Death, Taxes, Estate Plans, Probate and Prob8

 spiderman uncle

 “With great power comes great responsibility.”

      Spiderman’s dead Uncle Ben

(Oh, and some other guy named Voltaire.)

So, too, with wealth.

One of the pesky things that nobody ever seems to tell you while you are accumulating it, is that is that having and keeping it requires effort. You must learn how to invest it and how to protect it from the many forces that would happily pull it from your pocket into theirs. And this Great Responsibility of Wealth continues after you die. How unfair is that!?

But if you shirk this responsibility, your wealth will flee from you; while you are alive or after you are dead.

So far on this blog we’ve only talked about the alive part. This is not because I don’t think the death part is important. I very much do and in fact have had my own Will and other documents in place for many years.

Rather it is because I am not qualified to write about this stuff. While it might not always show, I try to write about only those things I actually understand. For this topic my knowledge base is simply too limited. For my own needs I have personally relied on legal professionals to get it done.

Early on a reader calling himself Prob8 began showing up on this blog. His comments were always well reasoned and well written. In my mind I heard his name as Prob(ably)8 and wondered, as I sometimes do with internet names, what it meant.

Back in October I finally had the chance to meet him while attending FinCon, the conference for financial bloggers like me. Turns out he is an attorney with a practice focused on estate planning and “probate” is the correct pronunciation of Prob8.

Regardless of the pronunciation, it didn’t take me long to figure out that in Prob8 I had just the right guy to fill in a knowledge gap around here for which my own abilities came up woefully short. He graciously agreed and here is his Guest Post. In an appropriately lawyerly fashion it begins with a disclaimer.

 Estate Planning Made Understandable

by Prob8


DISCLAIMER – You should contact a licensed professional to assist in the preparation of your estate plan.  This post and any comments are not legal advice and will not create an attorney-client relationship.  If you are not in the United States, this post may be useless to you and will probably suck to read.  You’ve been warned.

At some point in your life I suspect you will question whether you need an estate plan.  This may happen when someone you know dies, you reach a certain level of wealth, or perhaps when a friend or family member plants a seed in your mind.  For me, estate planning did not make it onto the “to do” list until my first child was born.

If you have not yet planned your estate, you might be wondering why you need to make a plan.  You probably don’t want to spend any more time than necessary in life with a lawyer.  You certainly don’t want to give them any of your hard-earned money.  I don’t blame you.  I feel the same way.

At a basic level, you need to make a plan in order to deal with incapacity during lifetime and distribution of your assets in an orderly fashion at your death.  But estate plans can accomplish much more than that.  Additional goals for many who plan their estate include avoiding the probate process (more on this later), reducing or eliminating estate tax (more later), creating creditor protection for heirs, and creating guardians for minor children.  Of course, this is not an exhaustive list and not all of these things will be relevant to you.  If some are relevant, you should give serious consideration to preparing or reviewing your plan.

Not everyone has an estate plan and that might get you thinking about whether there are alternatives to formal planning with a lawyer.  There are.  Let’s discuss some of them.

Informal Estate Planning

The first thing you need to know is that your state has an estate plan for you already in place.  The good news is that it’s free of charge and requires no formal documentation or effort on your part.  The bad news is that it probably doesn’t say what you want and relying on it will likely lead to increased costs and aggravation for your family.

1.  State Default Rules.

Let’s assume you have no formal documentation and your death occurs.  For simplicity, let’s also assume your assets are solely in your name with no co-owners or named beneficiaries.  Having failed to plan your estate, your family is now subject your state legislators’ opinions about how your assets should be distributed.  Perhaps you are okay with your state’s plan.  Perhaps not.  If you’re unsure, you should do some research.  You can start here (

Example: Because I practice in Illinois (and because it’s the home of Jim’s alma mater) (jlc: Go Fighting Illini!), let’s assume you live here too.  Let’s also assume you have a spouse and an adult child.  At your death, Illinois law says your spouse would be entitled to the first $20,000.  After that, the net assets will be distributed 1/2 to your spouse and 1/2 to your child.  Is that what you intended?  I don’t know . . . you’re dead.  Unless your wife can channel your spirit through Oda Mae Brown*, I doubt we will ever know.  I can tell you that unless your family gets along really well, someone is probably going to be upset with that result.  Especially if this is a second marriage and the child is from a former marriage.

