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Where There’s a Will

John Yeigh

THE WILLS, POWERS of attorney and advance directives drawn up for my wife and me were drafted according to the laws of another state—and were badly out-of-date.

For example, these various documents included guardianships for our then-young children, with a trust to make gradual payouts until they turned age 35. Both our children have since graduated college, become professionally employed and demonstrated they’re financially responsible.

Despite all that, I’m embarrassed to admit that we procrastinated over getting new wills. We’re far from alone. The majority of Americans don’t even have a will. I’d bet a few HumbleDollar readers are likewise in procrastination mode.

What was getting in our way? First, there’s the cost and inconvenience of making new wills. Second is the reaffirmation of our mortality, which can be hard to take.

Third was the continuing uncertainty over estate taxes. The Biden administration proposed lowering the estate tax exemption and eliminating the step-up in cost basis on inherited assets, though neither idea found much favor with lawmakers. Fourth, we were reasonably certain that we would soon be moving to a new state—New Hampshire—with different estate and end-of-life rules.

Finally, both our children were in the midst of major life transitions. One child graduated college in May, while the other will get married this fall.

Despite all this uncertainty, we just signed new wills, powers of attorney and advance directives. They’re all legally binding in our new home state of New Hampshire. It took us seven months after our move to get them completed, as unpacking and installing closet hooks took precedence.

I feel relieved to have finally replaced our complicated old wills. Not only did we eliminate the costs of administering a no-longer-needed trust, but also we avoided the possibility our estate would be settled in our previous state, which has high estate taxes.

Our new wills are purposefully straightforward and without any special nuances. We trust our children. Each has laid claim to just a few trinkets of personal interest—but neither one is interested in our heavy, brown antique furniture.

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We didn’t include a trust in our new wills. My family is generally anti-trust due to experiences with two previous estates that included them. With one trust, the lawyers seemed to be almost as much a beneficiary as the beneficiaries. A simple question over the telephone sometimes cost us a billable hour, or $250. The total legal costs to set up and close out this trust approached $40,000 across several years.

On top of that, not all the of the deceased’s assets had been transferred to the trust, so settling the estate became a mix of trust and probate procedures anyway. This reinforced my belief that a critical aspect of establishing a trust is to properly transfer in all assets, particularly deeded property, titled property, life insurance, annuities, business interests and personal property.

With the second trust, I estimate the trustee reaped almost one-third of the potential inheritance value—as much as $900,000—in management fees and opportunity costs over the 34 years this generation-skipping trust was in force. To make matters worse, changes to the tax code over the years eliminated much of the trust’s intended tax savings.

After these experiences, we’re much more afraid of lawyers’ fees, money management fees, operational complexities and tax-law changes than we are of the potential disclosure of our middle-class financial wealth through the public probate process.

The cost for our new documents was $600. We used a local New Hampshire law firm that seemed quite reasonable compared to the costs in our previous state. While do-it-yourself online options such as Nolo and LegalZoom are cheaper, we wanted to establish an attorney relationship in our new state for other business reasons.

The New Hampshire law firm also provided the added benefits of a notary, witnesses, fire-proof remote storage and the ability to make any future tweaks if required. The whole process took under two hours—one hour of remote work with emails and proofreading, followed by 25 minutes in the lawyer’s office for signing and copying.

The federal estate tax laws don’t seem likely to change anytime soon, except that today’s $12 million estate tax exclusion is scheduled to drop to $6.2 million per person at the end of 2025, unless Congress acts first.

We hope our new estate documents will suffice for many years to come. But our family structure, financial situation, residency, health and the tax laws could all change—and, if needed, so might our wills.

John Yeigh is an author, speaker, coach, youth sports advocate and businessman with more than 30 years of publishing experience in the sports, finance and scientific fields. His book “Win the Youth Sports Game” was published in 2021. John retired in 2017 from the oil industry, where he negotiated financial details for multi-billion-dollar international projects. Check out his earlier articles.

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ostrichtacossaturn7593
ostrichtacossaturn7593
1 month ago

The key is to learn whether your state has adopted “independent administration” of estates or not. Independent executors are authorized to administer estates without court supervision, and can thus act “independently” for the most part. Independent administration is less costly as compared to retitling all assets into a revocable trust, typically missing some assets that must go into the probate process anyway, etc.

If your state only offers dependent administration, you could save money using a revocable trust to bypass a more expensive probate process. https://legalbeagle.com/12723911-what-does-independent-administration-mean-in-probating-a-will.html

Contact a trusted local lawyer who regularly writes wills to guide you.

