Estate planning and legal documents - anything else we need?

[hollybloom24]

Hi,

I am trying to organize our finances and estate documents. Does anyone have any legal documents besides the following, and if so, what does the document do?

- Wills (both spouses - assets going into a trust)

- Power of Attorney (both spouses and backups if either of us is unable to serve)

- Living Will/Health Care Proxy (both spouses)

- HIPPA documents (allowing other family members to receive information about our health if we are unable to speak)

Now that we have kids it seems so important to have all this information complete!

Thanks!

[niccig]

Guardian of the kids?

We filled out lots of paperwork with our estate lawyer, and I think we've got the same list as you.

Life Insurance on both spouses? DH's policy is more than mine, mine is to cover child care expenses.

Disability insurance in case you or DH can't work for a while.

[ThreeofUs]

Estate planning for the kids. That is, if both mom/dad go, who is to be guardian and what moneys do they get and what moneys, etc., are held in trust (and what kind, and how distributed, etc.) for the kids.

[hollybloom24]

We have life insurance for my husband, since he earns more than I do.

Do people have specific Guardianship documents drawn up?

If my husband and I die, all our assets go into a trust to be given to our kids as monthly income until they are 25, and then they get whatever is left over. Cousins are the guardians, and they will be allowed to take money from the trust too, to accomodate the situation - for nexample, if they had to buy a bigger car to accomodate their kids and ours, or if they had to build another bedroom for our kids to have.

I really don't like this stuff!!!

[o_mom]

We have life insurance for my husband, since he earns more than I do.

Do people have specific Guardianship documents drawn up?

If my husband and I die, all our assets go into a trust to be given to our kids as monthly income until they are 25, and then they get whatever is left over. Cousins are the guardians, and they will be allowed to take money from the trust too, to accomodate the situation - for nexample, if they had to buy a bigger car to accomodate their kids and ours, or if they had to build another bedroom for our kids to have.

I really don't like this stuff!!!

That stuff was all in the will for us - guardian, back up guardian, trust, money distribution, etc.

[hollybloom24]

The Guardianship is in our will too - I just didn't know if this was sufficient. It might well be.

[niccig]

The Guardianship is in our will too - I just didn't know if this was sufficient. It might well be.

I think it's covered.

I would also look at a life insurance policy on you. We didn't do as much on me, but enough to cover cost of a nanny until DS was older. Our accountant crunched the numbers for us to let DH know how much of his income would be needed to care for DS if something happened to me. With no family in town and DS working late nights, he would need a lot of help. Just something else to think about.

[kusumat]

Beside those mentioned, living trust was created. The purpose of trust is to avoid probate fee(3-5% of estate). The fee is still applied if you only have will.

Also, make sure that the assets are under trust's name. Your lawyer should go over this with you on what necessary(Not all) to be transferred to trust. For example, bank accounts, investment accounts. Also, update beneficiaries on those accordingly.

[codex57]

Trust - like a big box to hold all your assets. When you die, probate court sees you have no assets cuz everything is in the box. So, no need for probate and all the fees. The key is to make sure you title everything into the trust.

Will - backups to the trust. For in case you forgot to title something in the trust. This is also typically where you name a guardian for your minor children. Should direct everything to go into the Trust.

Financial Power of Attorney - so successor trustee (of the Trust) can handle your financial affairs should you be in a coma, have alzheimer's, etc. Avoids having a conservatorship which can be more of a pain than even probate.

Advanced Health Care Directive/Living Will - just like the financial POA, cept it deals with medical issues. Where you also put in procedures you don't want, donation and autopsy and pull the plug decisions, funeral directions, etc.

HIPAA doc may be incorporated inthe Advanced Health Care Directive. Might be separate.

Trust Abstract - short form of trust. If a bank or whoever asks for a copy of the trust, give them this. Has all the info they need and none of the really private stuff that isn't any of their business.

[codex57]

That stuff was all in the will for us - guardian, back up guardian, trust, money distribution, etc.

That sounds backwards and would negate the benefit of having a trust.

I'm an estate planning attorney in CA, so the specific rules may be different, but the general concepts are the same everywhere.

