Retirement Planning - Lessons Learned

[ljjhouser]

With my Mother in Law, her various Wills over time had her money going 50%, 50% to my wife and her only sister. Her long time attorney had her update her Will every 10 years or so. Every copy had it 50% 50%. We never trusted the sister, she and her husband were always too busy to help out, too busy to take my MIL to appointments, etc. They never really lifted a finger and they never helped get the house cleaned up and ready to sell after the MIL went into a home (she was a hoarder so it was no easy task). They even had their kids ask my MIL for money for trips to Europe, cars, etc.

I suggested to my MIL that she consolidate her money into one investment house which she did. I also suggested that the set the account up as TOD (Transfer on Death) to the two daughters 50% 50% which she did. I had her keep about $30K out of that account separate for funeral expenses, etc. When she finally passed, my wife's sister and husband sprung into action like we never saw before. They wanted control of everything but did not know the MIL's personal advisor so I set up a meeting for the day after the funeral (we were all from out of town). The advisor went over the TOD distribution proceedings and during that meeting the sister and husband became visibly agitated. On a TOD, the money in the account bypasses probate and in this case it was owned 50% 50% the moment the MIL passed.

My god they were pissed, the husband even threatened the advisor. As it turned out they had an attorney from their home town write up a will with the sister and her husband receiving everything under the terms of the "new" will. The MIL had Alzheimer's in her final years and they had her sign the "new" Will unbeknownst to my wife and me. My wife had records of when her mom was diagnosed with Alzheimer's and it was prior to the signature. Not that it mattered because of the TOD, but it sure put a damper on their new threats to sue us. My wife had signature authority on the $30K so I had her write out the funeral home check, etc. before the sister could do anything with that account. My wife and her sister each received about $350K. My wife still has hers, the sister does not.

We have not seen them in years and likely never will.

It is amazing what comes out of the woodwork because of the smell of money. I have seen this two other times in my family. I used to wonder - why would someone place the financial dept. of a bank in charge of a will or trust. Now I understand there really may be no one to trust. I do believe in putting your kids in the trust as a beneficiary, not an an executor. My wife and I are the trust grantors. AFTER we are gone, there are executors to carry out the trust. And that can be anyone you choose. Give each beneficiary a copy. Then amend it as life changes.

 

[Fuddy1952]

I believe wills and estate planning is something most people don't want to talk about but should be a priority.
My in-laws had only one child (my wife) and put everything in her name years before they passed. Home, property, assets, everything.
They trusted her implicitly.
My wife always had her parents best wishes at heart and she is trustworthy.
They lived at home long as possible, her Dad passed at 90. Her Mom five years later wanted to go into a nursing home, unable living at home. The nursing home administrator wanted access to Mom's money, etc however couldn't since it was in wife's name over 5 years. They did get her SS and Medicare paid medical.
Then a certain family member started visiting Mom every day. I suspected something wasn't right so advised wife taking her to a psychiatrist for evaluation. For $75 he determined Mom was incompetent, had dementia and wrote a letter stating that.
I made a copy, placing it on Mom's nursing home nightstand in plain sight.
Wonder of wonders...that certain family member never visited again!
Careful planning is essential and the goal is to carry out their wishes. Lots of times as someone gets old or passes the vultures appear.
We were with Mom when she passed at 97.
The minister was there also, my wife held her Mom's hand saying we love you but it's time for you to move on and once again be with Dad.
At that point Mom smiled and her heart stopped beating.

 

[npalen]

also depends on how much money taken out, and how much it adds to your total end of the yr income. If it puts you in another tax bracket, you could pay xtra taxes. I have been there

I've never quite understood the concept of "puts you in another tax bracket". Are the tax rates not progressive so that as your taxable income progresses you INCREMENTALLY pay a higher rate?

Why are the tax rates referred to as BRACKETS as if you have one dollar more in taxable income your taxes could skyrocket?

 

[California]

I've never quite understood the concept of "puts you in another tax bracket". Are the tax rates not progressive so that as your taxable income progresses you INCREMENTALLY pay a higher rate?

People don't understand its only the next dollars beyond the top of a bracket that are taxed at the next higher rate. NOT YOUR ENTIRE INCOME!

Acquaintances told me the wife quit work because her wages went 100% to pay the taxes on what her husband earned, and he agreed with this reasoning. I think her real reason was she wanted to play golf with her friends all day. They've declared bankruptcy twice that I know of. No savings for kids college. She got an inheritance and bought a new Mercedes, soon wrecked it.

I don't understand people like that.

 

[MoKelly]

If you have life insurance, are you assured life?

You are assured you are alive when you buy insurance. After that, there are no guarantees.

MoKelly

 

[JasperFrank]

Understanding Maryland, and all the reasons i got out of there as soon as i could, I was not too shocked when the State took, 10% extra of my uncle's estate just because he didn't have children of his own. Maryland is the ONLY state that does this on top of the usual taxes.. Why does Maryland even have retirement communities? The smart thing, in retirement plannings is to plan it so that you don't have an estate when you die.

 

[RickB]

.

 

[npalen]

People don't understand its only the next dollars beyond the top of a bracket that are taxed at the next higher rate. NOT YOUR ENTIRE INCOME!

Acquaintances told me the wife quit work because her wages went 100% to pay the taxes on what her husband earned, and he agreed with this reasoning. I think her real reason was she wanted to play golf with her friends all day. They've declared bankruptcy twice that I know of. No savings for kids college. She got an inheritance and bought a new Mercedes, soon wrecked it.

I don't understand people like that.

only the next dollars beyond the top of a bracket that are taxed at the next higher rate. NOT YOUR ENTIRE INCOME!

Yeah, that's what I was trying to say.

 

[Doughknob]

Yep. Most times.

Also, having a will makes settling the estate after death go a lot faster for the survivors. You don't have to wait for the probate courts to settle everything out. It is a very considerate thing for someone to do to make out a will to save their family a lot of hassle and footwork.

I don't believe probate court is an automatic thing. Only if there are certain triggers, does probate happen.

 

[goeduck]

Understanding Maryland, and all the reasons i got out of there as soon as i could, I was not too shocked when the State took, 10% extra of my uncle's estate just because he didn't have children of his own. Maryland is the ONLY state that does this on top of the usual taxes.. Why does Maryland even have retirement communities? The smart thing, in retirement plannings is to plan it so that you don't have an estate when you die.

you should have had him adopt you