Beneficiary changes

Beneficiary changes

How do I get information on changing beneficiaries, the lawyer wants to charge a large amount of money for assisting me?


Your question highlights the greatest difficulty most people have with estate planning and, in fact, the entire legal system -- horrible jargon. The terms living trust and living will are so frequently confused that it is unfortunate that someone at some point came up with these terms. Briefly, a living will (which should also be accompanied by a health care proxy) is a document stating your health care wishes. A health care proxy is a document appointing an agent to make health care decisions on your behalf if your are incapacitated. A living trust is a contractual document between your mother as the grantor setting it up, your mother is perhaps a sole trustee or in many cases preferably as a co-trustee perhaps with you her son or another family member to facilitate your helping her manage her assets. A living trust, when funded (i.e. assets being transferred to it) can be a tool to help manage assets, avoid probate etc. Unfortunately living trusts are hiked well out of proportion to what they can do and often for the wrong reasons. Avoiding probate is not often such a big deal although it can be appropriate in some circumstances. The first step for your mother is to make sure she has the core basic documents which everyone, no matter how young or how old, how rich or how poor should have. These core documents include (1) a living will health/care proxy (really two separate documents although often bound together) to address health care matters; (2) a durable power of attorney to name agents to manage financial, legal, and tax matters in the event of illness or disability; (3) a will providing a broad range of powers to a person appointed as executor to manage the decedent's estate; (4) An emergency information sheet and financial summary outlining the key financial, legal, and personal data so that you and any other family members or friends that wish to assist her in the event of an emergency or problem would have the information to do so. A revocable living trust is not one of the essential core documents (although those selling these "services" will assure you otherwise). If your mother is going to have a living trust, the will might include a "pour-over" provision which states that all assets of the estate will be poured into the living trust for distribution. In some cases a pour-over is not always used. A living trust is really icing on the cake and although a useful document (everyone in my family has one) is not essential. So the answer to your question is that your mother absolutely needs a living will. A living trust is far more questionable. It would really depend on the facts and circumstances in the case. For example, for a smaller estate, which is quite simple, which you mothers may in fact be, signing a durable power of attorney for your assisting and managing your mother's assets in the event of her disability. If you live a distance or especially in another state, structuring her assets in a living trust might greatly ease the administrative burden you would face in helping her manage assets. Before you go to the expense of a living trust, the best thing you can do is to look into consolidating all of her assets into a single bank or brokerage firm. CD's are one of the most difficult assets to manage. When a CD becomes due, it is atomically rolled over, not followed up on. If you have everything in a brokerage account, your mother can purchase the same CD's and other types of assets she wants, yet her entire estate would appear on a single brokerage statement. This will greatly facilitate managing the assets. You can also request from the brokerage firm once you have consolidated, that duplicate monthly statements be sent to you, if your mother approves it. This is a no cost way of keeping tabs on your mother's situation to be sure nobody is taking advantage of her. Watch out for cancellation fees, etc. if you consolidate her assets in a brokerage firm. Whether or not there is a living trust, you will find that consolidation is one of the keys to simplicity, low cost, etc. If you are wondering why you do not hear much about consolidation, it is because no one makes money on your doing it. See the article in the estate planning section discussing the benefits of consolidation. Your best bet is to engage an experienced estate planner for a consultation. Put together all your mother's information and probably a brief thirty to sixty-minute consultation will be enough to straighten out all your questions on these matters. Be certain to use an expert who practices in the state where your mother resides.

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