[caleymama]

I checked with my sis who is an attorney that handles lots of estate type stuff . . . here's her (quick & dirty) reply when I summarized the posts here and asked her for info:

Generally, depending on what state you're living in, (in New York for example), the basic legal documents to have in place would be Last Wills and Testaments (Guardians for minor children are appointed within a Will - there is no separate document), Durable or Springing General Powers of Attorney (also state dependent), Living Wills (these are basically DNR's), and Health Care Proxies.

Life insurance may make sense - and a life insurance trust is also a consideration depending upon the size of your estate and the cost of the premiums, etc.

Trusts for spouses/children may be created within your Last Wills and Testaments to take effect upon death or irrevocable trusts may be created during your lifetime for the benefit of your child/children - there is tons of flexibility with trusts (can put $ in trust to a certain age or for life with very strict or very liberal terms) and serve as a good protector of your spouse/child's inheritance from a bad marriage, bad judgment, bad habits, etc.

Second marriages are an important consideration in estate planning as well.

A special or supplemental needs trust may be a consideration for people with children with disabilities or medical problems.

That's just a bit - sounds like they have most of it covered.

HTH

[niccig]

I'm an estate planning attorney in CA, so the specific rules may be different, but the general concepts are the same everywhere.

Do you mind answering a question? We're doing our irrevocable trust, we're in CA. DH and I decided last night to open another bank account for savings. Should I wait until after we sign the trust papers and then open acct. in trust name, or go ahead and open it in personal name and then after sign papers, transfer it to the trust?

We're not signing any of our papers for 2 more weeks - waiting for my citizenship oath swearing ceremony, so I'm a citizen.

[codex57]

Trusts for spouses/children may be created within your Last Wills and Testaments to take effect upon death or irrevocable trusts may be created during your lifetime for the benefit of your child/children - there is tons of flexibility with trusts (can put $ in trust to a certain age or for life with very strict or very liberal terms) and serve as a good protector of your spouse/child's inheritance from a bad marriage, bad judgment, bad habits, etc.

Yes they can. People have been doing it that way for quite some time now. However, revocable living trusts started becoming en vogue the past 20 years or so because if you set up a trust first, and have the will as the backup to the trust, you avoid probate.

The whole point of a living trust is to avoid probate cuz probate can be a big pain. In some states, their probate process isn't so bad so there's not much point to a living trust in those states. That's really the primary purpose. Saving on estate taxes is secondary and frankly, not many people would ever run into that problem (exemption for each person is $3.5 million for 2009).

If you have the trust created in the will, it still means the will gets probated and then have the trust set up and recognized then. Means you still have to deal with the probate process. Depending on the state, that's the hassle and expense people are trying to avoid by setting up a living trust in the first place.

Financially for the attorney, it's often better to take the probate case. More money usually. However, if you set up a living trust, it's a lot less hassle and everyone usually ends up happier. You make less (particularly if you need to compete against trust software or people illegally practicing law), but it might be worth avoiding teh headache of a probate case.

[codex57]

Do you mind answering a question? We're doing our irrevocable trust, we're in CA. DH and I decided last night to open another bank account for savings. Should I wait until after we sign the trust papers and then open acct. in trust name, or go ahead and open it in personal name and then after sign papers, transfer it to the trust?

We're not signing any of our papers for 2 more weeks - waiting for my citizenship oath swearing ceremony, so I'm a citizen.

It doesn't matter too much. If it's easier for you to have it open now, open it now. You can always go back after you set up a trust and then change it then. It's typically just a one page form that they have you fill out to change the name. No biggie. Just remember to bring a copy of the trust abstract with you.

If you can wait, then it will save you a trip to the bank and the time it takes to fill out that form.

Congrats on becoming a citizen!

[caleymama]

Trust - like a big box to hold all your assets. When you die, probate court sees you have no assets cuz everything is in the box. So, no need for probate and all the fees. The key is to make sure you title everything into the trust.

