bob_cville brings up an important point which the rest of us had overlooked. As more and more people inherit 401k's and IRAs, it is critical to understand that one needs to make the correct decision in such a case, BEFORE the funds are distributed. For our parents this was not an issue, the grandparents of Boomers didn't have these type of accounts. However, for us and succeeding generations, it is incumbent upon us to be aware not only of the current laws, but any future changes that will made in those laws by Congress. If you are inheriting any portion of an IRA, it's important that you know whether or not the owner was taking distributions. Once distributions are begun, they MUST be continued by the heirs. An IRA passed to multiple heirs may be split in any proportion the owner has specified. The heirs are best served by opening up a new IRA. Titling of this new IRA is very specific to avoid IRS problems. I've excerpted part of a WSJournal article on this issue: "...Inherited IRAs don't work like regular IRAs. If you inherit an IRA from anyone other than your husband or wife, you can't roll it into your own IRA. And you can't consolidate IRAs you inherit from different people into one account. So, if the heir had withdrawn the assets from a parent's IRA and deposited them into her own IRA, she would have undone the inherited IRA, making all its assets taxable. She also would have to remove any assets she deposited in her IRA above her allowed IRA-contribution limit for the year -- $5,000 if she's under 50, or $6,000 if she's 50 or older -- to avoid further penalties. But it appears that the account in question was left as is, except for being improperly titled. Thus, the error should be considered an administrative one that can be fixed. The reader would need to retitle the IRA so it's clear that the owner died and that she is the beneficiary. Ed Slott, an IRA consultant in Rockville Centre, N.Y., recommends using this format: John Smith IRA/ Deceased 1/1/2009/ FBO Mary Smith as beneficiary. (note: FBO means "for the benefit of") Make sure that the financial institution gets the titling right not only on the statements it sends to you, but also on the internal records it uses for reports to the IRS, he says. Some large IRA custodians use the beneficiary's name on the statements sent to him or her, but use the formal titling (as in the "John Smith" example, above) on the information it sends to the IRS to avoid confusing beneficiaries. After you have retitled the inherited IRA, you can stretch out withdrawals from the account across your lifetime, rather than being forced to withdraw the funds sooner. That gives you a chance to extend the time that tax-deferred earnings can accrue, possibly increasing your inheritance."

