Anyone do a will instead of a trust?

82 Replies

I know a couple of older (70's and 80's) couples who had their wills updated and their attorney switched to trust and charged one $6k and another $10k. That sounds excessive to me.

The last older couple I knew had a pretty simple estate and their attorney advised them to use a will and probate it. The probate legal fees were $4k. This was a while ago but still... I was involved and it was nice to know it would be done right.

When we own multiple properties things become more complicated so with a trust someone really needs to know what they are doing. Has anyone done a will and probate lately? I need to update and have a friend in the same boat. Hate to ask an attorney who benefits from using a trust. Legal Zoom ok temporarily but want it done right. No spouses in either case I am thinking of.

Not looking for legal advice just some personal experiences. We are in Oregon.

In Illinois we’ve got an instrument called a TODI (transfer on death instrument) which avoids probate and having to create a trust for RE. 

You might want to see if your site had a similar instrument.

I’m currently probating a parcel of RE at the moment and the multiple title switches alone are a headache. 

That is interesting @Jason Taken . Oregon does allow these deeds to be used. Read title company would take a while for things to clear like debtors and such.

I am not an attorney, nor do I have any specific education on this topic.  I believe there are other benefits to include long term care if ever needed via a trust.  This isn't just a probate and tax issue.  There are other things involved and an attorney should be consulted to discuss the pros and cons.  Just wanted everyone to consider the other benefits/risks.

I am not an attorney, but met with one last week to talk about trusts....  I was thinking for many people you may not even need a will.   Beneficiaries of bank, stock, life insurance solves many if not most issues for many people, as long as they are kept up to date....don't want to leave money to a dead person.   Now in Texas we can do something call deed on death, which you do now, so that when you pass, that real estate automatically transfers.  My thought is that covers 90% of people.   If you have small family and not a lot of valuable stuff in the house, you could probably write out a simple division of property and that might suffice....jewelry goes to X, watch goes to X, furniture should be sold and money divided equally between X and Y.

No will, no probate, no trusts, no attorney fees.

Now...that's for a quick death...if you are going to die slowly, then you probably want the package of POA, health directive, and all that that they give you in a package deal now.

One other solution I am considering for the properties is to put them all in LLC or maybe 2-3 or multiple LLCs if possible. You can name a successor president or manager to take over when you are not in a position to run the LLC. Attorney probably needs to help with this is my thought. Easier probably if you own outright with no loans, but maybe trickier if there are mortgages.

@Joe Martella good points. Hard to tell what long-term care would look like, it is a little early in the game. I think what works now probably won't work in the future. There is a lot of money being made on the backs of old people right now and these expensive trusts seem suspicious to me. Old people are very trusting and it bugs me to see them believe the people who overcharge them.

That makes a lot of sense @Bruce Lynn . Wish I knew more about this stuff. i know beneficiaries are most important and take precedence over a will so wonder if everything was up to date with beneficiaries and deed transfer could a will as a back up work just in case some assets aren't accounted for. That is where I am today. I am pretty sure if I did an attorney visit I would be steered into a trust. Personal property like you say kept out of estate and divided according to wishes written out beforehand.

@Jeff S.   Post I did on BP.  "Self Storage: So you just died, did you send everyone to hxxx?"

There was no reason, but the day I hit 30, I realized it was “ME”. Everyone around my family was doing fine, work was great, it was a nice day. Just for some reason, I realized I was the person in charge of my life. Its not like I all of a sudden matured. Paid my way thru college, top of the class, top 1% job, only got drunk twice in my life, etc, etc.

My realization was, I was it. Now I didn’t do anything with that thought. From that point on, until I was 50, I knew literally I could go through Mountains, jump over them, dig under them, go around them and stop Run away trains by hand. There was no obstacle in my life that I could not overcome.

And then it hit me. I ran into an obstacle, that I had no clue how to deal with, it could not exist (in my world), and the experts had no clue (from my point of view). No more Invincibility.

We are all at different points of our lives, perceptions of living into eternity, Invincibility, or just lack of thought on the subject. If your “there” and are aware of your lack of invincibility, please keep reading.

So you just Died. The following are actions not to put your Family through Hxxx. (Also Vendors, Customers, Bankers, employees)

A. “Will” or “Trust”?- Do you want things to go through Probate for several months or seamlessly go through a Trust with no stoppage in operations or control? Without a business, you might not care if your below a certain Dollar level or asset types that don’t deteriorate. Various discussion points- Bucket Trust, rename all of your assets to include the Trust, etc, talk with your attorney.

B. Power of Attorney- you can have this made specific to different aspects of your life. You may have a business partner who you want to be able to make decisions on your behalf for the Storage business, but have no say over your Personal life.