Death isn’t the only thing covered by your state’s default rules.  You’re also covered in the event you become incapacitated due to accident, illness or otherwise.  As with the death laws, the rules for handling your affairs while incapacitated vary from state to state.  In some cases, your spouse might be able to make limited medical decisions on your behalf.  More likely, some form of court proceeding (known as a “guardianship” in Illinois) will be required for making material and long-lasting medical decisions on your behalf.  Please note that relying on state default rules for incapacity will probably be time consuming and expensive.

When it comes to money, someone will almost certainly need a court proceeding to make financial decisions and pay bills on your behalf during your incapacity.  As you might imagine, involving money has a tendency to increase the contested nature of a court proceeding.  This is fine with me as a lawyer: It helps in my efforts to accumulate my own F-You Money.  It’s not so good for your efforts.

2.  Beneficiary/POD/TOD Planning.

A convenient and mostly free way to reduce some of the potential problems, costs and uncertainty of having no plan is to plan by use of beneficiary designations, pay-on-death (POD) designations and transfer-on-death (TOD) designations.  Making an account automatically pay to someone upon your death is as easy as completing a form provided by your bank, insurance company or other financial institution.  In some states (, you can even name transfer-on-death beneficiaries with respect to certain types of real estate and even vehicles (

There are some benefits to this type of planning.  Being cheap and relatively easy is certainly a nice benefit.  Planning this way will also help you to avoid probate provided your beneficiaries outlive you.  Assets transferring in this fashion will generally not be subject to the claims of your creditors at death.  Also a very nice benefit.

Planning this way isn’t all sunshine and rainbows though.  First, this works for many mainstream assets like bank accounts, investment accounts, retirement accounts and life insurance.  It does not work so well for assets like small business/partnership interests, most personal property, and real estate in many states/instances.  This type of plan probably does not work well for parents with ankle-biters as they may receive their “inheritance” at the age of majority in your state.  Please note that to the extent you have (or later create) a Will, your POD/TOD/Beneficiary designations will take precedence over anything you say in that Will.

Also, you must be very careful about your financial institution’s default rules for what happens if a beneficiary (perhaps one of your children) does not survive you.  Does your institution pay to the surviving beneficiary or do they pay to the deceased beneficiary’s descendants?  If you plan this way, you must review the plan if a beneficiary dies before you.

A significant problem with this type of planning is that it does not deal with your incapacity.  If you become incapacitated while using this planning method you are stuck with the default (i.e. guardianship) rules we already covered.

For those of you with an estate large enough to trigger federal or state estate tax, this type of planning will do nothing to reduce that burden on your beneficiaries.

3.  Joint Ownership (with right of survivorship).

Owning assets jointly with someone else is another way to informally plan an estate.  Many of you probably already engage in this sort of planning by owning assets jointly with your spouse.  For jointly owned accounts, the death of one owner will automatically make the other person the sole owner – the Last Will and Testament of the first to die is irrelevant as to jointly owned assets.  Further, incapacity of one joint owner will allow the other joint owner to have full access.  Planning this way works well for real estate, financial institution accounts (except qualified accounts like IRA’s and 401k’s), and many forms of personal property.

While this works well for married couples, most people are reluctant to name their children as joint owners of their property (privacy and being subject to their children’s creditors are big reasons).  As a result, the death of the second joint owner will result in probate unless other steps are taken.  If you have an estate tax problem, planning this way may not be your best bet.  Of course, this planning method needs to be combined with something more to deal with incapacity of both owners or the surviving owner.

Formal Estate Planning

While informal planning may work in some cases, it comes with gaps that need to be filled.  That’s where formal estate planning comes in.  Every plan should consist of a minimum set of documents**.  Here they are and what they do (at a very basic level):

A.  Last Will and Testament.

Although a Will can accomplish many tasks, the primary one is to direct the disposition of your assets at your death.  For parents with underage children, Wills can often be used to designate who will raise your children and how/when their inheritance will be distributed.  The issue of guardianship for minors is probably the most common reason I see for people making their first estate plan.