A little more from my sis since I missed your post while I was emailing with her:

The first option she is talking about is a Revocable Living Trust - where you title every asset in the name of the trust and assign all your tangible personal property to the trust. You are then the trustee or co-trustee of the trust for your whole life until you die and then you have provisions in the trust for what is to be done with your assets just like a will. You then have a pour-over will in addition to the rev trust like she said, to catch any asset not titled in the name of the trust. It's true you can basically avoid probate this way but probate isn't really a big deal or all that expensive - however, a rev trust allows for more privacy because the rev trust doesn't generally become public record like a will admitted to probate would.

Some ppl like a rev trust because it allows for a seamless transition into old age because someone (a Trustee) basically handles your whole life (finances and many decisions) as you age and even become incompetent up until your death.

[codex57]

I agree with your sis. Cept it really depends on the state as to the cost of probate. I have no idea about how things are in NY.

In CA, it TOTALLY makes sense financially. Primarily due to the cost of housing here. They have a sliding % scale on fees, but it's on the gross amount of your estate. In SF or LA, a $700,000 house might be a small house so even if it's mortgaged to the hilt, they still base it on the full $700,000. You easily crack $10,000 in fees out here.

Plus, it can typically take 8 months to 2 years to clear probate.

This is in direct contrast to, I think, Utah (don't hold me to that state, I can't remember which state was mentioned to me except that it was in the middle of the US somewhere). Where it barely costs anything and doesn't take long to clear probate. There, a living trust doesn't make much sense financially and you're better off with just a will.

[codex57]

Some ppl like a rev trust because it allows for a seamless transition into old age because someone (a Trustee) basically handles your whole life (finances and many decisions) as you age and even become incompetent up until your death.


Well, I'd like to clarify this part.

A trustee handles the "box". In a revocable trust, while you're alive, you are the trustee. Should you become incompetent, that's where the Power of Attorney kicks in. That person may not be the same as the successor trustee. When you pass on, that's when the successor trustee kicks in. But yeah, the idea of a trust is to have a more seamless transition than probate. It's not entirely kink free, but it often is a lot smoother than probate.

[hollybloom24]

Thank you to everyone who responded!!! This is good information. Special thanks to caleymama for talking to your sister and to codex57! I hope others can benefit from all this information and wisdom.

We do have a Revocable Living Trust. Codex57, is a Trust Abstract something that our attorney just creates from our current Trust documents?

We did decide against life insurance for me - I have some benign health conditions, like high cholesterol and fibrocystic breasts, which made the cost of my policy quite high. My husband is a physican and we are financially secure enough that he did not feel it was worth the cost of the policy. Life insurance companies are clearly in the business of making money!

Oh, and we live in Massachusetts, outside Boston where homes are very expensive.

THANKS!

[codex57]

We do have a Revocable Living Trust. Codex57, is a Trust Abstract something that our attorney just creates from our current Trust documents?


Yes. If you have a typical trust package, take a look at the back. It's usually stuck to the back. Only a few pages long. Might be as short as 1 page and could go on to 10 pages or so. Most run around the 4 page mark. The most important parts (from the viewpoint of, say, a bank) is that it should have the name of the trust, who all the various trustees are, and who the beneficiaries are.

Technically, you can just hand the whole trust document to the bank and they can pull the info from there. But, if they're nosy, they can see what assets you have, how you're distributing your assets, etc. That's why it's nice to have a trust abstract.

[niccig]

It doesn't matter too much. If it's easier for you to have it open now, open it now. You can always go back after you set up a trust and then change it then. It's typically just a one page form that they have you fill out to change the name. No biggie. Just remember to bring a copy of the trust abstract with you.

If you can wait, then it will save you a trip to the bank and the time it takes to fill out that form.

Congrats on becoming a citizen!


Thanks. I can wait it's only a few weeks. I'll open the account after the revocable trust papers are signed.

The estate tax exemption you mention of $3.5 million for 2009 is for a citizen. When we started our estate planning, I found out that as a NON-citizen there are different laws. I had always intended to get citizenship but I didn't get around to it. When our estate lawyer spelled out the legal implications of not being a citizen and some of the complicated ways to deal with that, it motivated me to apply. When I told our lawyer I had passed the interview and just waiting on the oath ceremony, she was overjoyed. She kept saying how I had made the best decision for DS and my future.

