
Last summer, my husband and I decided to update our wills and trust. Easy, right? Well, I thought so until I started delving into the process. My children are nearly 14 years old, and as they are quickly approaching adulthood, some key questions arose. When my children were 2 years old, we made our first wills with what I now understand was a “contingent trust,” meaning that the trust would automatically be created if the will had to be enacted but otherwise did not really exist in the present.
At the time, we felt pretty good that we’d taken care of that task, shared copies with our family, and kept the original in our safe deposit box. But now, as we had accumulated more assets and financial knowledge over the intervening 10+ years, I felt like this was the time to refresh our estate plan.
Arguably, we should not have waited even two years to do this the first time, but after giving birth to twins during fellowship, making two interstate moves, and starting my first attending physician job, we did our best. We used the legal plan I subscribed to through my job at the time to find a lawyer, and most of the cost was covered by the plan. One of the most important tasks we did in our estate planning was obtaining non-employer-sponsored term life insurance for my husband and me while I was pregnant, so that was already completed. About five years ago, we doubled our life insurance coverage to feel even more secure in our contingency plans. I also have additional life insurance and AD&D through my current job, but I think of that as more of an extra and not my primary coverage.
I know of a colleague who was between jobs when they were diagnosed with a terminal illness and only had employer-sponsored life insurance. They ended up without any life insurance benefits to leave their family.
In talking to friends and acquaintances even recently, I have encountered several with older kids or teens who do not have wills in place. They just have not gotten around to it. Leaving the distribution of my estate to a court to decide is definitely not something I would ever want. Particularly when it includes my most precious assets—the care and welfare of my minor children.
So, what were the tips, tricks, and highlights of the whole process of going through another round of estate planning?
Determine Your Estate Planning Goals
For many, the goal is to leave your heirs with a sense of financial security and/or to leave a legacy behind with charitable giving. Taking time to think about this on your own and/or discuss it with a partner if you have one or a trusted family member or friend can be helpful to get into the right mindset.
Finding an Estate Planning Attorney
There are lots of options out there these days to help with estate planning. Of course, you could use an online legal service that specializes in wills and trusts. It seems like those abound these days, but there are limits to those services if you want to customize your directives and/or have a deeper understanding of the options and process. A good route of referral would be to ask colleagues or friends who have had positive experiences.
I found an attorney through my local medical society, which has affiliated professionals who it vets and recommends for various services. I read online about this attorney’s philosophy and professional experience and also looked at who was recommended in the local doctor groups on social media. The key is that you must feel a sense of fiduciary trust and personal comfort with the attorney before proceeding. Our attorney also offered a discount to medical society members, and his rates seemed on par with other professionals in the region, which ranged from $3,000-$4,000.
We did an initial free consultation and a first meeting on Zoom. We had another in-person meeting to ask a lot of questions and make our wishes known, and we had some e-mail exchanges back and forth to clarify things before meeting in person again to execute the documents with witnesses. Another nice aspect was that he was a mobile attorney, traveling to his client’s houses for in-person meetings. It seemed to make a potentially overwhelming experience less so. He also included any changes we wanted to make to the documents within the first year as part of the package and a deeply discounted rate for future updates since we would not be starting from scratch.
More information here:
Getting Remarried? Revise Your Estate Plan
Questions to Consider with Children
Trust distributions can be as simple or complex as you want to make them. If no stipulations are made, the default would be that when a child turns the age of majority, they will inherit their portion of the trust as a lump sum. For many, it's not the ideal scenario for a newly minted adult to come into a potentially large sum of money and other assets all at once. There are multiple strategies to approach this conundrum, and it depends on how granular you want to get. The “what if” scenarios can spiral out of control if you let them. I tried not to get too lost in the details and endless options.
The other main choice is doing a “phased inheritance.” You can give a pre-determined portion of assets held in trust when a child turns 18 and then other portions when they graduate from college, when they turn a specified age (25, 30, 35, etc.), or when they reach a life milestone (getting married, having a child, wanting to buy a house, etc.). You can also stipulate that they may need to be pursuing higher education in some form or fashion. The distribution can be specified as a percent of the total assets or a specified amount. The former seems to make more sense given the unknown of how much one’s portfolio may be worth at any given time. These are all just examples to think through. I found talking to the attorney about what he has seen as well as reading about distributing trust assets to your children to be helpful.
