Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Living Trust vs TOD
Old 03-31-2016, 05:45 AM   #1
Dryer sheet aficionado
 
Join Date: May 2013
Posts: 38
Living Trust vs TOD

My wife and I have a simple will and have been discussing whether we should establish a living trust. The size of our "estate" would be ~$2 MM.

Main benefits of a revocable living trust: Bypass probate, easier for children, privacy of transfer.

In our state we can get all of the above benefits by establishing all of our financial accounts, house deeds, etc as either transfer on death or payable on death accounts. Cars can not be transferred.

So..... Can someone provide reasons why a trust would be better for us than a simple will with TOD / POD provisions? Am I missing something else that a trust could do for us?

Your comments, suggestions, and experiences are appreciated.
__________________

Dan32 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-31-2016, 06:57 AM   #2
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 3,070
Living Trust vs. "Payable On Death" Forms | Standard Legal Law Library

mostly about managing during disability and what things you can control/title
__________________

kaneohe is offline   Reply With Quote
Old 03-31-2016, 07:58 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
calmloki's Avatar
 
Join Date: Jan 2007
Location: Independence
Posts: 5,607
Gal and I are "not as tenants in common but with right of survivorship" on all property and joint on all accounts and cars - or TOD/POD on the few things we can't do that on. If one of us dies the other will have the entirety with pretty much no taxable event. We have a verbal agreement that the survivor will pass a certain sum to the others relatives - IF that is doable without hurting the survivor's retirement. The survivor will suddenly have an estate that they will need to worry about for tax purposes - one of us doesn't care about that, the other can do as they wish then. If we are both hit by the same asteroid then our relatives will have to deal with the hassle of reaping the benefits of our estates. Poor babies. Not like we had to do anything to pile up said estate.
calmloki is offline   Reply With Quote
Old 03-31-2016, 08:04 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Sunset's Avatar
 
Join Date: Jul 2014
Location: Spending the Kids Inheritance and living in Chicago
Posts: 5,349
The advantage of TOD is it's free, and you can change parts of it at any time, so it's really flexible.
Sunset is offline   Reply With Quote
Old 03-31-2016, 08:10 AM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
calmloki's Avatar
 
Join Date: Jan 2007
Location: Independence
Posts: 5,607
Quote:
Originally Posted by Sunset View Post
The advantage of TOD is it's free, and you can change parts of it at any time, so it's really flexible.
While trusts seem to require constant lawyer maintenance ($) to track changes in property, location of residence, changes in the law...
calmloki is offline   Reply With Quote
Old 03-31-2016, 09:05 AM   #6
Thinks s/he gets paid by the post
 
Join Date: Dec 2014
Posts: 1,851
Quote:
Originally Posted by Dan32 View Post

Main benefits of a revocable living trust: Bypass probate, easier for children, privacy of transfer.
Are the children minors? Are your children ready emotionally to get the $2MM in a day? Or should it be distributed over time.

If you have multiple kids and all are married. Then one of the kids passes leaving a family, do you want that child's family to get some of the assets?

How would your TOD work in these cases?

I agree with the other poster who noted about when you are incapacitated.

just thoughts.
bingybear is offline   Reply With Quote
Old 03-31-2016, 09:46 AM   #7
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 3,070
Quote:
Originally Posted by Sunset View Post
The advantage of TOD is.................you can change parts of it at any time,..................
assuming you're not incapacitated to the extent that you can't......
kaneohe is offline   Reply With Quote
Old 03-31-2016, 09:59 AM   #8
Thinks s/he gets paid by the post
Fedup's Avatar
 
Join Date: Mar 2014
Location: Southern Cal
Posts: 2,930
I only put real estates in living trust. Everything else has beneficiaries.


Sent from my iPad using Early Retirement Forum
__________________
When I post IIRC, that means going by memory. Google is your friend for facts. Stop being a lazy bum, I can't do all the googling for you. I'm lazy too. LOL
Fedup is offline   Reply With Quote
Old 03-31-2016, 10:31 AM   #9
Dryer sheet aficionado
 
Join Date: May 2013
Posts: 38
The children are not minors and doing well. I don't think they would think or act differently receiving any money all at once or over a several year period.
Dan32 is offline   Reply With Quote
Old 03-31-2016, 10:38 AM   #10
Thinks s/he gets paid by the post
MasterBlaster's Avatar
 
Join Date: Jun 2005
Posts: 4,359
Private trusts are at risk of unfair disbursement when morally-challenged executors help themselves.