Although a Will is an essential component of every formal estate plan, it not the most effective tool for dealing with two of the other very common reasons people make a plan – probate avoidance and estate tax reduction/elimination.  Since the term “probate” is such a big concern for many people, let’s take a minute to discuss what it is and why a Will can’t help you avoid it.


Probate is the process of validating your Will at your death, ensuring your valid debts and expenses are paid and distributing your net estate in the manner you direct (with limitations).  While many people believe having a Will avoids the probate process, quite the opposite is true.  In order for your Will to be validated, it must be filed in court and a judge must say it meets all the technical requirements in your state – an essential element of the probate process.  If it fails to meet those requirements, your Will is invalid and your estate will be administered in accordance with the state default rules mentioned above.

There are many reasons people don’t want their estates to go through probate.  The three most common are:  1. the probate process is very public – your Will, heirs, asset information, etc. are all open to inspection by anyone who wants to look; 2. the probate process takes a relatively long time to complete (varies by state) which tends to tie up your assets; and 3. the probate process can be expensive.  If you want to know more about probate, this should get you started:

You should note that only those assets owned by you in your individual name are subject to probate.  Anything with a beneficiary, TOD/POD or jointly owned (with right of survivorship) will bypass the probate process.  Further, small estates may not need to be probated.  The definition of a small estate varies across the country – see here to check your state’s rules. (

B.  Power of Attorney for Healthcare.

This document is primarily designed to appoint an agent to make medical decisions on your behalf if you are incapacitated.  Without this document, a court proceeding will typically be required to give someone the legal authority to act on your behalf.  This document typically begins upon signing and terminates at your death.  If your state requires certain language to be “durable” (i.e. survives your incapacity), you must make sure that language is incorporated.

C.  Power of Attorney for Property.

This document allows an agent to manage your business and financial affairs.  As with the healthcare power of attorney, failing to have this document will likely result in a court proceeding to allow someone to pay your bills, manage investments, and do all things asset related.  Your agent’s powers typically begin upon signing and end at your death.  If you are uncomfortable giving your agent that level of immediate power, you may want to consider making the document effective upon the happening of some future event (e.g. your incapacity).  Again, don’t forget to include durability language if required by your state.

D.  Living Will.

Although included in the basic set of documents list, this document is considered optional to many people.  The document is designed to deal with the specific issue of end-of-life care (e.g. life support machines).  If your healthcare power of attorney is broad enough to adequately cover life support machines and end-of-life care, you can consider skipping this document.  However, if you would like to give your agent and family specific instructions for end-of-life care a living will should be considered.  If you aren’t sure whether to include it, do a little research on living wills in your state.  Here is Illinois’ form document to give you a flavor for what one says.

As mentioned, using a Will as your primary post-death planning tool will leave a couple significant gaps – requiring probate and failing to efficiently deal with estate tax.  If these issues are a concern for you, the following additional document should be considered:

E.  Revocable Living Trust.

A revocable living trust is a document you create during your lifetime to hold your assets.  You are typically the trustee of the trust during your lifetime which ensures that you maintain full control of the trust assets.  If properly used, this document will become the primary vehicle to manage your assets both during your lifetime (even during incapacity) and at your death.  Once an asset is transferred to your trust, you technically no longer own it.  Instead, your trust owns the asset and you are merely the trustee.  This is the reason any assets transferred to your trust avoid probate – remember, only assets you own in your individual name at death are subject to probate.  If you own real estate in multiple states, a trust is a great way to avoid having to probate your estate in each jurisdiction.

Estate Taxes.

