Anyone do a will instead of a trust?

82 Replies

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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.

@Anish Tolia sounds like great solid advice. As I think this through doing probate during a pandemic with all kinds of craziness going on would be a bad idea. 

I’ve elected to do a Revokable Living Trust (being in my 30’s). Some of the basics of a RLT are:

- more thorough;

- let’s you set up who will get what…when and how;

- helps avoid probate and creates great privacy (assets and identities);

- you get a trustee;

- makes things much more efficient and cost effective;

- can be changed during your lifetime, if and when necessary.

Of course, I’m not a legal professional and one should be consulted, but this is what I’ve learned through my personal experience so far. Hope this helps!

After much research I switched from a trust to a Will, POA, and Medical Directive. The Trust was a 8" thick pile of unnecessary hoopla, whooptedo, and verbosity. I paid a lawyer $6,000 many years ago to set up the trust. It caused me nothing but headaches and trying to keep it current with all my business transactions was an absolute nightmare. On the other hand they're terrific for all the attorneys that have the gaul to propagate these monstrosities. Just my opinion of course :)

Originally posted by @Aaron Xie :
Originally posted by @Adam Carpenter:

Also, the law firm I handled this with is one of the best in the nation and even with my complex set up it only cost $1500.

Could you share the name or contact info of the law firm?

 Absolutely. KKOS Lawyers (kkoslawyers.com). You can also look up two of the partners, Mark Kohler and Mat Sorensen. Phenomenal education through podcasts, YouTube videos, their books, etc.

Thank you for the response @Jerel Ehlert . This is interesting in that you are not saying use a trust most of the time. What I wonder is what is complex? Is having a few rentals and stock brokerage accounts simple regardless of the worth as long as you stay under the tax exemption limits? Also wonder about doing probate with the court system being stressed from the pandemic that will never end. 

I see you have a decent background investing that is awesome.

There is an anti trust post @Jerry Lucker that puts the fear into those of us not knowing anything about trusts. Thanks for that. And a Seattle guy with a lawyer close to home. No lawyer with the will or did you find one that agreed the trust was a waste of money and time?

Originally posted by @Jeff S. :

@Adam Carpenter wow yet another pro trust opinion. Question? What do you mean you get a trustee? Is the law firm your trustee? Many TX responders.

Great question! Basically,having no will leads the state to distribute your assets according to state law. Having a willleads to a very potentially dreaded probate process, subject to the courts determination of whether or not the world is validleading to the mere, intended distribution of assets. However, with a trust you get to determine who will be the administrator(s) and steward(s) of your clearly outlined plan — the trustee. That plan can be robust and creative. The great thing about having more than one trustee, provided it’s a well-crafted plan, is, for example: you might not want someone who knows nothing about handling money to be responsible for handling all of the finances. So, you can essentially assemble a trusted team to administer your plan and can position them where it makes sense to position them. Of course, a trust isn’t necessary for everyone — but it can certainly be helpful based on the assets that one has (property, intellectual property, bank accounts, retirement accounts, companies, etc.).

Usually if you have a trust, you will also have a will. These are typically known as a pour over will in that they usually will stuff to the trust. My wife and I set up a trust and a will shortly after we got married and are currently updating both for the first time. (it's right beside me awaiting final review) If the documents are done well, they don't have to be changed frequently. We're in a different state now and it's been more than 30 years, hence the revision.

Originally posted by @David Morris :

@Adam Carpenter what is the name of the law firm. I live here in McKinney, Texas.

Sweet! Go, McKinney! 🤣💪🏻  so,I work with a few different law firms for their unique reasons and each are out of state. But, this particular firm is KKOS Lawyers, located in Cedar City, UT. Their client base is very spread out all across the nation. You can also find out how a lot more about them, specifically two of the partners in the firm, by searching the names Mark Kohler and Mat Sorensen.

@Jeff S.

I would look into the tax benefit of a trust vs a will. Talk to a cpa because I’m pretty sure the tax advantages of putting a property in a trust far outweigh them just a will. If not your family has to pay the tax gain from your purchase price. The other way they aren’t taxed because they receive the property at current market value. I read it in Amanda Hahn tax strategies book. Look into it might be well worth it for your family.

Don’t quote everything I’m saying exactly do your own research because I am not a CPA.

Originally posted by @Jeff S. :

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.

 Jeff,

It depends on several factors. Wills require probate, trust bypass probate.

It is far more complicated then that, however. In order to take advantage of estate tax exemptions of 11.7 million per person a married couple might need a spousal lifetime access trust if their assets are lopsided. This is one of many estate tax savings strategy the average person has never heard of.

My point is, a well versed estate attorney is worth her weight in gold. Your example of 16k in fees is high if net worth is minimal. If net worth is substantial that fee is a bargain.

I've paid over 50k to have my trust properly created and administered. High? Not if you compare it to the estate tax I will save. 

If my kids had to sell assets quickly to pay the estate tax, the loss on those assets plus the tax could easily be 20 times that amount.

Bottom line is fail to plan, plan to fail.

I'm no attorney and this is not legal advice. Just a recommendation to get some from the best you can locate.

Respectfully,

Gary

From what I’ve always known a trust is effectively a will on steroids and allows you to have far more co trip over your estate. For instance, let’s say you have $1MM life insurance policy and you pass with the beneficiary being your young kid. Under a will, the day they hit 18 they get $1MM👎. With a trust you can say nope, they get $1MM at age 40 or 500k at 40 and 500k at 50 etc…. Much better instrument for insuring what needs to happen happens. I’ve been quoted about 4K for one.

Following this. I currently have a living will and arrangements made for kids and valuables for my wife and I. I was planning on researching trusts and talking with my attorney to see if this would be the best route. I have always heard the transfer of assets is easier and more timely through a trust providing it is up to date with the persons involved. Not to mention could save on the taxes and fees associated with transferring the assets in a will only. This seems to only be more complicated the more properties and partners you have, at least in my simple mind. 

What I did to try to make life easier both for when I am here and for when I leave this world is I 'Gifted' a significant amount of real estate to my 4 children so there will be no problems with transferring the properties and so they can enjoy the money and benefits of owning real estate while they are young enough too.

As for my wife, she gets everything else, anyway. I n fact, now that I think about it, my wife is not on the title for several properties and I will start taking care of that today.

Originally posted by @Jeff S. :

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.

First guess time says the older couple had fairly large, complex estates. Fees are usually commensurate with the work involved.

Doing a trust should not be THAT expensive unless there is a lot to deal with. We did that with my Mom's estate not long after Dad died. I remember it only being a few hundred dollars ($350?).

@Adam Carpenter finding a trusted team is the problem for me. I admire that you have that. I watched a young stock broker take over my moms brokerage accounts after my father passed and that was a learning process. That was where I learned that money goes in their pocket first.