My mom is watching a bunch of YouTube videos where people are telling her she'll lose 50% of her assets in probate if she doesn't set up a trust. A will isn't enough to keep the government from taking it all. Etc.

I think this is fear mongering from people that set up trust funds. The problem is her sister, who lived in Canada, passed away earlier this year and supposedly the Canadian government is being a pain to deal with for her kids. That being said, her kids are are also idiots.

Does my mom need to be setting up a trust to pass her assets on to my sister and I when she passes away? Or is a will enough? Is there a net worth at which point it becomes important? Or important with certain asset classes?

Best place to look up this info that won't try and sell her a product by scaring her?

bigtruckguy3500 said:

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My mom is watching a bunch of YouTube videos where people are telling her she'll lose 50% of her assets in probate if she doesn't set up a trust. A will isn't enough to keep the government from taking it all. Etc.

I think this is fear mongering from people that set up trust funds. The problem is her sister, who lived in Canada, passed away earlier this year and supposedly the Canadian government is being a pain to deal with for her kids. That being said, her kids are are also idiots.

Does my mom need to be setting up a trust to pass her assets on to my sister and I when she passes away? Or is a will enough? Is there a net worth at which point it becomes important? Or important with certain asset classes?

Best place to look up this info that won't try and sell her a product by scaring her?

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The short answer is that she does not need a trust and she won't lose 50% of her assets in probate if she does not have one. You are correct, that is fear mongering.

I know nothing about the Canadian system so can't speak to that situation they are going through.

Trusts are used in planning for large estates (particularly in the past when the exemption amount was lower and prior to portability) or when the decedent wanted to control things somewhat from the grave.

one safe place said:

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Trusts are used in planning for large estates (particularly in the past when the exemption amount was lower and prior to portability) or when the decedent wanted to control things somewhat from the grave.

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I agree that the videos she's watching probably are fear mongering. However, a trust can be helpful.

Trusts are used for all sized estates to simplify the process for the inheritors by keeping the estate out of probate. An estate going through probate runs the risk of having claimants come out of the woodwork making claims of unpaid bills, etc. which can delay the process of settling the estate and can be difficult and costly to defend against.

In addition to a will, and unrelated to a trust, one of the keys in general is to name beneficiaries on every financial account (401k, Roth, IRA, brokerage, savings, checking, annuity, etc.) including accurate contact info. With that information, those accounts can be dispersed very quickly.

Note: I'm not a lawyer or financial planner, but I went through this process recently when my dad passed away. He had meticulously set up his will, a family trust and financial accounts to make the process easy for his heirs. The estate was modest, but he had put his house, car and personal possessions in a trust for our convenience and to protect against probate claims.

Trusts are only good if you put assets in them. For example if your bank account says Mr Smith it is not in a trust, same with your house, car, furniture etc. Anything not in a trust with a beneficiary takes precedence over your will. For example if your will says the 2 sons will split the retirement assets 50-50 and your IRA has wife #2 as the beneficiary it goes to wife #2.
Put beneficiaries on everything, review them periodically if you have a life changing event, and put Transfers on Death on all non retirement accounts. I'm a widower and my checking and savings accounts have my 3 kids on as TOD's and when I die those accounts go to them as soon as they get a death certificate. As do my retirement accounts and any insurance.
I spent a long time as an FA, IMO trusts are only necessary for those with a lot of money and a complicated family situation. As an aside never put your trust as the beneficiary of your retirement accounts, hoping it will smooth the distribution process. At Merrill the back office took control of those to ensure the funds were distributed IAW the trust, sometimes taking 6 months to a year ensuring they got it right. Pissed off a lot of folks.

We just signed up to have a Revocable Living Trust done, seems pricey but I guess in the long run will be worth it. Won't move assets that we already own in there but anytime we buy anything new will purchase under the trust.

Not an expert, but assuming that your mom has a relatively simple estate (a house, car, some investment accounts, etc.) valued at less than $12MM, the government will get essentially nothing. I'm sure someone will argue with me, but probate is just not that big of a deal in Texas for most people.

