All About Wills and Estate Planning in Plain English

Wow — there were a ton of responses to the recent letter to my wife post about estate planning if I were to suddenly die. I guess I’m not the only one feeling underprepared for that type of situation!

Researching this stuff a bit further, I wanted to share with you all what I’ve been learning. At the top of my list has been figuring out some type of formal will(s) for me and my wife. Surprisingly, it doesn’t seem as difficult as I expected.

**Also, because death is such a sad topic, I’m going to sporadically include pictures of Cooper as a puppy to lighten the mood. Everyone likes puppies, right!?**

This was taken the day we picked him up at the shelter in 2013. We lucked out big time finding this lil guy!

Defining All the Estate Planning Terms

First, here are some words that I had to google. You might know this stuff already but I thought I’d share anyway ‘cause I found it helpful!

  • Probate: This is a legal process where a court decides how a deceased person’s estate is going to be administered. If there is a will, the court decides whether the will is valid. If there is no will, the court will follow intestacy laws. 👇
  • Intestacy (or “intestate”): For people who die without a will, each U.S. state has a set of laws that determine who inherits the assets. Usually this is heirs, relatives, descendants, etc., but it can get pretty complex if there are step-children, in-laws, undocumented partnerships and stuff like that. Many people get screwed by sucky state laws, so having a will is 💯 better!
  • Last Will & Testament: This is a legal document with the wishes of the deceased person. It lists how they want their property to be divided, and also *who* they want to help manage the distribution.
  • “Living” Will: This is different from a will for when you die… A living will is for when you are still alive but are incapacitated or can’t handle your affairs. It’s also called an Advanced Healthcare Directive.
  • Executor: Person (or people) chosen to carry out the transfer of assets. If there is a will, the executor is usually named already and they follow whatever the will says. If there is no will, the court appoints an executor (usually a relative), and they have to follow whatever the court deems is the correct transfer for the assets.
  • Beneficiary: This is the person who will receive the benefit of stuff. They can be named inside the will, a trust, or with financial institutions directly designated within an account.
  • Trust: This is kind of like a will, but it’s a more custom and hardcore legal document to pass assets between people. Having a trust can bypass probate, keep transfers private, and can have tax deferral/avoidance measures. **Note** A trust cannot decide who will be the guardian of children; only a will can name guardians for kids. Check out more will vs. trust stuff here.
  • More estate glossary terms here

FYI: Many people choose to have *both* a will and a trust. Even though there’s a lot of overlap, one can provide a back-up for the other if something’s not executed properly.

Me and Coops, almost 9 years ago!

How to Avoid Probate

If possible, I’d like my wife to avoid probate court because it seems expensive and time-consuming. There are a couple of ways I can help do this:

  1. Listing beneficiaries directly at financial institutions: If I can pass assets directly to my wife legally through bank accounts, retirement accounts, etc., then she can take ownership without going through probate court. (I’ve already done this for our checking, savings accounts and retirement accounts.)
  2. Having joint ownership for assets and properties: For our duplex, other rentals and joint brokerage account, my wife is already a co-owner. Owning assets jointly means if one of us dies, the other survivor takes ownership and in most cases doesn’t have to go through probate.
  3. Getting a living trust: Having a trust can avoid probate… But, ALL assets need to be transferred into the name of the trust for this to be applicable. This seems like a real pain in the ass to do, and might be more applicable if we had kids.

All in all, I think the majority of our assets — and certainly the most valuable ones — are going to be easy to transfer without probate if one of us dies. I’m feeling MUCH BETTER knowing all this stuff.

**If you haven’t done this already, add it to your to-do list ASAP… Go through ALL your accounts/assets and call the bank/broker/county to make sure your designated beneficiaries are up to date. Only takes a few minutes, and could save a HUGE amount of time for your loved one if you die.**

Cooper and I took photos like this every couple weeks, but soon enough he couldn’t even fit on my lap anymore. :)

Writing a Will

My wife and I have already thought through the scenario if one of us dies, but what will happen if BOTH of us die at the same time? Weird to think about, but this is actually a very possible scenario being that we travel together and do almost everything together.

