Like many large companies, my employer offers a legal plan as part of our benefits package. At open enrollment in October or November, employees can sign up for the next year. Among other things, the legal plan covers basic will and trust. I signed up for one year at the last open enrollment to take care of our simple estate planning. I’m writing down our experience in using the legal plan for this purpose for others who may be looking to do the same.
The legal plan is offered by MetLife’s Hyatt Legal Plan. It costs about $200/year. Unlike other benefits, the cost is deducted from the paychecks after tax. According to Hyatt Legal Plan, they offer the plan to employers at no cost. In other words there’s no employer subsidy.
We don’t have complex estate planning needs. I thought of doing it using software like Nolo Quicken WillMaker Plus & Living Trust. I even bought the software a few years ago. I just didn’t have the confidence to trust it completely. I decided to pay a little more to a human lawyer for the peace of mind.
The legal plan has a directory of lawyers. You can search by subject area. I found a few names nearby. Then I picked one with good reviews on Yelp. For our simple needs I figured any lawyer would be able to do it.
Standard Package
We made an appointment with the lawyer for an introduction meeting. After reviewing the questionnaire we filled out before the meeting, the lawyer explained her standard estate planning package:
- Will for each of us
- A joint revocable living trust for both of us (we live in a community property state)
- A trust certification, which is basically an outline of the trust
- Transfer deed to put our home under the name of the trust
- Assignment to put everything not explicitly titled to the trust under the trust
- Durable Power of Attorney for each of us
- Advance Health Care Directive for each of us
The legal plan covers everything except the Assignment, notary fees, and recording the deed. I told the lawyer we can record the deed ourselves. That saved us $100. We still paid $500 extra for the Assignment and notary fees.
The lawyer said the package would otherwise cost over $3,000. I doubt the legal plan really pays that much to the lawyer given that we only paid $200 for the legal plan and there is no employer subsidy. The extra fees for services not covered by the legal plan provide additional profits to the lawyer. The lawyer also has a chance to get future business from new customers brought by the legal plan.
After we signed the engagement letter and paid 1/2 of the agreed fee, the lawyer gave us another list of questions for how we’d like to distribute our assets after we die, who we would appoint as the successor trustee to carry out the distribution, etc. We answered those questions over email. A few weeks later we signed the documents in her office.
We finally got estate planning off our to-do list. It has stayed on our to-do list for years. If paying a moderate fee can motivate you to finish it, it’s worth it.
Could we have done the same with software? Possibly but you never know. As a one-time cost, $700 all-in isn’t too bad even though it’s 10x the cost of software.
Could we go without the revocable living trust and just title everything as Joint Tenant With Right Of Survivorship? Possibly. As I understand it, the trust will be helpful after both of us die. The benefits are marginal when one of us is still living. Because it’s part of the standard package, we just went along.
Recording The Deed
The lawyer prepared the deed to transfer our home from our own names to the trust. I wanted to record the deed ourselves to save a little bit of money and also learn the process. I looked up instructions from the county’s office. The process is very straight forward. Basically you just mail it in with a check. Two weeks later the deed came back in the mail with the official stamp.
Add Trust to Insurance
One thing I didn’t know before was that after your home is put under the name of a trust, you should add the trust to your homeowner’s insurance and your umbrella policy. I was glad I read the lawyer’s post-signing instructions.
I called the insurance companies. They were all very familiar with it. The homeowner’s policy charged a small extra premium for adding the trust as an additional insured. The umbrella insurance didn’t charge.
Funding The Trust
Putting brokerage accounts under the name of the trust was more involved. I’m covering it in part 2 of this series: Switching Brokerage Account Into A Trust: Fidelity, Vanguard, Merrill Edge.
Say No To Management Fees
If you are paying an advisor a percentage of your assets, you are paying 5-10x too much. Learn how to find an independent advisor, pay for advice, and only the advice.
indexfundfan says
Putting assets in the trust is critical in CA because of the high probate fees. In some other states, it would be helpful (but not critical) to have a trust because of the ability to control how the assets are managed.
Vikas says
Hi Harry
I have my Will done but not the estate planning. What benefits can estate planning provide?
Regards
Vikas
Harry Sit says
A will is part of your estate planning. We hope the revocable living trust will help us avoid or speed up probate. The Durable Power of Attorney will help us when one of us is alive but doesn’t have the mental capacity to make decisions. The Advance Health Care Directive expresses our preference for how we’d to be treated when we are terminally ill.
David says
I have a plan very similar to yours Harry. I have to pay around $250/year for this service through Hyatt Regency Plan. I’m thinking about doing this trust sometime this year. However I’m still a bit confused on the fees aspect.
Quick questions. How much did it cost you in total for the package that you got with your lawyer? Is the $200/year fee to get the discounted fee with the lawyer?
