AirBear

I've got a free phone consult with a North Carolina Estate Lawyer next week. I did not realize how out of date our wills are. I've been watching a lot of videos on Estate planning and reading several websites. It looks like setting up a trust is going to cost a few thousand dollars and be a PITA with transferring beneficiaries to the Trust. My wife has 3 grown kids from her 1st marriage and I have a brother and minor niece. Both of us want wills that can't be changed by the surviving spouse so as to exclude the dead spouses blood relatives. But we also want to leave 100% to the surviving spouse in case of extended nursing home care required, etc.

I have quite a bit in a 401k, my wife has very little in hers. We have no debt and own our home. We both have life insurance but not a large amount. We're both older & retired.

Just curious what others have done to protect their blood relatives. Our estate is worth enough I could probably do a regular will and not give the wife 100%, just carve out my relative's share but of course that option isn't very popular with the wife

TransWorld

I strongly advise getting a Trust set up, with a Pour Over Will for anything that is missed. It is worth it. Been around and accepted in English Common Law for nearly 1000 years.

The Grantor (the person who creates it) is the only person who can change it. The Trustees cannot. The Trustees are required, by law, to follow what the Trust says. The Beneficiaries cannot. Rock solid law and court cases have stated this. Unless the Grantor is proven to be incompetent or insane, or the Trust was not the latest or is a fake, nobody can change it. If you think a relative might say they were forgotten and try to break it, you can explicitly leave them $1. Ask the lawyer. Same as your current Will in this regard.

Flexibility. My folks had one. When my mother needed money from selling the house to pay for the nursing home (my dad had already died), I just gave a copy of the trust, my dad’s death certificate, and a doctor’s note saying my mother was not mentally capable. I was successor Trustee. Executed selling paperwork on the spot. No Probate, no guardianship required. Just signed like it was my house I was selling.

Reduced taxes and simplicity. For pilots, with larger assets, it gives flexibility to avoid estate taxes going to the spouse, and a the inevitable second time to the kids, and getting hung up in probate for a year or more. People have screwed themselves over big time with simple wills.

PLEASE get a Trust. This is from a voice of experience.

AirBear

Thanks for the advice. I figured there are some on here that have gone thru this. I'll probably have to go with a trust, my wife will require a "Needs Trust" for her youngest daughter who is disabled and on SS disability and Medicaid. If we don't do it that way (from what I read) she could have too many assets to get Medicaid. The elder daughter handles her finances anyway. So we'll have to get one kind of trust and I suspect the others. Just a lot of paperwork to change beneficiaries, especially on the house.

Those of us who have large 401K's need to make sure the estate is structured so the heirs don't have to pay income tax on the entire 401k in a single year. I saw that on one of the videos. And the 401k's can be structured for multi-year payouts to reduce the taxes.

AirBear

Meant to mention this in my original reply. You DO NOT want to leave an estranged relative $1. If they fail to respond to paperwork sent to them it can tie up the distribution of assets for 18 months or more. Here's a video from a Louisiana Estate Attorney explaining why not to leave $1:

https://youtu.be/7KFv7bwd_TQ

TransWorld

He briefly mentions Trusts. But all of his conversation about paperwork going to the estranged relative, the probate court, and judge applies to the Will, ONLY.

Trusts are a different story. Trusts have NO paperwork to be completed by the estranged relative to make the other distributions. There is no probable court. There is no judge. The successor Trustee of the Trust can make distributions (or partial distributions) with no other paperwork from that unresponsive estranged relative. What I have been told is a check for $1 is sent to the estranged relative. If cashed, fine. If not, his tough luck. (Assuming the successor Trustee has a valid address for the unresponsive estranged relative.) Might want to leave $1 in the estate (maybe keep $100 in the checking account of the Grantor, who set up the Trust.), for some period of time.

I believe this is accurate. I am not a lawyer, get advice on this from your attorney.

Electrickjet

Absolutely have your estate planned. That can avoid many legal issues down the road.

In our case, my mother predeceased dad. Unknowingly she was the beneficiary of a small amount of my father's investments held by Morgan Stanley. When my father passed, I found out that mom being the beneficiary, would then trigger probate. So MS wanted to hold up the estate settlement by virtue of their policy without regard to the estate instructions. Fortunately my lawyer was able to secure Letters Testamentary from the probate court, of course at additional cost & time to settle the estate. That allowed me to make the lawful demand of MS to produce & distribute the funds as directed. Even that relatively small task took an additional couple months. The other necessity was to publish the probate in an appropriate public news paper for a month, IIRC. At the advice of my lawyer the "appropriate publication" is one that seeks to satisfy the legal requirement. Specifically not broadcast it to the world (NY Times) thereby triggering every nut that thinks they're an heir to a fortune.

When I informed my lawyer my folks had both passed, the very first question he asked was if anyone would be contesting our parent's estate? At the time I thought it to be an odd question given my family background. I came to understand it happens far more often than I thought it did. From my personal experience that is the worse time to be negotiating legal hurdles as a grieving adult child. As careful as my folks were in the details of their estate, that one beneficiary designation triggered probate. In states that have obstinate legal systems that could be wasteful & expensive at best. A good lawyer will look to provide language that follows your instructions & also looks to protect the estate with the contingencies life seems to deal all of us.

IOW, a couple grand now could save far more in the future.

rickair7777

Yes, get it all planned and get a trust even if you're young and especially if you have kids. I lived through the aftermath of young relatives who left behind a kid, some assets, and no will or trust. Kind of a nightmare. You want to help out the people who will be picking up the pieces, and also ensure no shenanigans WRT to to your INTENDED heirs. In our case the in-laws' black sheep second cousins came crawling out from the trailer park claiming that they, not the child, should inherit... then you have to spend the time and money to disprove that.

AirBear

I do plan to use the Estate Lawyer, I've read and watched enough info to realize this is needed. Wife and I are both retired. I have good income coming in for another 4 years from my Loss of Medical Plan but my wife's income isn't enough for her to live on and her retirement account is only 1/8 the size of mine. We have no debt which makes it easier. Since we want to ensure the surviving spouse can't cut the deceased spouse's blood relatives out of the estate I think we'll need a trust to do that. I'm trying to get together a list of questions to ask the lawyer on the call this coming Thursday.