Having a basic will and testament would help whoever cleans up our financial mess and inherits our stuff. I certainly don’t want to leave it up to the government to decide!

The good news is, writing a will doesn’t seem as hard or as scary as I thought it’d be. In fact, we could even write one ourselves pretty easily.

I found this article helpful: Should you write your own will?  And also this list of basic will requirements per state

In California, the basic requirements for having a legal will are:

a) be 18 or older

b) not be drunk/on drugs when it’s written

c) signed by a couple of witnesses

Although we could do it ourselves, given the size of our estate, it’s prolly a good idea to have some professional help. Also, it seems that estate planning software covers a handful of other scenarios if disaster strikes.

LegalZoom is one I’ve been looking into. For their basic bundle it looks like I can get:

  • Last will and testament – for me
  • Last will and testament – for wife
  • Power of attorney – for me
  • Power of attorney – for wife
  • Living will – for me
  • Living will – for wife

Bundle price for all these: $279

What I like about using professional software to prepare documents is they use all of the state-specific requirements and ask the right questions to produce a complete will. My biggest fear is that in a probate situation they might determine that a will is not valid, in which case I’ll have done all this work for nothing. So having professional help is nice.

As for a trust, I don’t think my wife and I really need one at this point. This might change as our family grows, but for now we’ll just start with getting basic wills.

Read this if you’re wondering if you should set up a trust.

Figuring out how mirrors work ;)

You’ll Need to Have Hard Conversations About Inheritance

Welp, here comes the hard part for us.

I was just about to start the LegalZoom process, but then it hit me… My wife and I still need to talk about who the heck inherits our mess if we die!

And this — I think — is the hardest part of anyone’s planning process. Filling out forms is easy. But actually sitting down and having tough conversations is what most people avoid.

Since my wife is still touchy and crying about the last letter I wrote, I’ll need to figure out a way to make this as unemotional and easy as possible. More to come on this!

Any of you done this already and have any tips?

Stay safe out there my friends,

Love, Joel

Byyyyyyeeeee!

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10 Comments

  1. Aretina October 22, 2021 at 8:09 AM

    Hi Joel, thanks for this straightforward explanation of what may appear an overwhelmingly complex issue. So many of us are busy building, earning and working that we don’t take the time to think about “contingency planning”, but in any successful endeavor, that is a key component.
    10 years ago my husband and I had a revocable living trust prepared for the same purposes; taking our squirmy 2-year old son with us to sign the documents. It was a relief to know that if something happened to both of us (we had the same concerns of both dying and leaving our young son behind) there would be a plan in place to take care of him. We didn’t even have to update it when our daughter was born since we worded it to apply to all future children.

    Years later, after our divorce, I made sure the trust was dissolved (as it was revocable, this was easy to do) and drafted a new one as a single. My trust attorney offers an estate planning package that for a set price the creation, maintaining, updating, filing of my trust is all-included; all my designated appointee has to do is call the firm and they get it all rolling and offer her advice if I’m no longer there. That really gives me piece of mind that if something happens to me, not only will my assets be immediately available to support my kids, but my family is not burdened with remembering details of accounts and processes.

    Perhaps if you approach it from a contingency plan for the family business versus an end-of-life discussion, it will make your wife more comfortable?

    Thanks again.

    Reply
    1. Joel October 22, 2021 at 9:46 AM

      Thanks Aretina! One of my concerns is constant updating of wills/trusts. Once I get it all squared away I feel like my situation will change. Then change again, and then again. Glad to hear attorneys recognize this and have a set price to cover ongoing maintenance.