If you are married, a properly prepared estate plan using trusts can reduce and often eliminate the need for your heirs to pay estate tax.  Before you prepare a plan to deal with estate tax issues, you must first determine if you have an estate tax problem – most people don’t.  If your estate is less than $5,250,000 (2013 exemption amount which will adjust over time), no federal estate tax will be due at your death.  If you are married, you can pass up to $10,500,000 to the next generation without triggering estate tax by filing the proper documents at the first spouse’s death.  Please note, your “estate” consists of anything in which you had an ownership interest at the time of your death including jointly owned accounts, accounts where you’ve named a beneficiary, IRA’s, 401k’s, life insurance, etc.  I bet life insurance surprised you.  Although the benefits are generally not income taxable to the beneficiary, they are counted in your gross estate for estate tax purposes.  For more detail, see here

Even if you don’t have a federal estate tax problem, you must also determine whether you have a state estate tax issue.  Some states collect estate tax while others don’t.  If your state collects the tax, the exemption amounts are going to be lower than the federal government.  To see your state’s rules, start your research here

A final note on estate tax . . . you can pass an unlimited amount to your spouse at death.  If you are single with an estate above the state or federal exemption amounts, there are solutions but you’ll need to get more creative.

DIY Planning.

I suspect many of you are like me and enjoy doing things yourself – both for the joy of accomplishment and for the money savings.  If you plan on doing your own estate plan be very careful.  I have been practicing law for more than a decade – in the estate planning arena for most of that time.  In that time, I have administered several DIY Wills.  None of them accomplished what the testator intended.  Many had fatal flaws leading to their outright rejection in court.  All of them led to above-normal administration costs.

This biggest problem I have with DIY planning is that problems are often not discovered until it’s too late.  It’s not like improperly fixing a leaking faucet.  If you mess that up, you’ll know.  You can always try again or call a professional.  Estate planning documents are a bit different.  You may not know there’s a problem.  If there is a problem, you’re probably already dead or incapacitated and can’t fix it.

If you decide to write your own, please at least consider having them reviewed by a professional.


* Bonus points if you know who that is without looking it up.

** Special circumstances may require additional documents.  Those circumstances and documents are beyond the scope of this post.

Note from jlc:

Prob8 practices law in Illinois. If you would like to talk to him about engaging his services, say so in the comments and I’ll connect you thru email.


My pal Darrow just put up an excellent post on this stuff, too. It is especially worth reading if you are considering doing this as a DIY project: Do it yourself Estate Planning.

Addendum 2: Curious as to what your taxes might look like in retirement? While everybody’s situation will vary, here are two excellent posts from my pal Jeremy detailing his own tax strategy as he travels the world as an early retiree: Never pay taxes again and his actual 2013 tax return.

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Important Resources

  • Talent Stacker is a resource that I learned about through my work with Jonathan and Brad at ChooseFI, and first heard about Salesforce as a career option in an episode where they featured Bradley Rice on the Podcast. In that episode, Bradley shared how he reached FI quickly thanks to his huge paychecks and discipline in keeping his expenses low. Jonathan teamed up with Bradley to build Talent Stacker, and they have helped more than 1,000 students from all walks of life complete the program and land jobs like clockwork, earning double or even triple their old salaries using a Salesforce certification to break into a no-code tech career.
  • Credit Cards are like chain saws. Incredibly useful. Incredibly dangerous. Resolve to pay in full each month and never carry a balance. Do that and they can be great tools. Here are some of the very best for travel hacking, cash back and small business rewards.
  • Empower is a free tool to manage and evaluate your investments. With great visuals you can track your net worth, asset allocation, and portfolio performance, including costs. At a glance you'll see what's working and what you might want to change. Here's my full review.
  • Betterment is my recommendation for hands-off investors who prefer a DIFM (Do It For Me) approach. It is also a great tool for reaching short-term savings goals. Here is my Betterment Review
  • NewRetirement offers cool tools to help guide you in answering the question: Do I have enough money to retire? And getting started is free. Sign up and you will be offered two paths into their retirement planner. I was also on their podcast and you can check that out here:Video version, Podcast version.
  • Tuft & Needle (T&N) helps me sleep at night. They are a very cool company with a great product. Here’s my review of what we are currently sleeping on: Our Walnut Frame and Mint Mattress.


  1. RobDiesel says

    This post is worth gold! It’s a most excellent starting point for people like me who want to get their feet wet and start poking into this before it’s too late.

    Many thanks to Jim and Prob8 for the post.

    Question – if I’m all setup in one state and then move to another and kick the bucket in the new one prior to “state-adjusting” my will (I call it will, but I mean whatever estate planning that might require adjusting), what are the consequences?