First, I do suggest that you work towards having a real lawyer draw up wills for you. We had ours done through the State Employees Credit Union, and it was only $250. Look around and see what SIMPLE forms would cost. The lawyer who did ours asked SO MANY QUESTIONS that got us thinking, prompted the right discussions, and we feel secure in our choices now. For example, suppose one of your children pre-deceases you. Would you then split your estate 3 ways, or would you still split it 4 ways ... and divide the fourth "portion" among that deceased child's children? Would the monk son WANT to inherit, or would he rather see his portion divided among his nieces and nephews, perhaps to be put towards their educations? What if one of your children comes to live with you in your elderly years? Would you want to give that child a larger portion of the estate as a thank you for the time and effort he gave you in your final years? These aren't easy questions, and you want to KNOW that your wishes are followed. You can BOTH be buried in the Veteran's cemetery without charge. My father-in-law was military, so a plot is reserved for him. His wife died first, and she was buried 12' down. When he dies, he'll be buried 6' down. You're legally married, right? Yes, if one of you were to die, the other would automatically own everything. You can /should make your kids (or one kid named as executor) beneficiary on your bank accounts. Even if the accounts are small, you want them to have your money (not the state!). Beneficiary trumps will. If you died tomorrow, the person who's named beneficiary on your checking and savings accounts could walk into the bank (with your death certificate) and leave with every penny in the accounts -- before the will goes into probate. If one of you were to die, leaving the other alone, would that spouse want to remain on the property? I ask because my parents live in similar circumstances, and I strongly suspect my mom will "come to the city" to be nearer us kids/grandkids and nearer to services she uses ... after my stepfather is gone (which is the likely scenario, given the state of their health). The tricky thing is, What happens when the second spouse dies? I do think you should talk to the children and see if any of them are interested in the land ... or would they prefer to see it sold /split the profits? You should also consider a "back up plan" in case one or both of you cannot continue to live on your property. That is, if one or both of you need medical care that isn't compatible with your current lifestyle. I don't know if you've considered this possibility, but I think this is your nightmare scenario: You're living frugally but comfortably now on your land. Suppose one of you becomes ill and needs serious care, even nursing home care. The state'll pay for that person's care, but not until you've sold the land and exhausted your resources. Where is the the still-health spouse going to live? The state doesn't care. To prevent this relatively likely thing from happening, could you put the land into one of the children's names now? That isn't a risk-free choice, of course, as it gives them power over your lives; if their children are eligible for financial aid for college, it could affect them too. As for the two of you dying at the same time, it's very unlikely to happen. Even if you were to be in a car wreck, the likelihood is that one of you would go first. Even if one of you lives an hour longer than the other, that person still predeceases the other. Consider, too, writing a letter to your children -- be sure they know where it's kept -- that'll let them know your final wishes. Ours includes a note about being fair and generous with one another during this time, remembering their faith, and then notes about how I'd like them to divide things that we value -- but don't really have much value -- like my wedding ring, my husband's tools, my grandmother's china, and certain pieces of furniture. Of course this isn't a legal document, but it's something you can easily change and update as time goes on. My husband and I have "a rule" we go over our estate information and the letter to our girls every year when we do our taxes. It works because money is already on our minds.

State laws, mainly - size of estate and banking laws determine the need to probate a will. An estate includes only assets (that includes cash money) that is only in the deceased's name or has no beneficiary (if you have no beneficiary, then ownership reverts to the state). When my DH died of cancer, we were careful to make sure he died without an estate, except for cash money in a checking account that would not exceed funeral costs (funeral costs are assumed to be paid out of deceased's estate). This was done to avoid the time and expenses of probate. Unfortunately, I found a small CD at a bank of his that had no beneficiary named. because of that CD, I had to go through probate for the bank to release the funds to me.

When I first worked for a Trust Officer of a bank in 1959 & we acted as Executor & often Trustee in California, any gross estate over $60,000 had to file an Estate Tax Return (Form 706) with the IRS (this much later went to $600,000) and a California Inheritance Tax Return (I think IT-22) had to be filed with the State, and, of course, any determined taxes had to be paid. These often held up the total estate payouts, but that would have been the case in a Living Trust also. California voters, by proposition, voted out the CA Inheritance Tax in 1982, and although a Federal Estate Tax still exists, the cut-off amount is pretty high ($4 million or something) and I would venture to guess many more estates & their beneficiaries were inconvenienced with the $60,000/$600,000 cutoff in earlier days than there are today. Also trusts are nothing new. The trusts we handled as Trustees were called Testamentary Trusts Under Wills, and were not much different than the Living Trusts are today. As the years went by, Executors in California got more "individual powers" (no need to consult the Court), and in the "smaller probate estates, after any taxes were determined & paid, the estate was distributed to the heirs, often in no more than several months (of course there were often beneficiaries that wanted "their money" yesterday or they couldn't function). When my stepmother died a resident of Michigan in 1990 (my dad died several years earlier), without a Living Trust, I was surprised how simple a probate proceeding there was. The "hold-ups" really were only in selling a couple pieces of property where the first buyers backed out (earnest money deposits were kept by the estate); otherwise, we siblings received our inheritances within a few months. I think I agree with Elmer. I've never seen the savings in estate taxes via a Living Trust either. Tomorrow at 4 my husband & I have an appointment with an estate attorney. Since we have no children, we'll probably give specific amounts of cash to five nieces & nephews (or their descendants), and the balance to charity. Should be fairly simple.