Doesn't matter to your Mom - she will have passed. It is important to you and your sister depending on size of estate. One consideration is that the estate exemption will likely reduce going forward given the current state of the US government financials.

Probate in Texas is easy if your ducks are in a row. But be prepared for roadblocks. I owned a house in Parker County in joint name, wife & myself. No mortgage, house was paid for. Wife died. County made me go thru probate even after my lawyer told them it wasn't necessary. Cost me about $2000 and was the ONLY place I needed a Letter of Testamentary.

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I think this is fear mongering from people that set up trust funds. The problem is her sister, who lived in Canada, passed away earlier this year and supposedly the Canadian government is being a pain to deal with for her kids. That being said, her kids are are also idiots.

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Must be Ontario.
They like taking cash from middle class people.

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Does my mom need to be setting up a trust to pass her assets on to my sister and I when she passes away?

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Is she worth over $5m? Large amounts of real property? Psycho family members that will lay claim to your mom's assets after she passes. If yes, please talk to an attorney about trusts.
If no, have a will, grieve, liquidate.
A will fits 95% of the population.

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Best place to look up this info that won't try and sell her a product by scaring her?

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Your sweet mom is using "street law".
Please take her to one or two estate planning attorneys.
Ask questions about estate assets and taxes.
One thing that dispels fear and uncertainty is knowledge.
Visit someone who has knowledge on these matters.

Good luck.


I have seen parents pass away with estates under $1m all in a trust that creates a nightmare.

Here is the absolute best advice, contact a good estate lawyer

Seven Costanza said:

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Not an expert, but assuming that your mom has a relatively simple estate (a house, car, some investment accounts, etc.) valued at less than $12MM, the government will get essentially nothing. I'm sure someone will argue with me, but probate is just not that big of a deal in Texas for most people.

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The only problem is those thresholds move a lot, and there are plenty of tax pimps in congress who have tried to set the stage for dropping it much lower. You don't think if Bernie or AoC ever have the opportunity they won't "tax millionaires" by cutting this ad low as $1m in total asset value?

I like irrevocable trusts as a way to gift $30k each (half from me, half from my wife) to each kid's long term benefit without tripping annual reporting requirement, so therefore never counting against any lifetime cap threshold that gets set.

Obviaouly the assets need to be substantial enough that the tax risk justifies a couple grand in legal fees to set them up.

FrioAg 00 said:

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Seven Costanza said:

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Not an expert, but assuming that your mom has a relatively simple estate (a house, car, some investment accounts, etc.) valued at less than $12MM, the government will get essentially nothing. I'm sure someone will argue with me, but probate is just not that big of a deal in Texas for most people.

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The only problem is those thresholds move a lot, and there are plenty of tax pimps in congress who have tried to set the stage for dropping it much lower. You don't think if Bernie or AoC ever have the opportunity they won't "tax millionaires" by cutting this ad low as $1m in total asset value?

I like irrevocable trusts as a way to gift $30k each (half from me, half from my wife) to each kid's long term benefit without tripping annual reporting requirement, so therefore never counting against any lifetime cap threshold that gets set.

Obviaouly the assets need to be substantial enough that the tax risk justifies a couple grand in legal fees to set them up.

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in the 2022 budget proposal in mid-2021, the Biden administration proposed materially killing step-up in basis. This made it to reconciliation and made it to the full news cycle before magically dissappering within about 2 weeks. Projected this would happen before hand, as that is about how long it would take for legislators advisors to tap them on the shoulder and explain how it would hurt them and their families.

While there is certainly room for estate tax limits to decrease from current, going to $1M is pretty remote in my view.

Also, the estate tax limits are already slated to sunset to $5,000,000 (higher really- indexed for inflation from 2017) starting January 1, 2026. So, without legislation this is already dropping fairly soon. Unless Dems take massive control in the upcoming Presidential cycle, sunset seems to be worst case scenarios for a few years, IMO.