    Is there an easy way to ‘convert’ my planning from one state to another, or do I just use my existing planning as a template with a new estate lawyer in the new state?

    • Prob8 says

      Wow, Rob, high praise indeed. Thanks!

      Because estate planning laws differ from state to state, you should consider having your plan reviewed once you move. It could be that your documents meet the technical requirements of your new state. If so, you may not need to do anything. If not, you’ll want to update the documents to be sure they are effective when you need them. For things like Wills and Powers of Attorney your new attorney will likely just prepare new ones. For trusts, it depends on what needs to be fixed.

      If you die in the new state and your documents do not meet their requirements (i.e. you haven’t “sate-adjusted” them), you are most likely back to the default rules of the new state. This is probably not a good result. Of course, you might get lucky and find there is a law that says documents valid where you signed them are valid in the new state. We have such a law for Wills here in Illinois – but I would not rely on that.

  2. Shilpan says

    Death and taxes are unavoidable.. It always makes sense to learn about ways to keep your assets from being subject to gruesome probate process so that your loved ones can avoid lengthy legat battle.

    Kudos to Jim and Prob8

  3. Reepekg says

    I’m in the Chicago suburbs and would be interested in getting Prob8’s card. I won’t need it right away, but I figure once I hit 50% to FI and have a kid in the next 3 years or so… it could come in handy.

  4. Jim Camasto says

    A very helpful and informative article! I’m also in the chicago burbs, and would like Prob8’s contact info. With a recent death in the family, I may be in need of consultation/services.

  5. brighteye says

    Ha! I liked the swearing in the disclaimer 🙂
    I only skimmed through the article, since I live in good old Europe. But I will show the article to my brother (who is a lawyer) and ask him “So which points of this are relevant where we live?”

  6. Danny says

    Thanks Jim for giving Prob8 the opportunity to write about this topic. I definitely agree that it’s an important topic that you don’t usually see discussed much in FI blogs (or one’s that are clearly written by a professional no less). Also, thanks Prob8 for taking the time to talk about you craft, and make it as simple as possible for folks such as myself. Never thought I see an Oda Mae Brown reference in an FI blog…well played Haha!

    That said, I do have a question. I know that you briefly went into revocable living trusts, but I wanted to get your take on irrevocable living trusts….and, in your opinion, which you think is the better of the two.

    Appreciate it and thank you both again!

    • Prob8 says

      Hi, Danny and good question.

      I think of irrevocable trusts much in the same way I view life insurance. That is, don’t get it unless you need it for a very specific purpose.

      For general estate planning concepts, the revocable trust works well. This type of trust grants the creator (called a “Settlor”) maximum flexibility and control over the assets. With this type of trust you can be the primary beneficiary and change or revoke the document over time.

      You become very restricted when you create an irrevocable trust. You should expect that the document cannot be changed or revoked once it is signed (some state laws allow for limited exceptions). These are sometimes used to deal with large estate tax burdens (an irrevocable trust is created to hold a life insurance policy where the beneficiaries are the Settlor’s children and someone other than the Settlor is the trustee) or to create some creditor protection for the beneficiary.

      I typically use revocable trusts unless there is some special need for an irrevocable trust.

      Hope that helps.

  7. TallMike says

    Thank you for the time and effort that went into writing this. I am very grateful; as a father of young children I’m in the process of getting this established now (overdue, I admit). I was particularly impressed by the specific example of default rules in Illinois, which I found motivating.

    Thanks again for writing well about a complex and important topic.

    • Prob8 says

      Yeah, having young children is a good reason to prepare your first estate plan. That’s what did it for me. I did not want various in-laws arguing over who would raise the kids if I died. I also wanted to be able to control when my children’s inheritance would be distributed to them. Good luck!

  8. 2l2r says


    Very timely – thanks for this, couple of questions if I may.

    1/ In your experience what is the most common way that parents deal with money going to children. Distributed over time, when they reach a certain age ( before that age for emergencies etc) ? . I currently have 2 children in College.
    2/ Revocable Living Trust – what would the expected cost be of having this done professionally, as it seems this is the best way to cover all the issues. Any gotcha’s or things to watch out for?.