There can also be considerations of issues that may put your heirs at risk of blowing through the trust money—such as substance addiction, gambling, severe mental illness (mania), or other issues. Another special situation would be creating a lifetime trust for a child who has special needs, a disability, or another medical condition that may require lifelong care.
We ended up doing a phased inheritance as follows: 10% at 18; 15% at 22 or upon college graduation, whichever comes first; 25% at 25, 25% at 30, 25% at 35. We figured if they were old enough to run for president, they were old enough to manage their affairs. And if they were not mature enough by that point, would a few extra years really make a significant difference?
For people without children, these principles can still be applied when leaving assets in trust to another relative (niece, nephew, sibling, etc.).
More information here:
When to Give Inheritance Money to Your Kid?
Age-Appropriate Money Conversations: Teaching Kids Financial Literacy
What About Pets?
I had not given a thought to what would happen to our beloved dog if something happened to us. We did not have a pet when we made our initial wills years ago, but we adopted her in 2019 and she has been like our third baby. We all adore her, and we would want to know she is well taken care of no matter what.
I found a pet care calculator where you could estimate the yearly cost of taking care of your pet including food, grooming, veterinary care, etc., while factoring in their expected lifespan. Based on this, we designated what we thought was an appropriate amount to ensure our sweet dog would be well taken care of for the rest of her life. We also designated multiple options of who would care for her if our children could not because they were living in a place that did not allow pets, like a dorm. Any leftover money would go to our children’s trust.
Charitable Designations
Many options are available for leaving a portion (or all) of your estate to a charity that you want to support. You can designate a percentage or flat amount from your estate to go to the charity or a portion of your life insurance benefits. You can create an endowment that could continue to sustain your giving perpetually. You can even specify how you want the money spent by the charity, whether it be for a preferred sub-category, scholarship, or something else.
“My Crystal Ball Is Cloudy”
As a child psychiatrist, I may think about this aspect more than most. While we cannot predict future behavior, we can look to past behavior and temperament in viewing one’s potential heirs. As a parent, I have a lot more insight into my children’s strengths and weaknesses, impulse control, risk-taking vs. risk-averse nature, ability for emotional regulation, and decision-making at age 14 than I did when they were 2.
Just for fun, when they were 4 years old, I gave them the classic “marshmallow test” (a test of receiving a bigger reward for delaying gratification), and they both passed with flying colors. Of course, we know that executive functioning does not fully mature until around the mid-20s, but as they grow, I can see glimpses of what they may be like as adults. In Piaget’s theories of cognitive development, it is around age 11-12 when the “Formal Operational Thinking” stage begins and continues into adulthood. This involves the development of logical thinking, the ability to formulate hypotheses, the ability to approach problem-solving in a systematic way, and the capacity to think abstractly. As my children are squarely in this stage, I can also give them the skills, knowledge, and financial literacy to be better equipped to handle a worst-case scenario.
More information here:
The Gender Role Reversal: Being the High Earner of My Family as a Woman
Justifying and Cash-Flowing a ‘Selective Extravagance’
Designating a Trustee
Who will manage the trust? Easy, just pick someone you trust (pun intended)! Truly, we are lucky to have multiple people in our lives who we felt could take on the role of trustee. But the important thing was asking them to make sure they were comfortable taking on this role and were aware of the responsibilities. We made multiple designations in case one or more of the people we picked could no longer serve in that capacity. Again, we had to be cognizant not to get lost in thinking of too many hypothetical scenarios.
Final Tasks for Estate Planning
Our attorney gave us a blank form where we could list out any specific items like jewelry or collectibles we wanted to go to a particular person. This can be updated as needed. We also had the option to designate a medical Power of Attorney (POA) and a Living Will. We also have to store the will and trust documents in a safe place.