When my father died with a will in place, all my Mom had to do was file a muniment of title - it was super easy & everything went to her - no probate. I don't think we can do the same when she passes because stocks & investments might hang us up, but it was an interesting option that I'd never heard of.

"Texas is the only state in the country that allows a will to be probated as a muniment of title. This allows smaller estates with limited debts and assets to avoid the formal probate process."

There are certainly situations where a trust is a good idea. If your kids are older and have good heads on their shoulders proper beneficiary designations on all accounts and a revocable transfer on death deed on your house should be able to avoid probate and make it easy on your heirs.

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Also, the estate tax limits are already slated to sunset to $5,000,000 (higher really- indexed for inflation from 2017) starting January 1, 2026. So, without legislation this is already dropping fairly soon.

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Do you know whether any existing DSUE (deceased spouse unused exclusion), assuming the $5 mil+ exclusion is in fact sunsetted beginning in 2026, will still be allowed to be added in full to increase that amount?

Where are you located? If houston area I can recommend an attorney who took care of all of our stuff.

Ribeye-Rare said:

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Also, the estate tax limits are already slated to sunset to $5,000,000 (higher really- indexed for inflation from 2017) starting January 1, 2026. So, without legislation this is already dropping fairly soon.

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Do you know whether any existing DSUE (deceased spouse unused exclusion), assuming the $5 mil+ exclusion is in fact sunsetted beginning in 2026, will still be allowed to be added in full to increase that amount?

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I am virtually certain the IRS clarified this as correct, along with cleaning up other related uncertainties. Will have to find the release and report back, but am confident it stays intact.

I remember when exemptions were $675,000, $1 million, $5 million, $0 (George Brenner, wealthy owner NY Yankees, died), $5 million and soon to be a shade over $12 million. This is not a complete list of exemptions. This shows how politicians jerk us around. They jerk us around in many of our walks of life. And we send them back to Washington to jerk us around some more. Voters do the craziest things.

schwack schwack said:

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When my father died with a will in place, all my Mom had to do was file a muniment of title - it was super easy & everything went to her - no probate. I don't think we can do the same when she passes because stocks & investments might hang us up, but it was an interesting option that I'd never heard of.

"Texas is the only state in the country that allows a will to be probated as a muniment of title. This allows smaller estates with limited debts and assets to avoid the formal probate process."

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Not saying a will isn't enough for your situation or that you're wrong, but isn't it a different animal when a spouse passes vs a parent, etc.? My dad didn't really have to do anything when my mom passed…

Right. I don't know. Mom's will divides everything by 3. I don't think we'll avoid probate.

Seven Costanza said:

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Not an expert, but assuming that your mom has a relatively simple estate (a house, car, some investment accounts, etc.) valued at less than $12MM, the government will get essentially nothing. I'm sure someone will argue with me, but probate is just not that big of a deal in Texas for most people.

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I wish my wife and I were most people. Our daughter's estate is worth approximately $15k to the best of our knowledge and has been stuck in probate for 5 years. Wife's ex has paid a $25k retainer to an estate litigation firm so we'll never recover funeral costs. I'm shocked at how some people can hold on to hate for decades and piss money away just to spite others.

Dang, that sucks. Just an ambiguously written will or what?

Going thru this right now. MIL was found dead on Saturday. Working thru calling credit cards. Waiting on autopsy and death certificate. To really get ball rolling. No will and we have no idea if my wife was named beneficiary on certain accounts.

Sorry you are having to go through this. Don't be in a rush to make payments on those credit cards...they will very likely write off any balances. I wish I would have been more patient cleaning up my Dad's estate. Paid off a bunch before figuring out I really didn't need to and I could have kept a good bit more cash in the bank for my mom.

Sorry to hear that. Immediate advice #1 is to ask for more official copies of her death certificate than you can imagine ever needing.

BDJ_AG said:

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Sorry you are having to go through this. Don't be in a rush to make payments on those credit cards...they will very likely write off any balances. I wish I would have been more patient cleaning up my Dad's estate. Paid off a bunch before figuring out I really didn't need to and I could have kept a good bit more cash in the bank for my mom.