    • Prob8 says

      Good questions, 2l2r.

      As for parents with young children there are many ways to deal with how to handle the inheritance. Assuming no issues in the family, the most common distribution method I see is where the entire financial pot is equally divided amongst shares created for the children at the second parent’s death. Those shares are then held by a trustee until the children reach the magic age or ages for distribution. Some parents go with one age (say age 25 or 30 or beyond) while others dole it out at multiple ages (1/2 at 21 and 1/2 at 25 for example). Until the child reaches that age, their share is held with instructions that the trustee pay for the childs health, education, maintenance and support in the trustee’s discretion. The goal is to have the money available if the child has a legitimate need (determined by the trustee) while protecting the inheritance from being completely spent while the child is getting his or her financial sea legs.

      Revocable trusts may or may not be the best way to handle what you need. You’ll have to decide how you feel about the probate process and whether estate taxes are an issue for you. As for costs, they are all over the board depending on what you need. In my area, many lawyers charge between $500 and $1000 for basic wills, powers or attorney and living wills – that’s a pretty wide range for standard documents. Trusts are a bit more difficult to peg. If you just want to avoid probate (and can’t accomplish that easily with another method), a simple joint trust might work. If you need estate tax planning, things get more complicated and, unfortunately, more expensive. In my area, I’ve seen trust plans range from between $1,500 to $4,000.

      Don’t be afraid to ask your lawyer about costs up front. They should be able to get you into a ballpark range – assuming no abnormal drafting or other work.

      If trusts are to be considered, you should have a full understanding of why the lawyer thinks you need them and whether your goals can be achieved without incurring the extra cost.

      As for things to watch out for . . . you don’t want to be surprised on cost so ask up front. Also, make sure you understand what your documents will accomplish and what you need to do to make them work. For example, trusts will require you to change the ownership of assets to the name of the trust.

      Hope that helps.

  9. Mad Fientist says

    Prob8, great post! Jim, brilliant idea getting Prob8 to write a guest post!

    I too had the pleasure of meeting Prob8 at FinCon and I must say, if I lived in Illinois, I wouldn’t think twice about hiring him to do my estate planning. Based on the comments he leaves on my site and here on Jim’s, he’s obviously an intelligent guy and after having had lunch with him, I imagine he’d be great to work with on this type of stuff.

    I’m ashamed to say it but it is definitely a part of financial planning that I’ve neglected up until this point so thanks for bringing it to my attention again. Prob8, when are you moving to Vermont to help me out 🙂

    • Prob8 says

      Thanks for the kind words, MF. As soon as you can make Vermont’s winter temperatures hover in the mid-70’s I’ll make my plans to move there. Of course, you’ll be in Thailand by then.

  10. BD says

    I, too, live in Illinois. Funny thing is I just thought about this yesterday, and asked somebody for some contact info of 2 lawyers in my area. And then I saw this post today.

    I wanted to have a very simple will so I’m trying to look for a cost effective way to do it. It would be great if you can contact me.

  11. Jeff says

    Prob8, you’ve done a great job of providing one of the best summaries of estate planning I’ve ever read. It can be such a complex subject and you have really distilled it into a very understandable and readable post.

  12. Charles@gettingarich says

    This is a great detailed post. If you have a family you need a revocable living trust with a health care directive so that people don’t argue over your care. James Gandolfini (Tony Soprano) didn’t set up trusts do his son will lose $35 million in taxes for something that would’ve cost a few thousand to set up.

    • jlcollinsnh says

      Hi T-Mike…

      I don’t know what’s generally considered “good form” but around here I’m happy to have links to interesting and relevant stuff. So thanks for the link!

      Interesting stuff and I agree: “total badass on the frugality and estate planning fronts”

      But I do have some reservations on the investing front. Like many writers on this one was short on some key details. Like how much money did his parents leave him to begin with? 187.6m is a huge sum, but without knowing where he started it is impossible to judge investing performance.

      If the article is accurate, he was working with a couple of major liabilities:

      1. He was a stock picker and in all but the very, very rarest cases that’s a strategy that underperforms.
      2. He used a stockbroker. That adds a HUGE layer of wealth draining expenses.