In the process of doing all of this, I mentioned it to a few close friends which led to some meaningful conversations. One very close friend asked if my husband and I would be listed as guardians for their children in their will. Another friend asked us if we would help guide their children’s religious upbringing if they were no longer here. We agreed to both of these asks.
A key step at the end was to change the beneficiaries of our accounts to the name of the living trust. This was pretty easy for many of the accounts, involving a simple online request or update. For our life insurance policies, we had to fill out a multi-page form and mail it in, but it still wasn't too onerous. Although updating our will and trust took more time, thought, and consideration than I figured it would, it gave us emotional peace knowing that we have our wishes in place and a plan we are comfortable with going forward.
Have more questions about estate planning or protecting your assets? Hire a WCI-vetted professional to help you sort it out.
Have you had to redo your estate planning? What was your experience like? What other tips do you have for those who haven't gone through this process?
Great topic that a lot of people don’t think about. For our children, we did phased inheritance but start later in life, with distributions starting at 30 and going until 45 in similar allotments. Before this, we have a “board” of 3 people we trust that have the ability to disburse X amount if agreed upon unanimously before the age of 30 knowing that there can be large expenses that would be beneficial for our kids as they establish themselves but trying not to hand them the keys to the estate too early.
What are your thoughts on inheritance potentially handicapping motivation of children to build something of their own as they start out? I’ve heard a lot of differing opinions such as “comfort is a silent killer of ambition”.
We think it’s a real problem, that’s why our estate plan involves a small inheritance for their 20s (the 20s fund) then nothing until 40. The remainder of the inheritance is split 1/3 at 40, 1/3 at 50, and 1/3 at 60. If we’re still alive, that can all be changed as needed.
Thanks for the comments Ryan. I think this is a great point. Obviously, we hope to never have to enact the inheritance plan when our children are still minors or even young adults. If a worst-case scenario were to happen, I would find comfort in knowing that they would be financially secure to establish themselves with pursuing education, buying a house and starting a family of their own as young adults without the benefit of parental guidance or support. My kids already live a very “comfortable” life, but still they are motivated, hard workers, and good students with goals for their future. They are very responsible with money and are not at all spenders or risk-takers. Of course, this could change, especially if they experience the trauma of losing parents at a young age. I anticipate updating our estate plan again around the time when they turn 18 and we may modify the phased inheritance a bit at that time as we will presumably have even more assets. I see the potential reality of your concern. Certainly, having too much at a young age could decrease someone’s motivation. As it’s hard to predict the future, I’m going with what I think makes the most sense to us right now.
Great and useful essay, thank you! how much does a nestate attorney typically cost when doing something as comprehensive as you have outlined here?
The $3,000 to $4,000 fee is that flat or based on a certain number of hours of work?
I think the fee ranges would vary regionally and you would have to clarify with the attorney up front what is included in the package. The attorney we worked with had a flat fee. He met with us as many times as we needed to discuss our plans. Some of these meetings were long. He was very patient and answered all our questions even if we repeated some of them for extra clarity. We also e-mailed back and forth many times. He will update the documents again for free within a year if we change our minds on anything. He is also available for questions via email or phone call ongoing. We felt good with the level of service he provided and if we want to update the estate plan in the future, he offers a lower rate since it is less time-consuming for him.
Hi Doc,
I am looking to do Estate and Tax planning. I am not over the Estate Exemption limit yet but we are expected to leave more than that.
The fees from your attorney seems very reasonable. Would you be able to provide contact information?
Thanks
I’m not sure you’re in the same situation as Dr. Alonso, much less the same state. You may need a more extensive plan and certainly need to make sure you’re seeing an attorney in your state.
Thanks for the reply.
I agree 100% with you on talking to an attorney. It appears that Dr Alonso has an attorney who is very reasonable on pricing. And Dr Alonso seems to be satisfied with the service she received.
I would love to get the information of that attorney so I can reach out.
Again appreciate what you do and provide lot of valuable knowledge for financial aspects of our lives.