      LOVE the idea of approaching it as family contingency planning. Or “generational wealth planning”. It’s not about us dying — it’s about future family members continuing what we started! :)

      Reply
  2. Martinus October 22, 2021 at 11:19 AM

    My wife is an estates lawyer in Canada. As she is past 60 and has been a lawyer for 40 years she is at the top of her game. I hear first hand about the estate nightmares about people without wills, with people with Will Kit wills, and people with lawyer drafted wills where the lawyer was careless or not competent.

    We all desire to have a large estate. Why would you cheap out and get commodity pricing and buy a will kit, or choose a lawyer based on cheapness. There is a difference and I see it daily.

    An estate specialist lawyer will take time to ask you questions that you won’t even think of, conceivably saving your estate thousands of dollars. They may also help you prevent actions which are mean or stupid (if there ever was a time to be magnanimous, it is in death).

    So my strong recommendation is to search out a lawyer who is an estate specialist, and chose one who has more than a few weeks on the job. This isn’t an issue in which you want to be parsimonious.

    Reply
    1. Joel October 22, 2021 at 11:40 AM

      Great recommendation Martinus. I was calculating probate fees the other day for California… They are like 4% for the first 100k, then 3% for the next 100k, then 2% for the next 800k, and more ongoing from there. So for someone with a 1M estate, probate could be up to $23,000 in fees right off the bat. So paying a lawyer even $10k now to avoid probate completely is still a massive saving (assuming this basic scenario, not accounting for time value of money, etc.).

      I realize it’s not always as clear cut as this simple example, but can definitely see how it saves money to get a decent priced estate lawyer that is as experienced as possible. Thanks for sharing!!

      Reply
  3. A Frugal Family's Journey October 22, 2021 at 1:19 PM

    Great information…thanks for sharing! Death and estate planning are something many put off because they think that have time or they simply don’t want to think of the inevitable. But the reality of talking about it and, more importantly, planning for it is the best thing you can do for your family. Our family began our estate planning journey sometime during the first year after our firstborn. I can tell you from our experience, it gave us tremendous peace of mind knowing a plan is in place should something happen to me, my wife, or the both of us.

    Reply
    1. Joel October 22, 2021 at 1:45 PM

      Honestly, that’s probably what sparked my interest in this stuff right now too. My wife and I are closer to having kids, and so our thoughts are beginning to be less about us and more about kids. Glad to hear you and your fam are all squared away and have peace of mind! that’s priceless!

      Reply
  4. Liz October 22, 2021 at 10:24 PM

    My work had a discount for working with estate lawyers which is when I set mine up. It is uncomfortable to consider death. I have immediate family as primary beneficiaries, but if a meteor takes us out at Christmas I have contingency persons listed.

    I saw recently a suggestion to both talk to your friends and family and put in a will who will care for your pet(s). Especially as life circumstances can change…. a parent may not be able to take on an additional pet, or a friend may be busy with a family or have moved far by the time they are needed. I have seen some people set aside a trust to provide funding to care for the pet to not burden the new caretaker with expenses.

    I get that you and you wife just got through the last post on the topic, but think of this as a HUGE gift to your loved ones. My parents have their papers in order and it is such peace of mind!

    Reply
    1. Joel October 23, 2021 at 12:43 PM

      Thinking of it as a gift to others really helps. Thank you Liz :). Love the Pet idea too!

      Reply
  5. Liz October 25, 2021 at 6:34 PM

    I am single with no kids. I hope to leave my estate to my local Humane Society in a trust that will distribute 10% of the value each year, and over the years my lump sum should continue to grow and provide more and more of a benefit each year! In effect this will be an endowment for them. So that is my plan and fingers crossed it works out! It makes me happy to have this kind of legacy to leave.

    Reply
    1. Joel October 25, 2021 at 6:44 PM

      That’s awesome Liz! If you actually lower the % given each year (maybe down to like 4-5%), perhaps the fund could sustain itself forever! Like a fully self-sufficient donation machine. Love it!

      Reply

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