      On the other hand, it sounds like he held for the long-term and, living to 98, his long-term was very long indeed. That alone gets you a huge pile at the end.

      Still, I can’t help but wonder how much more he’d have had for his causes if he’d used low cost index funds and saved the money on those WalL Street Journal and Forbes subscriptions. 😉

  13. Jared says

    Great topic! This is an important area that is neglected by many personal finance blogs. I’m still trying to wrap my brain around this, but here are some questions rolling around in my head after the second read-through:

    1) Without going through the hassle of creating a trust (or something more exotic), are POD/TOD designations and joint ownership the only “normal” tools for avoiding probate? (I’m trying to identify the simplest key pieces to look at for an “average” case)

    2) If I understood correctly, POD/TOD designations aren’t generally subject to claims from creditors. So if someone has debt when they die but the vast majority of their assets are in accounts with POD/TOD designations (I’m thinking 401k, taxable investment accounts, etc.), is the creditor effectively screwed at that point (i.e. they just plain don’t get what they’re owed)?

    3) The article mentioned that a component of probate is essentially validating one’s will. Does that part of the process only happen upon death? If so, how do you know that your will is sufficient while you’re still alive? Or do you really just have to have faith in your attorney’s competence? 🙂

    4) (Last question, I promise) For average folks with a decent amount of assets in investment accounts and, say, one reasonably priced house, do people often just rely on documents A/B/C/D outlined in the article, and POD/TOD designations where possible (i.e. for all the investment accounts)?

    • Prob8 says

      Hi, Jared. Good questions. I’ll address them in the order presented:

      1. You got it . . . those are the “normal” tools. Some people also engage in gifting to avoid owning certain assets at death. If you gift, please keep in mind the annual and lifetime gifting limits set by the IRS.

      2. That’s generally the result for unsecured creditors. For secured creditors (e.g. mortgage or car loan) they can always go after their secured collateral. If the collateral is not enough, they become unsecured for the balance. I should have been a little more clear in the post but it was already way too long.

      I suppose there could be some state law that changes the rules for unsecured creditors but that would be odd. Probate laws are designed, in part, to settle claims against a decedent. An unsecured creditor’s remedy is to make a claim against assets in the “estate.” If there is no estate (due to POD/TOD for example), unsecured creditors are generally out of luck. I’ve seen this happen several times.

      3. Yes, that happens only at death. If you hired a lawyer, you will be relying on their competence to a certain extent. There’s no guarantee he or she will get it right of course. You can reduce that risk by getting someone that primarily practices in the estate planning arena and not, for example, personal injury or bankruptcy law. Keep in mind that if they mess up, they’ve got malpractice insurance.

      If you want to double check that your will meets the minimum requirements, you can do a little digging on your state’s requirements – google can help. You can also start here:

      4. My clients are all over the board depending on what they want to accomplish. Many have selected the documents you mention when looking for the simplest and cheapest option – assuming they don’t have an estate tax concern. It works very well and probate can be avoided in many cases using the POD/TOD/Beneficiary designations – just make sure you’ve thought about how your funeral/burial will be paid for. It helps if your state allows a TOD to be placed on the deed. If not, going through probate on some of your assets is not the end of the world. Annoying for sure, but not something to lose sleep over in my opinion.

      Thanks for the questions and good luck.

      • Jared says

        Thanks for the detailed responses! I feel like I’ve got a handle on some of this now (whereas I really knew nothing before reading your article and these comments/responses). I really like the idea in #3 about kind of double-checking your will for your own peace of mind.

  14. May says

    This was very interesting. One day — hopefully far off in the future — I will have to deal with my parents estate. I was thinking it would be pretty straight forward but they have recently purchased a property in another country and I am not sure how that would be dealt with so I think it might be time for us to visit a professional advisor. Thanks for the information.

  15. Done by Forty says

    Thank you, thank you for this post. My wife and I were on the path of DIYing our will documents, and now we will heed your advice and work through a professional. For someone like us (married, with no kids), could you estimate what kind of costs we should expect from a professional?

    • Prob8 says

      Hi, Db40. I’m glad you found some value from this post.