C. Bank Accounts “POD”- Payable on death, So you just died and who is going to pay the bills? This will automatically allow a person to access the funds and support the ongoing business. You probably have you and your spouse on the account already, so put somebody that is likely not traveling or living with you, in case both spouses pass at the same time.

D. Life insurance- not tax deductible, tax free proceeds. This is more about risk, comfort zone, lack of knowledge and stage of investment. With our fast growth we have taken loans out. All of the locations cash flow very well, so there really is no risk from losing a “wage earner”. It is more about taking pressure off the family members who will end up with the property. Also to cover any estate taxes or debt restructuring if they arise.

Where the major danger comes in, is if your in the middle of a development and your the main developer. The other family members only know how to run an existing facility. This is where you can lose a lot of money, if you have to sell the property and not complete the build out.

We identified three areas of risk and they are all on three different time tables. 1. Ongoing debt payments for existing units., 2. One location in Rent Up Phase., 3. One location in development phase and then Rent Up phase.

Per our advisor we took out three separate Term life policies. That way as the risk diminishes you can drop one policy at a time. If you had just one large policy covering all three risks, you would have to cancel a policy and renew. You have gotten older, any new health issues that arise, and the need to go through the review process again, may change your access and cost of an insurance renewal. Don’t get to exact figuring out your coverage needs, it is really cheap, go for the higher number.

E. Living Will; End of Life- This is more for applying medical treatment or not under certain circumstances to continue your life support, while you are incapacitated. Just added this so you have a complete package of estate issues. By this point you should not be in control of any business, unless you were incapacitated due to an accident or sudden medical issue.

F. Medical Power of Attorney- this allows someone to be in charge of your medical treatment if your incapacitated. Not so much a business impact, but wanted to keep the list complete.

G. Facilities Management- worst case, no one knows how to run or has the time to. Develop an “Info List” with all contacts and passwords. Identify ahead of time a Management company or local Realty company who you have vetted to manage the business. Have them identified on the list.

H. What does a storage facility look like 6 months after you have died? You go down to 70% occupancy from 95%. 40% of your customers are behind. Some customers haven’t paid in 6 months. No one can find the contracts. 5 of the units were yours. All of your systems are on paper and no one has kept up. Trash has been thrown over the back fence and the neighbors want it fixed. Weeds are everywhere. I come in and offer to pay 50% of the value. Ended up not buying your property. It takes about 3 to 4 months to get a location like this transitioned over to a management system and cleaned up, through auctions. Your investment value has greatly deteriorated since there was no transition plan.

So are you taking action; or are you sending everyone associated with you under the bus?

Start small and Make Your Big Mistakes Early”

Pick an attorney that specifically does trust and estate planning.  Not your local attorney.  Just ask your CPA's in the area, who they recommend.  This took about 6 meetings before we finalized everything.

You have to go based on your estate.  If simple, then just do a normal Will.  If complex then do a Trust.

Your $6k to $10k shouldn't be that much if the person has a large or complex estate. 

You know how your parents or old people always say I don't want to bother you?  Well dying without a Trust is a huge bother and will lead to a lot of family anger in most instances.

That is interesting @Henry Clark that you say "if simple do a will." That is what an attorney told a couple that their estate was simple so do a will. I would like my estate to be simple regardless of the asset value. Rentals and a home and brokerage accounts plus a few cars. 

You rally can't trust anyone in this world. I am a plumbing contractor, work in many homes and I've  heard a few horror stories from wives who had their husbands pass away and even though they had a Living Trust they were taken to the cleaners and lost almost everything.

For my first Living Trust, my CPA was the Trustee. I did a little reading about trusts and found that the Trustee is supposed to follow the instructions in the trust to the 'T'. But here is where the heirs can get screwed Big Time. Since my CPA charges $250+ per hour and since he has many friends who are super expensive attorneys, all your CPA has to do is create some tax issues, or other issues and then he and his friends can get rich making believe they are resolving issues with the IRS and heirs while they are actually causing problems.

In my Living Trust, I made annual payments of $10,000 per year for something (can't remember), but when I decided to remove my CPA from my Living Trust he had to tell me that he 'borrowed' $8,000 from my account and that was not the first time I caught my CPA stealing money from me.

On another occasion, my CPA handled a major audit by the IRS. On the day of the audit, the IRS auditor showed up at my CPA's office at 9 am. I never go to audits because I don't want to answer questions wrong and that is what I pay my CPA for. So, at about 4 pm, my CPA calls me, tells me the auditor just left and the audit was deemed a No 
Change Audit. My CPA did not know that I already had talked to his secretary at about 10 am and the auditor had already left. So, my CPA billed me $250 per hour for the day and I let go rather than confronting him and causing hard feelings.

