It appears my state does not allow TOD of vehicles unfortunately. I can’t believe we are going to have to probate over a vehicle worth less than $10k.
Well, you guys are pushing me to finally sign and make legal the draft free will I created online a while ago. Our estates are very simple - me and husband with only one daughter. I am going to print them out and get them signed.
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In our state, you need signed and witnessed original copies of a will for it to be considered. We just had ours redone…we have two such copies…and they are in an accessible and safe place. Our kids know where they are, and we can give them unsigned copies so they have them… but our estate lawyer was very clear…the unsigned/unwitnessed ones will not be used.
Also…important…if you have previous wills signed and witnessed, it’s important to get those destroyed. Our old ones were on file with our previous estate lawyer. The current one asked for a signed letter (which she provided us to sign) so that the old wills could be gotten and destroyed. She said she has been in a few contentious situations where two wills were presented. Both signed and witnessed. It got sorted out…but cost the estate in legal fees (especially the one where an older will was filed and was not the current disbursement of assets)
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Interesting info. I had always assumed a newer will superseded any prior versions.
There are different options for storing a will (and in some locations they can be filed with county clerk). The important thing is that the executor knows the location.
First though… special needs trust, already mentioned.
Second thought, if there are assets generating income, trusts are taxed at a higher rate than people, generally. So some method AND TIMELINE for disbursement of assets might be needed to be recorded in the trust.
As soon as a trust is complete, go to the bank and get THEIR list of what is required for trust accounts and then get a certification of trust which lists those things…this will avoid having to argue the trust at the bank and will let that document be filed instead of the completed trust which says anything about beneficiaries, only the allowable actions by the trustee are exposed.
…make sure that the trustee can appoint a successor trustee, including a paid one.
But, yeah good professional help is the way to go.
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My DiL’s mom had made many threats and written down imagined changes on (literally) bits of paper we found in various locations throughout her home. The estate lawyer said they had no legal standing because they were not signed, dated, witnessed, or even found with the will itself. The legal will had not been updated since DiL was a child; a faraway elderly relative was the executor and it created enormous headaches for all.
Did he have a Pour Over Will? (it’s a catch all to put stuff into the Trust after the fact that Dad forgot to put in.)
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When we were considering a Trust, the recommendation was to also have a Pour Over Will. That will cover any assets that were accidentally (or intentionally) not linked to the Trust. Even if you get all current assets linked, there is a possibility that in later years there will be new accounts added without the Trust considered.
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Exactly. And a Pour Over Will really isn’t anything special per se, its just an additional clause – ‘anything I forgot to put in the Trust should be treated as it is in the Trust’ – in a regular Will.
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Time to update our will. It is O.L.D. (but evidently still valid).
We recently considered creating a trust to replace the old will. Friends/Family say a trust is easier for heirs (but they also all live in other states). Our state probate is not that complex (or so I’ve heard). Now we’re thinking a trust is just too much of a headache. Need to re-name all assets. Need to find (or pay) a trustee.
We’re hoping all our assets can be transferred via POD/TOD. A relative in our state did that in the past, and for the most part it was very smooth. Possessions were minor. No real estate. There was literally nothing left to go through probate!
Problem without going through probate, however, was there was no court-recognized executor. One was named in the will, who did most of the legwork for other heirs, but it never became “official”. Since all assets were directly transferred, the only time no official executor became a problem was trying to gather information on any potential life insurance policies. As usual the insurance companies were not cooperative in even checking status without official executor paperwork.
One small bank had minor paperwork issues. Merrill Lynch was a PIA, but most institutions were easy to deal with, simply requesting an original or even photocopies of death certificates.
We need to verify how cars and house can be transferred, but any of our accounts are already in POD/TOD format.
Are there any downsides with inheriting a house via POD rather than through a probate process? I assume cost basis is calculated at death – we’ve owned our home A LONG time.
If your state has a process for small estates to skip probate, there is no reason for a court-appointed Personal Representative (the new term for Executor). For example, California does not require probate for small estates under $166k. The PR just needs to sign an affadavit. (Banks and insurance companies are fully aware that many states do not require court-probate for small estates and PoD/ToD generally decreases the value of the estate for probate purposes.). Perhaps yoru state has something similar.
Yes, receives cost-basis step up.
As @bluebayou noted earlier - the step up in cost basis is a crucial thing to consider, especially if this is a house that you’ve owned for years and has increased substantially in value. The cap gains on that home sale could be very, very high. It’s not completely out of the ordinary for some folks to have purchased a house for $30-$50k decades ago that is now worth $800 to over $1M.
For example, my folks have two vacation homes that we are keeping in the family; one was transferred to my sibling and I through fractional gifts over 20 years (e.g. 5% of the home value per year), and the other one is in the process of being transferred via a QPRT (qualified personal residence trust).
On one hand, the tax savings will be substantial as this removes the houses from their estate, on the other hand if we need to sell either of these homes in the future their cost basis will be the original purchase price (one from the 1970s and the other from the 1990s) plus what we can legally document as capitol improvements.
If you anticipate your heirs selling the home, do check the math on how not receiving the step up basis would affect the tax outcome.
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Our estate planning lawyer reviewed our assets, including our home, and suggested NOT doing a trust.
Why?
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Because it would just be our house. Estate lawyer and financial planner agreed a trust was not needed and probate for the house only wasn’t going to be a huge issue.
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Our estate lawyer also downplayed the probate. According to him, in most states probate is not a big deal. I believe he said it is mainly NY, FL, CA and a few others where probate is an issue.
We have heard that the probate courts are terribly backed up (1-2 years) so some things could be tied up for a very long time.
** ack autocorrect
Same for us… Trust does not make sense for us right now (though perhaps someday it might if we have grandchildren and desire some kind of different plan).
For now, all assets are co-owned or have spouse beneficiary (kids as alternate). That leaves only the house. Probate is supposed to be pretty easy in CO for that, and honestly I’m not even sure we’ll still be in the house by the time 2nd spouse dies.
We were told that some people like trusts for the privacy aspects, which is not an issue for us. Also in some situations there can be tax advantage for the recipients. (If my kids someday get a lump sum windfall that gets taxed, that will be OK with me. My retired mother benefited from Section 8 subsidized housing for two decades - that influences my attitude on this).
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This was part of our discussion as well.
Except a healthy spouse could get it by the proverbial ‘bus’ tomorrow, both could go down in a major accident; what happens at simultaneous death? The purpose of a Will/Trust is to cover the common as well as the rare chances of death.
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