Dear Liz: My wife and I have updated our will and trust every 10 years. So far we've been sorely disappointed. The local bar association recommended some attorneys, but they were relatively young, inexperienced, unable to answer a lot of our most basic questions, and produced documents that I could have created on my home computer. It seems as though the most experienced attorneys are downtown in tall office buildings with equally tall price tags while the suburbs get the new graduates, the generalists or the estate planning attorneys who didn't make it in the big leagues. Can you recommend a referral source that will actually suggest someone who is experienced, specializes in estate planning and won't require us to drive 40 miles to downtown?
Answer: The first question that must be asked is whether yours is a big-league estate.
If your joint estate is worth more than $22.4 million, the current estate tax exemption limit for a married couple, you probably should swallow your distaste and hire a skyscraper-based attorney. You'll need expert help dealing with estate tax issues, and that doesn't come cheap.
If your estate is not in the big leagues, you should still be able to hire a competent, experienced attorney if you do sufficient research beforehand. Understand that software will be drafting your plan, regardless of which lawyer you choose.
What you're paying for is advice on the documents you need, assurance that those documents are prepared correctly and help getting the deeds for your real estate recorded for your trust, said Jennifer Sawday, an estate planning attorney in Long Beach. Good estate planning attorneys have seen the many ways an estate plan can go wrong so they can give the guidance needed to help you avoid disaster and create the outcomes you want.
Sawday said the best source of referrals maybe your CPA or tax preparer. Your tax pro has a good idea of your financial situation and probably has referred many other clients to good attorneys. Financial planners and attorneys who specialize in other areas can often recommend someone as well.
"Professionals don't refer to other professionals time and time again who give bad service or otherwise generate unhappy clients," Sawday said.
Interview two or three attorneys before you decide. You'll typically have to pay a consultation fee, but you'll have a much better idea of whether they can answer your questions to your satisfaction.
The suburbs, by the way, are precisely where you're likely to find reasonably priced, competent attorneys, since they don't have the same overhead costs as the skyscraper set.
When rolling your 401(k) into an IRA isn’t a good idea
Dear Liz: I have just retired. I have a 401(k) from work. Do I keep it as is or do I roll it over into an IRA?
Answer: Investment companies and their representatives like to push the idea of rollovers as the best option, but that may profit them more than it does you.
Leaving your money in your employer's 401(k) has several potential advantages. Many 401(k)s offer access to institutional funds, which can be much cheaper than the retail funds available to IRA investors. Workplace retirement plans also offer unlimited protection from creditors if you're sued or forced to file bankruptcy. Although IRAs' protection from creditors in bankruptcy filings is typically limited to $1,283,025, money transferred from a 401(k) or other workplace retirement plan to an individual retirement account has unlimited protection from creditors in bankruptcy. In nonbankruptcy situations, the creditor protection afforded IRAs varies by state.
If you retired early, you can access your 401(k) without penalty at age 55. The typical age to avoid penalties from IRA withdrawals is 59½.
You may opt for a rollover if your 401(k) offers only expensive or poorly performing options. Even if you decide to roll over the rest of your 401(k), though, get a tax pro's advice before you roll over any company stock. You may be better off transferring the stock to a taxable account now so you can let future appreciation qualify for capital gains rates. Ask your tax pro how best to take advantage of this "net unrealized appreciation."