I don’t know if she’ll answer (she probably doesn’t monitor these comments) but if you’re not in TX you don’t want her attorney. If you are, I’ll connect you two by email.
Thank you for your reply. I am in Texas.
Email sent
Hi Tom,
With over a decade of experience in estate planning, I’ve observed that the fee structure typically reflects the case’s complexity. Many estate planners, myself included, favor using a flat fee. This approach allows for unlimited meetings and revisions, ensuring your plan perfectly aligns with your needs. I take pride in my experience and am committed to crafting a personalized plan that gives you peace of mind.
[Solicitation and contact information removed. If you’d like to advertise here, please buy an ad by contacting cindy (at) whitecoatinvestor.com. Otherwise, it’s the internet equivalent of painting your ad on my barn without my permission.]
thanks for the article
i’m surprised by the number of folks who opt to distribute assets out of trust at pre defined ages. this defeats the ability of a trust to protect the assets from creditors, predators, and spouses. our estate plan allows our kids to become trustees of their trust at age 35, but the assets stay in trust. only the income is distributed. if our kids are in a high risk profession, or are ever divorced, they will appreciate that asset protection.
Bob, I totally agree! Also one has to consider the potential of divorce. Our legacy trust will split 50/50 for each of our sons upon the last parent to die. Our sons are co-trustees until age 45, then trustee. I have spent their early adult years explaining (as has our estate attorney) why the trust exist and why the inheritance should remain in the trust with only income distributed. I did this before each son will be married, to preclude any hostility with future daughter in laws. Our sons will inherit our IRAs, their management of these will be a guidepost for the trusts trustee (professional) to work with our sons. Both are gainfully employed and doing well in their careers. These issues are time consuming but worth it not so much for our peace but for their lives.
I think the way we set ours up is that they CAN distribute the assets, not that they have to. The assets just become accessible at certain times. Mandating they can only have the income is basically a spendthrift trust so they can’t run out of money. But that would keep them from using a big chunk to pay off a mortgage or buy a second home or start a business or something similar.
I think the way we set ours up is that they CAN distribute the assets, not that they have to. The assets just become accessible at certain times. Mandating they can only have the income is basically a spendthrift trust so they can’t run out of money. But that would keep them from using a big chunk to pay off a mortgage or buy a second home or start a business or something similar.
A plug for military service? Remember all the trade offs!
Part of spouse’s retirement benefit is JAG support. Just as I highly value the low cost medical care our family military service has gotten us do I value the legal service and wish it were more reliably and cheaply available to everyone. And tolerate the barebones aspect of socialized legal and medical services. Getting probably good enough for free really decreases our willingness to pay $4000 for probably a bit better, we may never find out. Will changes 4+ times so far as each named guardian ages out of suitability for raising our kids and as we changed state residency reinforce this.
A friend wisely moved states to be closer to grandkids but is paying big money a second time (and hoping she doesn’t change states again) for a complicated trust for her special needs children. Like licensure it would be nice if state lines didn’t undo so many costly legal documents.
We are counting on the apparent wisdom of our now adult kids and decided the costs of managing from the grave outweigh our concern that if they are bad with money when we are gone they’ll be broke again quite soon after inheriting. Also we want to die with zero anyway if we make it longterm and are giving them some of their inheritance along the way. Should something change dramatically or we come to mistrust a child’s spouse we might change our tune.
Of course the JAG military lawyers aren’t well experienced with years in the state we need the estate plan for but we can’t knock the price. However I doubt they would/ could do a trust (or that I would trust them to) like those described here. So we haven’t arranged any beyond the children’s trust in past wills when they were still minors.
We recently redid our estate documents, but did it a little differently. We set up a testamentary trust that only becomes active if both of us die, and then all the life insurance and assets go into that. So no living trust right now. We’ve made sure though to check every single account and make spouse as 100% primary beneficiary and testamentary trust as second. If one spouse were to die, we would redo the plan. Through my legal plan, there was no cost to me for the attorney to set this up.
This sounds similar to what we had set-up in our previous will and trust. It’s definitely important to double check all of your primary and secondary beneficiary designations. The legal plan can assuredly save you money in these matters. My current job does not offer one like my previous job did.