      I discussed this a bit in my response to 2l2r above but, in short, it depends on what you want to accomplish and who you hire. For 2 adults with no kids, I don’t think I would spend a whole lot of money on a fancy estate plan. A basic plan in my area (Southern Illinois near St. Louis) should cost around $500-$700 but I’ve seen them as high as $1,000 on rare occasions. Shop around a bit and don’t be afraid to ask about experience level and cost. Someone who does this often should be able to get you in the ballpark.

      The basic documents should adequately serve your needs (wills and POA’s). Those documents coupled with joint ownership (with right of survivorship) and making beneficiary designations on retirement accounts and life insurance will put you in a good position to deal with most issues. Of course, this assumes you want your spouse to inherit the estate 🙂

      Good luck!

  16. Darrow Kirkpatrick says

    Superb post Prob8. You managed to summarize, in one reasonable read, what most of us need to know about estate planning. This is a great overview, with excellent references for further research. And I agree this isn’t an area for DIY, as far as the content goes. As a frugal, non-legal type, I’ve generally drafted a will using a software program, then had a local attorney review it. Thanks again!

  17. Patty Mac says


    Great post & primer on what most people need to know about estate planning.

    Jim – Big fan of your blog & also a fellow U of I alum. Would be interested in Prob8’s contact info as I’m a fee-only planner in the area and always looking for like-minded professionals to refer folks to.

  18. Ninochka says


    Great blog. I learned a lot of good practical stuff and I’m on my way to an earlier retirement in a big part thanks to your blog.
    I would like to connect with Prob8. I live in Chicago but would prefer to work with prob8 to set up my estate docs.
    Wish I can be of some help for your blog.

    • jlcollinsnh says

      Thanks Ninochka…

      ..the best way to help is to simply pass it on thru your social media.

      I’ve sent Prob8 a note letting him know you are interested.

  19. Michivegan says

    My wife and I were able to get our Wills and durable POAs done for free through our employer’s EAP (employee assistance program). The program gave us several names of estate planning attorneys in our area, we chose one and were done in two visits. For our house it was a little trickier since I owned it before I met my wife. We’re in Michigan and the attorney suggested a Lady Bird Deed/aka Quitclaim Deed which effectively transfers ownership to her on my death (I guess it’s effectively a TOD). Since this wasn’t covered by the EAP we owed a small fee (around $140) for the Deed and filing with the county which his office handled. It was very simple and I would encourage others to check for this EAP benefit first as it could save you hundreds.

  20. Dianne says

    Hi JL,
    I am in IL and would like to get in touch with Prob8 as my husband and I are redoing our Estate Plan.

    Also I had a question for you and I see you aren’t taking them right now but thought I would add it here just in case you might be able to point me in the right direction.

    First of all love the simplicity of your ideas and have purchased your book for others but don’t understand why people like to make things more complicated than they need to be.

    Question: We just retired, unfortunately prematurely for my husband who has been diagnosed with a terminal illness but luckily we have saved and should be okay. We have been 100% in stocks and now are making the transition to 80/20. The part I don’t understand is how to divvy everything up because it can’t be 80/20 across all accounts because of the nature of them. I am a little confused-am I converting whole accounts like taxable ones that we will live off of first, into bonds?

    About 70% of our worth is in 401ks to be converted into Trad IRA at some point or ROTH IRA. 15% is in ROTHs and 12% in a taxable trust.

    Thanks for any direction and I appreciate all your hard work.

  21. Meredith says

    Hi. I live in Illinois and have been looking for an attorney to help with estate planning. I’d really appreciate Mr. Prob8’s contact information. Thanks!

  22. Prob8 says

    Another quick note related to POD/TOD planning.

    Companies often vary as to how they let you plan with POD/TOD. For example, some companies will not let you put a beneficiary on a jointly owned account – I’m lookin’ at you Vanguard! In those, cases, you may want to consider other solutions if you are relying on POD/TOD as your primary estate planning tool (although you should have estate planning documents regardless!)

    As with any plan, periodic updates are necessary. For example, if you have named a primary and secondary beneficiary on an account, your primary will need to update the beneficiary designations at the first death. Get in touch with your plan administrator if you have questions as to how beneficiary designations work.

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