFORE you die to move sufficient funds to take care of things. And remember these things yourself, if you will be dealing with this for one of your parents.

Also, some parents sell their house to their kids, then rent it back for the parents use until they die. So they don't have to worry about probate on the house, since it is already owned by the kids. But you better trust the heck out of your kids if you do that. Arrangements like this can sour later. Or, you kid could get sued for something and guess what? You house may get sued right out from under you (remember, it's not YOUR house anymore, it's your kids house - subject to lawsuits against THEM!) Our lawyer said he would never recommend doing this, even for families that are all sweet and getting along just fine currently. Because of both the possibility of family ties souring, and of lawsuits against the kids (the home owners).

 

[Weedygarden]

I know a couple who have two grown children. Their home is paid off and they registered as tenants in common. As they die, the survivors still retain ownership, until they decide to do something else with the home.

 

[bamadeb48]

I own an acre with a mobile home on it, I have 4 grown children, I don't have much stuff at all, but my granddaughter lived with me for 5 years , helped me fix up the place, put a metal roof on, new windows, and helped pay for stuff. so I put this all in her name, my children don't want it.. I offered it to them, She wants her daughter to attend the school near here, not even a mile from here so it needs to be in her name.. I think that is only fair.. she is the one that helped me more than anyone and still does take care of me... she will be over my health care and everything,

 

[Cascadian]

We need to update our will. After dragging our feet for a long time we did it about 10 years ago. We took the street bike to L.A. and back. That got us motivated to git er done alright.

 

[Supervisor42]

: Remember that Power of Attorney ceases at time of death. The Executor will take over (often times this is the same person). However, the Executor is hamstrung at the beginning waiting for assets to open up. You'll need a death certificate, and these can sometimes take a while. Banks will freeze the accounts of the deceased. So don't go thinking you can waltz in there and take $20k out of a parents account to pay for a funeral, even if you're PoA (which is useless at that point).
You'll probably have to pay for it yourself, then get reimbursed later, once assets get unfrozen. . Things like being a co-signer on a checking account may make you think you are in good shape upon their death. But it doesn't help to be a co-signer on an account that is frozen. Financial institutions tend to get their panties in a wad around death time, and they will freeze access to things that you wouldn't think they could do. And they may not legally be able to, but that will take weeks to months to sort out. You will eventually get access to the funds, but "eventually" may be too late if your kids need the money NOW for funeral expenses.

A couple of very important points that most people miss. Like thinking a 'Burial Insurance Policy' will actually pay funeral expenses when they are due. POA means nothing after death.
You obviously have talked to an attorney who knows how easily things can get screwed-up.
If the 'beneficary' listed on an account, from years ago, is already deceased, the account will be frozen until the will has been run thru probate.
Even if there is a valid co-signer, the bank can still freeze the account (any and all accounts) if the 'beneficary' listed on the old paperwork is a different person, living or not.
When both of them realize that the funeral home will not even turn the key in the hearse until the $11,000 bill is paid, neither of them can do anything, no matter how much they cooperate.

And kudos to the OP, @angie_nrs for doing the most important part that so many people miss:

...and an asset sheet filled out and put in with our end of life packet that's in the safe, which the kids know how to get in to. I also have those papers for all of our parents (when the time comes) put in the same place in the safe.

Overheard after my brother died: "Where is his will? we don't know,did he have a safety-deposit box?we don't know,what bank would it be in?we don't know,does anybody know where he would have kept the key?we don't know,what properties does he own?we don't know,did he have an account in bank 'Y'?we don't know,we know he owns stock, where is it at?we don't know...."

 

[angie_nrs]

Many documents can be completed on your own. We had a Suze Orman packet that we completed with the will and POA's. We just went to the bank and had our signatures notarized and it was legal. I picked up the kit on ebay for a couple of bucks maybe 10-15 years ago. It was a simple 'fill in the blank' sort of document. The will was more important to us back then b/c we had young kids. Now that they are on their own, it takes some of the pressure off. We only have to plan for the dogs now if we pass. Thankfully the kids will (and are able) to take the dogs. We have set aside money for them too so that their needs will be paid for, should we pass before them.

The documents that we have (and that can be done yourself) are:

Financial Power of Attorneys (for each of us)
Medical Power of Attorneys (for each of us)
Advanced Directive (for each of us)
Will - with burial and funeral wishes along with cash to pay for it
Asset sheet with all accounts and contact information listed with each account
An instruction sheet on top of it all in the packet so that the kids will know what to do and who to contact

 

[Meerkat]

Lots of good advice on this.We need to look into it and soon. We'er not exactly spring chickens anymore by a long shot.