Thanks Harry for the informative post!
Harry Sit says
$200 for one-year subscription to the legal plan, which I likely won’t use for anything else and I won’t subscribe again for another year. $500 paid to the lawyer for services not covered by the legal plan. Total $700.
David says
That’s awesome price! I didn’t take advantage of this plan last year when they offered. I will definitely sign up for this legal plan once it becomes available.
Not sure if you know the answer to this but for revocable trust, do you know how much it cost if we want to revise it? …say add another beneficiary to the trust? Or Does the fee price varies depending on the lawyer?
Harry Sit says
I don’t know. Maybe when you need to revise it you can sign up for another year of the legal plan. Of course verify whether the legal plan covers revisions as well as creation. Outside the legal plan, it will vary depending on the lawyer.
John says
Harry,
I did the living trust without an employer plan and it cost me $750 so it’s comparable. I did not understand the benefit of adding the trust to Insurance. Isn’t insurance supposed to cover your needs when alive and the Trust to avoid probate when you are dead. How would umbrella work when you are sued and the umbrella policy is in the name of the trust and not your name?
Harry Sit says
Adding the trust as an extra named insured does not replace you on the policy. The home is now owned by the trust. If the home burns down, but the trust isn’t named as an insured on the policy, the insurance doesn’t pay. Although you as a person are named on the policy, you have no insurable interest in the home because you don’t own it. If someone slips and falls, the trust as the property owner may be held liable. If the trust isn’t named as an insured on the policy, the insurance doesn’t cover it. Adding the trust to the umbrella policy extends the additional liability coverage to the trust.
SS says
Hi Harry,
We did the same thing with Hyatt Plans a few years back. Found an attorney that specializes in trusts through the network. He claimed that he usually charges $2K for the services, but we didn’t pay anything besides the notary fees and the $205 for the Hyatt Plan. We did everything you did *except* for the “Assignment”. What was your reason for doing that? In my state, CA, everything above $150K goes into probate. If our estate is below $150K we don’t have to worry about it was my thinking.
One more note, I believe the recommendation is to put the trust as life insurance primary beneficiary. Admittedly, I’ve been lazy about doing the research behind that! Thanks for the reminder about the home/umbrella insurance as well! I had forgotten about that.
Harry Sit says
The assignment just says we are putting into the trust everything that doesn’t have a title. It’s supposed to further push down the value of the estate. It’s a one-page document the lawyer wanted to charge extra for. I didn’t fight it.
Jules says
I have a similar plan available at a similar price through my company but it requires signups in one month of the year, and I found out about it after signups had closed. Instead of waiting another year to signup only to be able to use it in 2019, I paid a local lawyer $1400 to get a will and trust plan done for my wife and I here in the Pacific Northwest. From what I could tell, this was roughly the market rate, maybe slightly above average, for the service in the city I live in.
I decided not to wait an additional year and a half because I just had my first child and wanted to get it done with. Updates to the plan, such as adding beneficiaries or additional children, are free, and the whole thing came packaged beautifully and professionally, including thumb drives with copies of everything. The attorney answered all my questions patiently and adequately and came highly recommended by the head of a charitable organization I donate to that he also heads up. So even if I overpaid a bit, I am happy the money goes to support a guy that is completely on board with my charitable goals.
Now to get term life insurance done …
Sanjay says
Harry, Thank you for pointing out the issue of adding the Trust to the Home and Umbrella insurance.
Related question about the actions and cost when one or all trustees pass away. This might be useful to plan ahead of time (even though it is not a pleasant topic)
1. Actions/cost when one of trustees passes away – where the successor trustee takes over.
2. Actions/cost of executing the trust and distributing the assets held by Trust after the primary trustees pass away (e.g. both spouses).
I am guessing that that item 2 is more expensive (even after assuming a non-complex asset/trust). How much more expensive are the attorney fees and other costs (ignoring taxes) of setting the estate? Probably more expensive than setting up the trust? If so, perhap should that be the area to optimize for cost saving (for the sake of beneficiaries) ?
Harry Sit says
I have no experience in either. My understanding is when both spouses are co-trustees with independent authority (i.e. only requires one signature to act on behalf of the trust), after one spouse dies the other spouse becomes the sole trustee. The successor trustee only comes in after both spouses die. A guest post next week will talk about settling the estate. Because trust assets don’t go through probate I would think distributing trust assets would cost a lot less than dealing with non-trust assets.
jci says
Your comparison of legal plan to software is off because presumably you’d incur notary fees both ways. So diff is closer to $500. The notary fees are a big rip-off. They check your ID once, then you sign a bunch of documents for a charge of $200.
I completed my mom’s estate plan using WillMaker and our estate plan with Hyatt legal. I would say it’s similar to using turbo tax vs. seeing a CPA. Unless you have something unusual, the software is more than adequate and you will learn a thing or two about your state laws in the process.
