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Old 10-28-2014, 06:12 PM   #21
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Originally Posted by ERD50 View Post
Since you have joint title to all accounts, Will, Pour Over Will, POAs 'and such', what is the need for the Revocable Living Trust? Would being joint on the home and real estate be enough? Or are there complications with that? Or maybe other beneficiaries named in the trust?

Just curious, since we are going through some of this with my in-laws, and I'm looking to update my trusts now that our kids are no longer minors. Trying to educate myself.

The homestead is not jointly owned, she is sole owner. Her wishes were/are that it pass on to me, without any chance of anyone (a certain, oft times disgruntled relative of ours) contesting anything during possible probate. So after researching things and discussing it with our attorneys and legal advisors, she, her attorney, and myself agreed that a Revocable Living Trust was a great vehicle to use to accomplish her goals. In this way, the homestead and property pass directly to me as the Successor Trustee, immediately upon the death of the Trustee (which is her), and thus does not go through probate.

And being a Revocable Living Trust, she can change or dissolve the trust at any time prior to her last breath. So if she would decide that she doesn't want me to have it, she can name a new Successor Trustee. Or if she would decide that she wanted me to share it with some else, she could add an additional Successor Trustee.

The bottom line is that she wanted to keep it out of the probate process, and the RLT accomplishes that with very little expense. All of her estate planning legal work, documents, filings, and attorney fees, cost her a whopping $350.

A couple of books that were very beneficial to us were NOLO Press's "Plan Your Estate" and "Make Your Own Living Trust". With those two books, and advice and coaching from our legal friends, we could have done everything ourselves. However, we wanted to make sure that everything was 100% bullet-proof and fully legal under all applicable laws, thus the attorney. It's actually a very simple process.

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Old 10-28-2014, 06:23 PM   #22
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One of the great tax benefits of inheriting property is that the basis gets stepped up to the value at the time of death. If you put the heirs names on the property do you still get the stepped up basis, or only for the half that isn't in their name?

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Old 10-28-2014, 07:22 PM   #23
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Based on family experience I recommend that all assets (x-IRAs) be held by the revocable living trust with signature cards for the grantor trustee and other trustees. In that way other trustees cannon clam ownership of the trust assets and title will pass under the terms of the trust.
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Old 10-28-2014, 09:35 PM   #24
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Originally Posted by growing_older View Post
One of the great tax benefits of inheriting property is that the basis gets stepped up to the value at the time of death. If you put the heirs names on the property do you still get the stepped up basis, or only for the half that isn't in their name?
Yes, important point.

Cost Basis - Inherited

If the stock was held in a joint account or joint registration with your spouse, one-half of the stock would get a stepup at the date of death, unless you live in a community property state. If you do live in one of the nine community property states, the entire account gets a stepup to market value at the date of death, not just one-half. The nine states are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Community property status is also available as a voluntary election in Alaska. See Community Property for more information.
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Old 10-28-2014, 10:47 PM   #25
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But in these examples, parents are putting children's names on the accounts, probably thinking it will make probate easier or possibly side step it. So community property or not, since your child isn't your spouse you give up half the stepped up basis.
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Old 10-28-2014, 11:55 PM   #26
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I think it's an incredibly dumb idea for many reasons. BUT, I'm Canadian and here it only avoids a small probate fee (which may or may not be required depending on the estate). It also opens up Pandora's box if there is more than one kid. YMMV.
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Old 10-29-2014, 06:01 AM   #27
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In my Mom's case, sis and I are co-owner's of some bank accounts only so we can help her with bill paying and have ready access to her funds if she becomes incapacitated. No step up issues there and the amounts are modest. Her other financial accounts have beneficiary designations. Real estate is owned by a living trust (not sure we need this any longer) and autos, boats, etc have TOD designations. Total estate is well under estate tax exemption amount.
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Old 10-29-2014, 06:30 AM   #28
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All of you make great points and I appreciate reading everyone's comments. I've learned that families have to develop a great sense of trust......between parent and child and also between all the siblings. And, every family with some degree of wealth needs a good tax attorney or CPA to determine joint ownership, lrevocable trusts, etc. Most of my assets have been placed in a trust to avoid probate, both the cost and the time delay, which can vary be State. My DW and kids will all share in my assets, I may have to pay the tax man some as well.......but, planning will keep it to a minimum.
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Old 10-29-2014, 07:51 AM   #29
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We ran into a bit of an issue when my MIL passed away. Twenty years ago, my youngest brother-in-law was added to the deed on MIL/FIL's Florida place. We're not sure of all the motivations were but the problem was they didn't tell anyone and I think my MIL actually forgot about it. The BIL didn't seem to know either, but he would have been early 20s when they made the change.

Her will designated equal shares for her three children and the BIL was cooperative so we were able to work it out. We did not claim the stepped up basis on his half of the property so there was some pain when after we sold the property and did the taxes.

I'm not sure what would have happened if BIL had gone through a divorce or died. I suppose his wife could have ended up sharing the place with her in-laws or otherwise causing a stink.

Seems like adding children to titles can be a risky proposition. I also wondered if it constitutes a "gift" for tax purposes at the time the change is made. And how do you back out of it if situations change.

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