 

[Neb]

Lots of good advice on this.We need to look into it and soon. We'er not exactly spring chickens anymore by a long shot.

Nor are we.

I broached the topic with my son and daughter in law.

We need an administrator that will faithfully execute a trust after we are gone.

Not easy.

Ben

 

[Supervisor42]

We need an administrator that will faithfully execute a trust after we are gone.

Not easy.

Ben

Well, don't pick me.
I suck.
My philosophy is: when it is all over, if everybody hates you the same amount, then you were fair to all.
(Ok, none of them hated me, but none were shopping for a new car either )

Since we touched on another unknown, anyone can write you in as executor of their estate, without even asking you, without even telling you, no notification or consent needed.
And it will cost you thousand$ because you cannot lay your hand on a single dime of the estate because of the flock of buzzards staring down wanting every one.
Oh, and you can't say no or the will goes into the court and the state ends up with most of it and...
...then you have ALL of the heirs wanting to kill you.

 

[Haertig]

Many documents can be completed on your own. We had a Suze Orman packet...I picked up the kit on ebay for a couple of bucks maybe 10-15 years ago.

Be very cautious about this. Banks will sometimes not deal with you when you don't have "fresh" documents. And documents from an eBay kit that are over a decade old are probably just begging for trouble. While in the end they may eventually work, probably only after a trip to court to enforce them, it will be the many months of hell before the end that make your family wish you had done something different.

Remember, when a bank says, "We are not sure about the legitimacy of these documents..." then they will flat out not deal with you. Do-it-yourself documents are going to be on the more suspicious end of the continuum every time. And the courts are going to back the banks up on that, and allow months of time to pass while the bank does due diligence to verify the documents. Claims of "these documents are legal" on the software you bought have to be balanced against, "Yeah, but how long will it take to make them work?" It may be well worth it for you to contact friends that might have used the same kit your bought, in your state, and see how well they did in actual use (not theoretical use, or claims on the software's packaging). Maybe that "couple of bucks" software you bought 10-15 years ago will indeed work. But you probably owe it to your kids to at least do a little research to verify that.

But in any case, having some documentation, no matter how old or iffy, is much better than having no documentation. At least your children should be able to establish your intent, if not a legal claim. For what that's worth. It may help in the long run, but probably not in the short term immediately after your death.

One other thing - when my mom moved to Colorado from Texas, we went to see my lawyer about her estate plan that had been done in Texas. My lawyer reviewed all documents for continued relevancy. The only document he said that we really, really needed to redo was the Financial Power of Attorney. He said that the one from Texas should work, but he had seen many problems with out-of-state PoA's over the years. Hit or miss if we'd run into any problems with my mom's. Depends on the specific banks we would be dealing with. He recommended re-doing the PoA so that it was an official document of the state of Colorado rather than Texas to lock things down tightly and make sure things would flow smoothly. We also re-did the HIPAA forms, since many hospitals won't honor yours if they are more than a few years old. You didn't mention HIPAA forms in your post, but those are important. Many places have their own that you are asked to sign (the dentist, your physician, etc.) But you also want a more generic all-encompassing one. I'm sure that must have come in that eBay packet you bought. If not, generic HIPAA forms are easy to come by. Did you know that even a spouse cannot legally get medical information without HIPAA authorization?

 

[joel]

When I was in SCNG, a JAG officer came & thalked about getting a will made up. He work in town & told us about $25.00 at his office for a simple will. That we could get any lawyer to draw one up, that we did not have go to his frim. I had one draw up for my DW & I, but a lot has changed in the last 30 years & I need to add to it.
My Father hand wrote a will at the last minute, thank God none of my siblings wanted to sue, the paper was not legal. My mother gave her house to a Granchild, not everyone liked it, but no one sued.
I am trying to get my children to save for retirement, prep & write a will.
Sometimes I think it is water off a ducks back. I can make a horse drink water, but all I can do for a child is love them.

 

[backlash]

My Dad was having his chest opened for bypass surgery. His surgeon asks if he had his legal affairs in order. He said no should I? Doc called a lawyer friend and waited for him to get there and do dad's legal work then he opened him up. I don't think Dad had taken the surgery seriously before that.
After he got out of the hospital he and Mom got it all taken care of so it worked out.
Dad was one of those that only went to the doctor if it was serious, like jamming his thumb and finger into his table saw. He did however wait for 4 hours before going to the ER. He had to get his nap in first.