Thanks, I appreciate your positive feedback!
Would you and WCI be able to comment more on the beneficiary aspect of the trust? It makes sense to me to create the trust to avoid probate and create a better plan for your assets. I also understand the benefits with minors as life insurance beneficiaries.
I must have been mistaken, but I thought I read a previous article on WCI about estate planning commenting that the tax rates on trusts were very high and this was the danger of listing it as a beneficiary on retirement accounts. There was some comment about this not being necessary. I admit I am confused since I was originally going to copy the plan in this article, but then hesitated. I probably completely misunderstood the prior article. Thank you!
A revocable trust and an intentionally defective grantor trust (a type of irrevocable trust) are pass through entities to the grantor as far as taxes go. An irrevocable trust, including a revocable trust after death, is taxed at trust tax rates. It takes a lot less income for a trust to get to the top tax bracket than for an individual. There are pluses and minuses to trusts that should be understood prior to forming one.
Thank you. While it seems the benefits are clear for a term life insurance policy, it makes it unclear to me if the benefits outweigh the negatives for retirement accounts and IRA’s. The estate planning attorney couldn’t offer any advice. I am not sure if this is best explored through a tax accountant or a financial advisor.
If your attorney can’t advise on this, you have the wrong one. If you’re asking about making a retirement account payable to a trust (different than actually transferring life insurance to an irrevocable trust), you would do that if you need to control enjoyment by a beneficiary of that asset. Otherwise, you would not want to, given the income tax rates.
But you have to weigh those against the asset protection benefits and control inherent in a trust. For example, if we died while our kids were 25, we don’t want them to get that retirement account money yet.
I live in Pagosa sp co and trust attys where apointed defence attys and purpusly botched one case and then yrs later after the death of Susan Angelo a small team of individuals where paid off tp make false reports ,damage property and follow me oger a yrs period while attys focused on deeming me incompitent that failing then dropping charges after 10 yrs of being harassed homeinvaded you name it they did it .its been three yrs since Susan passed my mail was discontinued when she passed and I’ve never been able to get my mail reinstated I’ve lved alone at yhe same address for five yrs and only found out Susan passed two yrs prior when i went to her residence.the estate included several property’s and millions in cash bank accounts I’ve never received anything but grief our former sheriff lives on a 509 aker ranch and the town judge now owns a realestat company there whete sevtal attempts on my life slander totally financially destabilizing every aspect of my life .the judge issues restraining orders then the lawyers point the said people in fear to my residence as of the most recent attempt to disqualify me I’ve been labled as per there naritive the town crazy .they have d destroyed me and I can’t serm to find help .
Sorry to hear that. Hope things get better.
Maybe we will have to update ours in the future if we want any changes, or make our estate more complex. We did Legal Zoom a few years ago, and the process was very straightforward for a trust and will. I’ve opened trust accounts with Schwab and Fidelity, as well as handled a few real estate transactions with the documents we received. No issues yet. In fact, when doing a real estate deed transfer, someone at the title office informed me that a surprising number of estate lawyers in the area actually do it incorrectly! I believe many would just list the trust name, when in reality you needed to list both grantors and trust.
For Legal Zoom, I do remember there being a couple sections (“Anything else you want to add?” text boxes) where if you clicked the “more info” button, a notice popped up saying something to the effect of: “If you choose to type out a unique request here, please note that the courts may or may not honor them in the future.” I suspect it would be better to talk with a lawyer if you have a more complex situation (i.e. “Donate 20% of my estate to X charity, give Y property to Z child, A property goes to B child and receives my 401k, and C will receive my brokerage account at age 50”).
I agree that using an online legal service for a will and trust is a very viable option for lots of people who want easy access and a lower cost. Much better to have simple estate planning documents in place than none at all. As you said, if you want more specific details or more complex instructions, then working with an estate planning attorney makes sense even with the added cost.
Great Post
Resources like this are valuable for both estate planners and clients. They help us understand each other’s perspectives and work together to create effective solutions. Thank you for your continued support!