My CPA just retired about two months ago and I am upset that he did not call to tell me because he was my CPA for about 38 years.

Don't make your CPA the trustee.  We have listed three individuals in order who will be our trustees.  If 1 can't do it, then 2,  then 3.  These are people who I trust.  Plus a Trust should be fairly explicit on how things get handled.  Our trustees have very little 
"decision making" to do.

Originally posted by @Jack Orthman :

You rally can't trust anyone in this world. I am a plumbing contractor, work in many homes and I've  heard a few horror stories from wives who had their husbands pass away and even though they had a Living Trust they were taken to the cleaners and lost almost everything.

For my first Living Trust, my CPA was the Trustee. I did a little reading about trusts and found that the Trustee is supposed to follow the instructions in the trust to the 'T'. But here is where the heirs can get screwed Big Time. Since my CPA charges $250+ per hour and since he has many friends who are super expensive attorneys, all your CPA has to do is create some tax issues, or other issues and then he and his friends can get rich making believe they are resolving issues with the IRS and heirs while they are actually causing problems.

In my Living Trust, I made annual payments of $10,000 per year for something (can't remember), but when I decided to remove my CPA from my Living Trust he had to tell me that he 'borrowed' $8,000 from my account and that was not the first time I caught my CPA stealing money from me.

On another occasion, my CPA handled a major audit by the IRS. On the day of the audit, the IRS auditor showed up at my CPA's office at 9 am. I never go to audits because I don't want to answer questions wrong and that is what I pay my CPA for. So, at about 4 pm, my CPA calls me, tells me the auditor just left and the audit was deemed a No 
Change Audit. My CPA did not know that I already had talked to his secretary at about 10 am and the auditor had already left. So, my CPA billed me $250 per hour for the day and I let go rather than confronting him and causing hard feelings.

My CPA just retired about two months ago and I am upset that he did not call to tell me because he was my CPA for about 38 years.

 You knew your CPA was a crook and you kept them for years? Wow.

If you own any wealth a trust is a necessity. Dont make your CPA or your lawyer or any paid person your trustee. Use a friend or relative you trust. Creating a simple trust shouldn't cost more than 2-3K and updating one should be only a few hundred dollars. Make all the trust the beneficiary of all your accounts. Title all your properties in the name of the trust. From what I hear probate is hell for your heirs. 

@Lisa Edwards that might be cheap compared to having the "experts" running up bills that are crazy because the wife doesn't understand what is happening. Although now the courts are clogged up and probably dysfunctional so probate may be an impossibility with forever covid. 

@Henry Clark  that is great you have that many people you trust. Seems like you have to write a book about how to deal with a complicated estate with your attorney charging for each word. I guess when your net worth is high enough it is academic and it is all good to share the wealth with your advisors since even though they charge a lot still only pennies compared to a big estate. At that point you can afford a lawyer on retainer as an employee.

Texas Attorney here. Each state has its own sets of probate/estate statutes. I'm only licensed in Texas so ymmv if you are not in Texas.

I get lots of REIs coming to me wanting to buy property but the sellers have been dead for quite some time.  If you don't have a will, your state has one for you. 

If you have a house and have a complex family relationship, get a will. Texas has a Ladybird Deed and Transfer On Death Deed - both meant to avoid real estate in probate.  Texas disfavors JTwROS, so don't depend on that in a deed.

If you have a business, get a will.

If you have non-family business partners, you AND your partners all need wills.  You probably don't want to run a business with your partners' spouse/kids. Key person insurance might be a good idea.

If you need cash to run a business until it can be wound down, check out ILITs - an irrevocable, non-amendable trust which is both the owner and beneficiary of one or more life insurance policies. Upon the death of the insured, the trustee invests the insurance proceeds and administers the trust for one or more beneficiaries.  This investment trust can cover costs of hiring a business manager while selling off properties without having to do a fire sale.

If you don't want to exist in a vegatative state until your body expires, get a living will and DNR. Appoint a medical POA and guardianship in advance of need.

Got something special you want done (or not done) with your remains? There's a directive for that, too.

For my plain-Jane-vanilla estate planning for spouses is about $700+ hourly after 2 hours.  For complex estate <$5M in assets, I require a $5,000 retainer and bill hourly, minimum 1%.  Over $5M, it is a $10,000 retainer, minimum 2% - this requires advance tax planning because you start bumping into the estate tax.

Probate can be simple or complex, depending on the estate assets and proposed heirs.