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This is good advice. When my FIL passed, the two CC companies wrote everything off when we gave them a death certificate.

DannyDuberstein said:

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Sorry to hear that. Immediate advice #1 is to ask for more official copies of her death certificate than you can imagine ever needing.

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Also good advice. We got 20-30 and used most of them.

Churlish Sambino said:

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BDJ_AG said:

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Sorry you are having to go through this. Don't be in a rush to make payments on those credit cards...they will very likely write off any balances. I wish I would have been more patient cleaning up my Dad's estate. Paid off a bunch before figuring out I really didn't need to and I could have kept a good bit more cash in the bank for my mom.

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This is good advice. When my FIL passed, the two CC companies wrote everything off when we gave them a death certificate.

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So what you're saying is I should have my kids go on a spending spree while I am on my death bed

Similar question: We have a will and trust set up for our minor children. Our named beneficiaries on our accounts are our children. Should we change that to the name of our trust?

Sea Speed said:

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Churlish Sambino said:

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BDJ_AG said:

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Sorry you are having to go through this. Don't be in a rush to make payments on those credit cards...they will very likely write off any balances. I wish I would have been more patient cleaning up my Dad's estate. Paid off a bunch before figuring out I really didn't need to and I could have kept a good bit more cash in the bank for my mom.

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This is good advice. When my FIL passed, the two CC companies wrote everything off when we gave them a death certificate.

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So what you're saying is I should have my kids go on a spending spree while I am on my death bed

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But if you make a miraculous recovery, you better be ok with one of your kids clubbing you over the head when the nurse is looking the other way.

lb3 said:

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Sea Speed said:

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Churlish Sambino said:

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BDJ_AG said:

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Sorry you are having to go through this. Don't be in a rush to make payments on those credit cards...they will very likely write off any balances. I wish I would have been more patient cleaning up my Dad's estate. Paid off a bunch before figuring out I really didn't need to and I could have kept a good bit more cash in the bank for my mom.

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This is good advice. When my FIL passed, the two CC companies wrote everything off when we gave them a death certificate.

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So what you're saying is I should have my kids go on a spending spree while I am on my death bed

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But if you make a miraculous recovery, you better be ok with one of your kids clubbing you over the head when the nurse is looking the other way.

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As long as we end up on dateline or some ID channel show, it would be worth it.

Sea Speed said:

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Where are you located? If houston area I can recommend an attorney who took care of all of our stuff.

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Care to share info?

Booma94 said:

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Sea Speed said:

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Where are you located? If houston area I can recommend an attorney who took care of all of our stuff.

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Care to share info?

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Sure. She got my family squared away and was great to work with. Definitely recommend.

https://hoggattlawfirm.com/

Sea Speed said:

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Churlish Sambino said:

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BDJ_AG said:

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Sorry you are having to go through this. Don't be in a rush to make payments on those credit cards...they will very likely write off any balances. I wish I would have been more patient cleaning up my Dad's estate. Paid off a bunch before figuring out I really didn't need to and I could have kept a good bit more cash in the bank for my mom.

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This is good advice. When my FIL passed, the two CC companies wrote everything off when we gave them a death certificate.

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So what you're saying is I should have my kids go on a spending spree while I am on my death bed

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Pretty funny, but it doesn't really work that way. At least in some states.

My in-laws both passed this last year and so we had to go through it in NY. The law (at least in NY) is that no money should be distributed from the state for 6 months, which gives adequate time for all bills to arrive that can be paid from the estate. CC were one of them. If the executor distributes the cash before 6 months without paying off all outstanding debts first, they are personally liable for any debts that could have been paid. Ouch.

I don't know how the CC companies would know there was extra cash left over, but my BIL (the executor) didn't want to risk it.

Am I wrong for thinking that credit card bills should be paid if the estate has the $$? Seems like a no brainer. One thing if person dies and has no money to make next credit card payment, not sure if family should have to pay that, but another if has $15k in bills and passes down $100k and family thinks credit card companies should just "write it off".