I have the ceremony tomorrow. DH is taking the day of work and we're making a day of it. I'm getting pretty excited. But I'll feel better when all the paperwork is signed in a few weeks. But I think I still need to do something about my Australian assets, which is just my 401K. I have to talk to the estate lawyer again and work out what I need to do with that.

[codex57]

I rarely check the Lounge, so if anyone has anymore questions, I'll try and pop back in here later. Otherwise, you can always PM me.

[niccig]

We did decide against life insurance for me - I have some benign health conditions, like high cholesterol and fibrocystic breasts, which made the cost of my policy quite high. My husband is a physican and we are financially secure enough that he did not feel it was worth the cost of the policy. Life insurance companies are clearly in the business of making money!


That makes sense. My premium is quite low, but it was done a few years ago and I had no ongoing medical conditions then, so it was quite cheap.

[codex57]

Thanks. I can wait it's only a few weeks. I'll open the account after the revocable trust papers are signed.

The estate tax exemption you mention of $3.5 million for 2009 is for a citizen. When we started our estate planning, I found out that as a NON-citizen there are different laws. I had always intended to get citizenship but I didn't get around to it. When our estate lawyer spelled out the legal implications of not being a citizen and some of the complicated ways to deal with that, it motivated me to apply. When I told our lawyer I had passed the interview and just waiting on the oath ceremony, she was overjoyed. She kept saying how I had made the best decision for DS and my future.

I have the ceremony tomorrow. DH is taking the day of work and we're making a day of it. I'm getting pretty excited. But I'll feel better when all the paperwork is signed. But I think I still need to do something about my Australian assets, which is just my 401K.

Yeah, there are even tax issues. Your attorney even has to tweak the language a bit for a non-citizen.

Sorry I didn't mention it. I think nearly all my clients have been citizens. Kinda weird but I haven't had to think about non-citizens in like forever. Frankly, I don't even think about the estate taxes stuff much cuz my clients aren't really that wealthy either. Only one ever bugs me about it, but it's always for free legal advice work even tho they've got more than enough money to pay. I don't mind giving out some free help, but the really rich ones seem to abuse it. Her especially cuz I think she knew I felt sorry for her cuz she had a disability as well. Sorry... venting here.

[niccig]

Yeah, there are even tax issues. Your attorney even has to tweak the language a bit for a non-citizen.

Sorry I didn't mention it. I think nearly all my clients have been citizens. Kinda weird but I haven't had to think about non-citizens in like forever. Frankly, I don't even think about the estate taxes stuff much cuz my clients aren't really that wealthy either. Only one ever bugs me about it, but it's always for free legal advice work even tho they've got more than enough money to pay. I don't mind giving out some free help, but the really rich ones seem to abuse it. Her especially cuz I think she knew I felt sorry for her cuz she had a disability as well. Sorry... venting here.

Our lawyer was surprised that I was born in Australia, I don't have an accent anymore, and as soon as I told her my place of birth, she said that that changed everything. Hence her very strong encouragement to become a citizen. It also makes things much more simple for our estate planning and thus cheaper for us.

Sorry about the client that always wants free advice. Friends of ours don't want to pay for their estate planning, and if we had done that, we would have been in a bigger mess because of non-citizen issue that we wouldn't have known about. So the estate lawyer's fee have been well worth it to know what to do. I used to be a law librarian at UCLA, and I'd get a lot of people trying to do their own legal work, and I would steer them to places where they could get help - it's just too complicated to work it out if you don't know what you are doing. And if you do, you can still miss things, which is why I was surprised I didn't know about the non-citizen issue as I *thought* I had looked at all legal implications when I married DH.

[o_mom]

That sounds backwards and would negate the benefit of having a trust.

I'm an estate planning attorney in CA, so the specific rules may be different, but the general concepts are the same everywhere.

The way everything is titled it passes on death to the trustee of the trust named in our will (this is if both DH and I die - if one dies the other gets everything) and avoids probate altogether. Probate in our state is minor, and the bulk of our estate passes outside of it.

[codex57]

The way everything is titled it passes on death to the trustee of the trust named in our will (this is if both DH and I die - if one dies the other gets everything) and avoids probate altogether. Probate in our state is minor, and the bulk of our estate passes outside of it.