Harry Sit says
You are right about the notary fees for documents generated by software. The all-in difference is more like 2-3x not 10x. I also agree with you on the notary fees. I’m curious if you can negotiate with an independent notary for a volume discount when you use software. If I must do this every year I would definitely use software, like I do with taxes. For a one-time event, I’m OK with paying 2-3x more to have a lawyer do it.
Thrifty Femme says
I use my bank for notary services. Is there any reason my bank couldn’t notarize these types of documents?
Harry Sit says
If your bank agrees to notarize the documents you generated with software, sure, just ask them. The lawyer I used insisted that I pay her to notarize the documents.
Indexfan says
Per my agent my umbrella policy cannot add the trust on the insurance.
Any thoughts or suggestions Harry ?
Thanks
Harry Sit says
Call the home office again? I have GEICO. They treated it just like routine business.
Kent says
what happened with your title insurance? I’ve read conflicting things online such as your title insurance no longer covers the house once ownership goes to the Living Trust, or that you need to call them and get a rider to the policy.
Dan Flaherty says
Hi Harry,
Curious as to the function of the will when you have a living/revocable trust. Are the two documents mutually exclusive, or can/should you have both?
Thanks…
Harry Sit says
You can and should have both. The trust only holds assets. It doesn’t express other wishes, such as who you’d like to appoint as the guardian for your minor children or what to do with your remains. The will can also serve as a backup for assets that you didn’t put into the trust.
Dan Flaherty says
Thanks. Is the “Assignment” line item in the standard package thevsame thing as a pour-over will?
Harry Sit says
It’s not the same thing. Nolo Press explains it better:
– Assignment
– Pour-over will
Jim Blase says
Oh my goodness. You paid $500 for the “assignment?” At most our law firm charges $75 for this!
And we charge $0 to notarize the documents.
And we charge $0 to record the deed for the clients.
Harry Sit says
I guess that’s how they make up for the low reimbursement from the legal plan. Join the legal plan to get clients and then charge extra for small things not covered by the legal plan. Do you participate in a legal plan? What do you charge for a simple package like this outside a legal plan?
VIn says
After the Trust is created, do we need to keep the legal plan every year?
Wondering if we need to tie up any loose ends, can we has it out with the lawyer without the legal plan?
thanks
Jules says
You might need to add kids to the trust in the future. My lawyer does that for free.
Sam says
You wrote: “As I understand it, the trust will be helpful after both of us die.”
Why is it helpful AFTER both die? Would you please explain more? Thanks, Harry.
Harry Sit says
A successor trustee takes over and distributes the assets according to the terms of the trust. Without a trust, either you have an executor go through the court to settle the estate or you designate a beneficiary for each account. Designating a beneficiary still works if you have only one beneficiary. It’s more difficult to distribute to multiple beneficiaries because your accounts and your desired percentages for each beneficiary don’t necessarily line up well.
John says
Hi Harry,
After recording your deed, did you need to contact the title insurance company? Does your title insurance company require that the trust buy a new policy?
Thanks,
John
Harry Sit says
No, I didn’t. Maybe I should have. The property in question has been sold. I’ll make sure to title any new property to the trust and have the title policy issued in the trust’s name.
Gabriel says
Can we put the property (home) in trust if you still owe mortgage on that property. My understanding is that the title of the property is still with the lender until the mortgage is paid off. So putting the trust is even an option here.
Harry Sit says
You can put the home in a trust if you still have a mortgage on it. The title of the property isn’t with the lender. The lender has a Deed of Trust, which is a separate document from the deed that you have.
John says
I heard you need to add the trust to your home insurance once you put your house in the trust.
Gabriel says
Hi Harry, the law firm I was checking gave me this fees below. Is this reasonable. You mentioned you recorded the deed yourself and is that something straight forward and can be done by ourselves and say no to the attorney.
Details of third-party fees.
As a general rule, Notary and witness fees are $150 per person.
Deeds are $130 for primary residence and $200 for additional properties up to a maximum of 2 additional properties.
Harry Sit says
Fees around a deed can refer to different things:
1. A fee charged by the attorney to prepare a deed to transfer the property. My attorney included this in her package.
2. A fee charged by the attorney to handle the recording of the deed. I declined this service. I filled out a form and sent it by mail to the county together with the deed prepared by the attorney.
3. A fee charged by the county to record the deed. This is unavoidable. I had to pay it when I recorded the deed myself.
If the fees you quoted are for (1), I would pay it to make sure it’s done correctly. If it’s for (3) and there’s no markup by the attorney, you’ll have to pay it regardless. You can do it yourself if the fee is for (2).
Gabriel says
Thanks Harry