 

[angie_nrs]

Be very cautious about this. Banks will sometimes not deal with you when you don't have "fresh" documents. And documents from an eBay kit that are over a decade old are probably just begging for trouble. While in the end they may eventually work, probably only after a trip to court to enforce them, it will be the many months of hell before the end that make your family wish you had done something different.

Remember, when a bank says, "We are not sure about the legitimacy of these documents..." then they will flat out not deal with you. Do-it-yourself documents are going to be on the more suspicious end of the continuum every time. And the courts are going to back the banks up on that, and allow months of time to pass while the bank does due diligence to verify the documents. Claims of "these documents are legal" on the software you bought have to be balanced against, "Yeah, but how long will it take to make them work?" It may be well worth it for you to contact friends that might have used the same kit your bought, in your state, and see how well they did in actual use (not theoretical use, or claims on the software's packaging). Maybe that "couple of bucks" software you bought 10-15 years ago will indeed work. But you probably owe it to your kids to at least do a little research to verify that.

But in any case, having some documentation, no matter how old or iffy, is much better than having no documentation. At least your children should be able to establish your intent, if not a legal claim. For what that's worth. It may help in the long run, but probably not in the short term immediately after your death.

One other thing - when my mom moved to Colorado from Texas, we went to see my lawyer about her estate plan that had been done in Texas. My lawyer reviewed all documents for continued relevancy. The only document he said that we really, really needed to redo was the Financial Power of Attorney. He said that the one from Texas should work, but he had seen many problems with out-of-state PoA's over the years. Hit or miss if we'd run into any problems with my mom's. Depends on the specific banks we would be dealing with. He recommended re-doing the PoA so that it was an official document of the state of Colorado rather than Texas to lock things down tightly and make sure things would flow smoothly. We also re-did the HIPAA forms, since many hospitals won't honor yours if they are more than a few years old. You didn't mention HIPAA forms in your post, but those are important. Many places have their own that you are asked to sign (the dentist, your physician, etc.) But you also want a more generic all-encompassing one. I'm sure that must have come in that eBay packet you bought. If not, generic HIPAA forms are easy to come by. Did you know that even a spouse cannot legally get medical information without HIPAA authorization?

Good points!

A 'do it youself' program is a good place to start. Like you stated, having something is better than having nothing. Those documents can also be updated any time you want to update them. Simply change the will as needed and take it in and have it notarized with the new date. If you go to the bank for notarization, you could ask them then if it is sufficient for their needs or if they would require something more. The most recent document is the one that must be followed, as long as someone knows where it is and that it even exists. If everything is done correctly, the will isn't even needed.

What's more important than a will? Having your beneficiaries designated on your accounts. This is especially important if you have been re-married, have children from more than one person, or have nasty/greedy family members to deal with. The beneficiary listed on your account paperwork is what the institution will follow.....no matter what your will says. That's why a will is only a backstop in case something was missed. So, if you're really concerned about who gets the bank accounts, make sure the bank has those beneficiary papers on file and that they are exactly how you want them. It wouldn't be a bad idea to get copies of those forms and include them with your 'end of life' packet. That way you'll know your paperwork is updated correctly and whomever is left to deal with your death will know that you knew what those papers said. Accounts that should have beneficiaries listed are IRA's, HSA's, bank accounts, investment accounts, pensions, etc. All that information should have been filled out upon the open of the account, but it's a good idea to re-check all of them, especially if your life circumstances have changed since the opening of the account, like a new spouse.

I believe the Medical POA in our state trumps (or includes) the HIPAA. In our case, both of us has each other listed on the forms, but neither of us has any significant medical history to speak of. We had a recent family member hospitalized and incapacitated and I had the papers needed immediately upon hospitalization. There was never any issue with HIPAA for us. Although, I'm sure it probably varies from State to State.

One of the things those documents did for us, was to make us think of all the different scenarios. We had to ask ourselves.....do we want to be on a vent? If so, for how long? Do we want to be a DNR? Do we want to be buried or burnt upon death? Where do we want our final resting place to be? They are not easy questions to answer, but thinking them thru and putting them on paper will help your loved ones when that time occurrs. If you change your mind.....change your papers. It also pushed us to have the 'talk' with the kids. They are aware of our wishes and where our papers are. In fact, it's been a while since the talk, so guess what a topic of discussion will be during Easter dinner? In fact, I think I'm going to urge them to consider making out their papers as well, even though they are really young, it's a good exercise to go through, espeically now that they are accumulating their own assets. It's a little uncomfortable to think through all the scenarios, but it's a kind and thoughtful thing to do for those left behind.