Dear Quentin,
I live in Southern California and am a female solo ager. I do not trust many people due to unfortunate life experiences. For this reason, I am suspicious of revocable living trusts, which are private and confidential with no oversight.
My plan is to have a handwritten, notarized will, bequeathing my personal property and the remainder of my estate to charitable organizations. Also, in my will, I’m asking the courts to select an executor.
In addition, I have named beneficiaries on all my bank accounts and retirement accounts, and I am doing a transfer-on-death provision for my primary residence, so I have control of my main assets while I am alive. All my beneficiaries will be charitable organizations.
If it is not too much trouble, could you please be so kind as to let me know what the implications and drawbacks of taking this route would be? Any advice would be welcome. Thank you so much for your help.
Sincerely,
On My Own
“Make provisions for what happens when you are alive too. Arguably, this is more important.”
MarketWatch illustration
Dear On My Own,
Whatever you have gone through in your life, I appreciate you spinning that straw into gold by making sure that a portion of your assets go toward the causes that you most cherish. It will be your final act. The best thing we can do in life is to get through it without breaking anything and to leave a positive impact.
Holographic or handwritten wills are only legal in about half of the states in the U.S. (California does happen to be one of them). Even so, write your will under the guidance of a trust and estate attorney. Word of warning: It’s not worth writing a will on the cheap or downloading one from the Internet. Too many things can go wrong.
And don’t forget to make provisions for what happens while you are still alive. Arguably, this is even more important than writing a will or setting up a trust. Name a power of attorney who would be able to make financial decisions during your lifetime should you become incapacitated, as well as a medical power of attorney who would make healthcare decisions as set out by you ahead of time.
Pros and cons of setting up a trust
To ensure proper oversight of fees and disbursements: if you leave your estate to charity, California’s Attorney General says it “must be given notice of any matter involving a gift to charity, assets held in charitable trust, disposition or gifts of assets to an unnamed charitable beneficiary, or property that may escheat to the State of California.” Similar laws exist in other states. You can read more here.
One big caveat: If you want your estate and your wishes to remain private and confidential, a trust will serve you better than your last will and testament going through probate court. When your will is filed with probate court, it becomes part of the public record, and your family members, extended family members, friends, next-door neighbors and old high-school classmates can access it.
If you set up a revocable trust, you can be both grantor and trustee during your lifetime, and you have the freedom to change the terms. You can leave instructions to distribute the assets held by the trust according to your wishes. Those wishes may change over your lifetime. You can retitle your home, bank accounts and other assets into the trust.
There are limitations to a revocable trust, however. It cannot, for example, be used to make medical decisions during your lifetime, protect you from civil judgements or creditors or help you qualify for Medicaid, the program that provides medical care for low-income Americans. A trust can be expensive to set up and comes with ongoing administrative and legal costs.
Evaluating charitable institutions
Also, please be mindful about which charitable donations you choose. You don’t want your precious donations to be swallowed up by administrative fees. Guidestar.org, Charitynavigator.org and Give.org, which is run by the Better Business Bureau, all aim to help donors give wisely. These websites detail an organization’s impact, financial management and accountability, culture and leadership.
Leaving your estate to a court-appointed executor seems like something of a gamble to me. The process could be time-consuming and expensive and could ultimately reduce the amount of money you intend to leave your favorite charities. Leaving your estate in the hands of an unknown individual does not appear to be the right approach.
Appointing an executor of your estate — someone you trust — would be a wise decision. And if you decide to set up a revocable trust, you can nominate a relative, friend, attorney or financial institution as a successor trustee. Such a trustee is a fiduciary and has a legal and ethical duty to carry out your wishes.
Adding a ‘trust protector’ clause
A revocable trust becomes irrevocable upon your death. However, you could add a “trust protector” clause — a third party that oversees the actions of your trustee. The American Bar Association says this person can correct mistakes made in a trust or modify it to take advantage of tax law. They can also approve accounting and compensation.
“A trust protector has the ability to change parts of the trust document that the trustee may be unable to,” according to Cunningham Legal, which has offices in California. “Officially, a trust protector is a person with no vested interest, almost always an attorney named within the trust, who has power over the terms of a trust but who is not the trustee.”
Finally, it’s always good to ask questions. First, that’s what this column is here for. Second, the ability to ask for help and advice does not come easily to everyone, but it’s an empowering act. As an advice columnist, I find it a privilege to answer. I only wish more people asked for help when they needed it. If we are not here to be of service to each other, then what is the point?
Solo agers make up around 12% of the 50-plus population, according to the AARP, formerly the American Association of Retired Persons. Solo agers are primarily concerned with maintaining independence, physical strength, good health and mental abilities, and adequate finances, the AARP says. The Moneyist says: Join the club! I hope you have a community of friends and social groups, and continue to build on this in retirement. Having a social network is important as we get older.
In the meantime, good luck with your estate planning.
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on X, the platform formerly known as Twitter.
Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.
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Should I put my fiancé’s name on the deed to my $ 560,000 California home after we marry?