T. V. NARAYANAN
T. V. NARAYANAN
1 month ago

Very informative article. We created two revocable living trusts for me and my wife a few years ago and the cost was minimal (we live in Florida). The attorney also created power of attorney for healthcare and financial power of attorney. My only worry now is the fact that we have two revocable living trusts. After my death my trust becomes irrevocable and my wife will have to file a tax return for the trust. The tax rates for the trust are higher. My attorney suggested that my wife should withdraw the taxable income from the trust and include the income in her tax return. My wife will be the sole trustee of the trust after my death so she is allowed to withdraw the money. That way the irrevocable trust does not have to pay taxes. My wife is not tax savvy. Hope our son will come to her help. I manage the trust myself. After my death my son is knowledgeable enough to manage the trust.

My attorney also suggested that the trust should be the beneficiary of our traditional IRA so that after our death the trust becomes irrevocable and the assets in the IRA will not be part of our assets, so that they will be exempt from estate taxes. Estate taxes are a moving target and keep changing with the administration. Making the trust as the beneficiary of the IRA will take away worry about generation skipping tax as well in case some of our assets end up with your grandchildren. Right now the estate tax exemption is $12 million per person. But that will change in 2026 and the exemption will come down to 6 to 7 million per person. It is because the Trump tax laws were passed with reconciliation rules. I cannot say what the precise amount of exemption will be because of the inflation adjustment in the tax code.

The problem with the will is that it has to be probated after one’s death. Most people do not feel confident enough to represent themselves in the probate court. Many attorneys charge a fee as percentage of the assets and the cost can be enormous.

John Yeigh
John Yeigh
1 month ago

I have handled a couple of estates via probate which amounted to documenting the deceased assets on a spreadsheet and submitting the spreadsheet by email to the state. The state then replies with a document confirming the estate is closed as long as the list seems in order.
Probate was quite easy, cost free, did not require an “attorney’s charge,” and did not require “representing themselves in probate court.” Remember it is estate lawyers that keep telling us how costly and untimely probate can be.

Last edited 1 month ago by John Yeigh
mytimetotravel
mytimetotravel
1 month ago

I updated my will, POAs and advance directives a couple of years back, ahead of (minor) surgery. I have beneficiaries on my IRAs, and TOD on all other significant acounts. Right now the only large item that would be governed by my will is my house. I aim to sell it in the next couple of months, after which I will update the beneficiary designations. I had no interest in setting up a trust, which seemed quite unnecessary. However, most of my beneficiaries are UK citizens and residents, which could be a complication,

James McGlynn CFA RICP®
James McGlynn CFA RICP®
1 month ago

At the bare minimum readers should verify their beneficiaries on their retirement accounts, life insurance and other investments. Being named as a beneficiary supersedes being named in a will.

John Yeigh
John Yeigh
1 month ago

Agreed, and our financial accounts primary and secondary beneficiary designations were always up to date.

Guest
Guest
1 month ago

We are relieved to have everything in order in our 50s. A family member who is a lawyer and a close family friend with trust investments experience are both the co-trustees and the co-executors and we’ve spelled out the trust investment policy for them. We recognize we’re very fortunate having 2 extremely trustworthy folks at the helm if needed. Please HD readers, complete/update your estate planning docs to make it easier on your family. They’ll likely have enough grief as it is.

M Plate
M Plate
1 month ago

I have come to grips with inevitability of my death. If Steve Jobs and Jack LaLanne couldn’t find a workaround, what are my chances?

The fact that life circumstances are always changing, has made me wait for better timing. I know that is a mistake.
I’ve been mulling the use of trusts. Sharing your experiences with trusts is most helpful.

Paula Karabelias
Paula Karabelias
1 month ago
Reply to  M Plate

It doesn’t seem to be the typical experience with trusts , at least in the experience of my family and friends in Massachusetts. I can’t speak to other states/attorneys however.

IAD
IAD
1 month ago

Agree. Both my grandparents and my parents had trusts and the costs were minimal once they were set up. Sounds like the attorney/firms used were more interested in lining their pocket.

Jonathan Clements
Admin
Jonathan Clements
1 month ago
Reply to  IAD

Much depends on the type of trust. If it’s a simple revocable living trust designed to bypass probate, the cost should be modest. If there’s ongoing trust administration, that’s when the costs can spiral out of control.

John Yeigh
John Yeigh
1 month ago

Indeed when people set up trusts, their beneficiaries are subject to the trustee’s (administrator’s) management fee structure without recourse to negotiate as long as the fees are commercially “reasonable”. In my family’s long-term trust case of nearly 50 years since the will was signed and 34 years since implemented, the bank management fee percentage actually declined when the local bank was taken over by a national bank.
However, I don’t believe the deceased ever suspected or considered the potential long term management fee and opportunity cost to their beneficiaries over the nearly half-century since executing the will in the early 1970’s.
My advice to folks setting up trusts is to consider the long-term consequences of third-party management fees versus the protections you are setting up for your beneficiaries.

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