Sounds perfect!

[kusumat]

Trust - like a big box to hold all your assets. When you die, probate court sees you have no assets cuz everything is in the box. So, no need for probate and all the fees. The key is to make sure you title everything into the trust.

Will - backups to the trust. For in case you forgot to title something in the trust. This is also typically where you name a guardian for your minor children. Should direct everything to go into the Trust.

Financial Power of Attorney - so successor trustee (of the Trust) can handle your financial affairs should you be in a coma, have alzheimer's, etc. Avoids having a conservatorship which can be more of a pain than even probate.

Advanced Health Care Directive/Living Will - just like the financial POA, cept it deals with medical issues. Where you also put in procedures you don't want, donation and autopsy and pull the plug decisions, funeral directions, etc.

HIPAA doc may be incorporated inthe Advanced Health Care Directive. Might be separate.

Trust Abstract - short form of trust. If a bank or whoever asks for a copy of the trust, give them this. Has all the info they need and none of the really private stuff that isn't any of their business.


Is it true that the financial power of attorney should be updated every 5 yrs?

[codex57]

Is it true that the financial power of attorney should be updated every 5 yrs?

Prolly depends on the state. In CA, it used to be that they expired by law every 7 years. Then, they changed it somewhat recently. Now they last forever, so to speak. But I still constantly run into ones that were made under the old law and are no good anymore.

Still, you should take a look at all your docs every two to four years. Life changes, you know? Maybe a relationship changes so you don't want them to be your POA anymore, etc. Don't necessarily have to change or update the document, but at least take a look and make sure everything still applies.

[kusumat]

Thanks. I can wait it's only a few weeks. I'll open the account after the revocable trust papers are signed.

The estate tax exemption you mention of $3.5 million for 2009 is for a citizen. When we started our estate planning, I found out that as a NON-citizen there are different laws. I had always intended to get citizenship but I didn't get around to it. When our estate lawyer spelled out the legal implications of not being a citizen and some of the complicated ways to deal with that, it motivated me to apply. When I told our lawyer I had passed the interview and just waiting on the oath ceremony, she was overjoyed. She kept saying how I had made the best decision for DS and my future.

I have the ceremony tomorrow. DH is taking the day of work and we're making a day of it. I'm getting pretty excited. But I'll feel better when all the paperwork is signed in a few weeks. But I think I still need to do something about my Australian assets, which is just my 401K. I have to talk to the estate lawyer again and work out what I need to do with that.


So, the estate tax exemption are not applied to the legal aliens? I am a citizen but some of my family members are not. Anything else that you wouldn't mind sharing on the non-citizen estate tax?

[niccig]

So, the estate tax exemption are not applied to the legal aliens? I am a citizen but some of my family members are not. Anything else that you wouldn't mind sharing on the non-citizen estate tax?

Here's an article that discusses some of it. You'll need to talk to estate lawyer about your specific situation.

http://carolinanewswire.com/news/News.cgi?database=columns.db&command=viewone&id=418

Also, the limit for the estate tax exemption varies depending on the year. I think it was $2,000,000 in 2007 and 2008 and then 3.5 million in 2009 and in 2010 I've read that there will be no estate tax at all, so the numbers can change. I know the exemption limit is really high and won't hit most people, but we wondered if that would change and it would be lowered to a smaller amount. It has been a $1 million limit in the past. We live in CA, and our house is small but worth a lot of money and from what I understood, they take the full value of the house and not just what your equity is, when working out the value of your estate.

Our main issue was the house as it was just in DH's name. He has a longer credit history, so the mortgage was less if it was just him, and we were going to put it in my name as well. Citizens have unlimited martial deduction for a gift during life time. But as a non-citizen, I can only be gifted $125,000 a year in assets before being taxed on it. So from what I understood, it would take a few years to get the house in my name as well.

There are just more hoops and more complications for estate planning and for taxes if you're a non-citizen. And it would take more to do the estate planning, so it would cost us more. I had always intended to become a citizen, so it was a no-brainer for me to do it. I also can keep my Australian citizenship as Australia allows dual, so I'm not losing anything by becoming a citizen, I'm adding to what I have.