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A Better Plan

Dana Ferris

MY HUSBAND AND I WERE late bloomers when it came to estate planning. Though we took care of the basics when we became parents, such as purchasing term life insurance and naming a guardian, we never had a professionally executed will and trust until 2016, when we were in our late 50s.

Observing my in-laws, now in their 80s, made us realize how important it was to get our own estate-planning house in order. My husband, who is an attorney, has been named as the beneficiary and trustee of their estate. Understanding my in-laws’ financial lives, so we’re prepared when the time comes, hasn’t been easy—and there may be a bumpy road ahead. At the same time, there are complex issues to consider with our own adult daughter and the inheritance she would receive.

Although we’d drawn up a will and living trust in 2016, we had never transferred any assets into the trust. We wanted to remedy that, build in some guardrails for our daughter’s inheritance and name a different trustee. But there was a problem. When I emailed the local attorney who’d helped us draw up our estate plan, the email bounced back. I called his office and left a message, but no one ever returned the call. Our estate attorney had ghosted us.

Caught in the middle of the “sandwich”—wanting our estate to be easier to manage than what we’d observed in the older generations of our family, but also wanting to wisely provide for the younger generation—we decided to start over. It was an expensive process, but we’re far more satisfied with the results. Here’s what we learned.

We needed a better attorney. We discovered after the fact that the guy we’d hired in 2016 wasn’t actually an expert in estate planning. He was a divorce attorney who did a little estate work on the side. To find a more qualified attorney, we sent an email to our condo community’s group list. Four neighbors quickly replied with the name of the same local estate-planning attorney. We had a winner. A few weeks later, we had our first appointment with her.

You get what you pay for. Before our first appointment, our new attorney sent us a detailed online intake form which pulled together our basic details, contact information for family members, assets and so on. At the first meeting, she explained that we’d meet at least four times. Each meeting would have a purpose. First, we’d talk about our goals and parameters. Second, we’d discuss the outline of what she had come up with. Third, we’d sign final documents, review everything in detail and receive a to-do list. Finally, she’d follow up and make sure we had correctly transferred assets into our trust.

Our previous attorney had basically left us with “here are your documents, and good luck figuring out what to do next.” The price tag for this recent do-over was nearly double what we paid the divorce lawyer who ghosted us, but the value was excellent.

Expertise matters. One of our most important goals in our recent process, beyond just getting our act together, was to ensure that our 20-something daughter could manage her inheritance if something were to happen to both of us. Our new attorney came up with a plan: After we’re both deceased, the assets in our living trust would pass into a trust she also created in our daughter’s name. This trust has various guardrails to make sure the money is well managed and distributed over a period of decades. For example, if our daughter later marries and then gets divorced, her trust will remain her separate property.

In the years between setting up our first trust in 2016 and now, I’d read various articles about what you should or shouldn’t put into a trust, and they had just confused me. If we both died today, the bulk of our estate would consist of life insurance payouts and retirement accounts, and we had named each other as primary beneficiaries and our daughter as the secondary or contingent beneficiary. We did not, however, really want our daughter to receive that much of a windfall at this point in her life.

Our attorney explained that we could change the beneficiaries for both our life insurance and our retirement accounts to either our trust or our daughter’s trust. This was on our to-do list after our third meeting, and it was cumbersome to do. But we now know that, if we both suddenly pass away, the mechanism has been created to meet our goals and, more important, the assets are under the trust umbrella.

Naming a trustee. Because aspects of our estate may be contentious, we decided it would be better if an objective third party was our “successor trustee,” meaning the person or entity who takes over once we’re both gone. We also felt that we didn’t want to put that burden on a family member. Instead, we arranged for a local financial services fiduciary to serve as both the executor and trustee of our estate. They charged a $200 set-up fee and, when the time comes, the trust will be billed hourly for the services needed.

Setting up this third-party oversight was the final piece that made us feel comfortable that our daughter’s inheritance would be well managed. The trustee will distribute assets according to the schedule we created and manage things like inherited IRA withdrawals so that there’s no trouble with the IRS. We gave the names and contact information of both our new attorney and the trustee firm to two family members and to our daughter. That’s all they need for now.

What obligations do we have to our heirs? Offer your thoughts in HumbleDollar’s Voices section.

Dana Ferris and her husband live in Davis, California. She’s a professor in the writing program at the University of California, Davis, and is the author or co-author of nine books on teaching writing and reading to second language learners. Dana is a huge baseball fan and writes a weekly column for a San Francisco Giants fan blog under the nom de plume DrLefty. When not working, she also loves cooking, traveling and working out.

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