There are no trust-police and pretty much no one is watching.

The good thing about a will and probate is that it is open for everyone to see and supervised by the court. There is less chance for funny-business.

If you have Pay-on-Death arrangements with most of your financial assets, there may be little need for a trust. Most Pay-on-Death arrangements pass outside of probate. If your entire $2MM estate goes to probate the fees (in California) would be around $66k. The $66k is a fair amount of money but only about 3% of a $2MM estate. The fees would be less with assets outside of probate being subtracted off the estate.

In my opinion most people of moderate means do not need a trust. The exception, where a trust would be useful, would be to provide for children of mixed marriages.

- Just my two cents after watching a number of these things unfold.
MasterBlaster is offline   Reply With Quote
Old 03-31-2016, 10:42 AM   #11
Thinks s/he gets paid by the post
 
Join Date: Jan 2008
Posts: 1,495
Quote:
Originally Posted by calmloki View Post
While trusts seem to require constant lawyer maintenance ($) to track changes in property, location of residence, changes in the law...
This is not correct. Whether a trust is long-term depends on the type of trust you have created. Some trusts (such as mine) can be completed quickly, in a manner of months.

Making an error while engaging in estate planning has the potential to completely undermine everything you are trying to accomplish (it can also create a nightmare for your heirs if you do it incorrectly). I just went through a rather exhaustive estate planning exercise and strongly recommend not taking any action without reading this book or one like it (I read it twice before going forward):

Plan Your Estate - Legal Estate Planning Book - Nolo
Options is offline   Reply With Quote
Old 03-31-2016, 12:43 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
calmloki's Avatar
 
Join Date: Jan 2007
Location: Independence
Posts: 5,607
Quote:
Originally Posted by Options View Post
This is not correct. Whether a trust is long-term depends on the type of trust you have created. Some trusts (such as mine) can be completed quickly, in a manner of months.

Making an error while engaging in estate planning has the potential to completely undermine everything you are trying to accomplish (it can also create a nightmare for your heirs if you do it incorrectly). I just went through a rather exhaustive estate planning exercise and strongly recommend not taking any action without reading this book or one like it (I read it twice before going forward):

Plan Your Estate - Legal Estate Planning Book - Nolo

Strange. We sat through a California estate planning "exercise" by a lawyer in Palm Desert. Talked with the man after the seminar and when I mentioned I was an Oregon resident and asked how that would affect having a living trust drawn up by his firm he noped right out - different trust laws between the two states. We were concerned and when we got back to Oregon spent the bucks for an hour with a top trust lawyer in Salem - at the end she said with our current and projected assets and our lack of kids that our JTWROS planning was optimal and that a trust DID require regular review. I stand by what I wrote, but am not a lawyer - all should do as they see fit.
calmloki is offline   Reply With Quote
Old 03-31-2016, 01:09 PM   #13
Thinks s/he gets paid by the post
DrRoy's Avatar
 
Join Date: Dec 2015
Location: Michigan
Posts: 2,034
We evaluated the options and have had a living trust for 9 years. Bypassing probate is well worth it.
__________________
"The mountains are calling, and I must go." John Muir
DrRoy is offline   Reply With Quote
Old 03-31-2016, 01:54 PM   #14
Thinks s/he gets paid by the post
 
Join Date: Jan 2008
Posts: 1,495
Quote:
Originally Posted by calmloki View Post
Strange. We sat through a California estate planning "exercise" by a lawyer in Palm Desert. Talked with the man after the seminar and when I mentioned I was an Oregon resident and asked how that would affect having a living trust drawn up by his firm he noped right out - different trust laws between the two states. We were concerned and when we got back to Oregon spent the bucks for an hour with a top trust lawyer in Salem - at the end she said with our current and projected assets and our lack of kids that our JTWROS planning was optimal and that a trust DID require regular review. I stand by what I wrote, but am not a lawyer - all should do as they see fit.
Regular review of a trust during your lifetime and management of a trust after your passing are two different things. All trusts require regular review (perhaps every ten years or so) as one's circumstances change. Whether your trust will requiring ongoing management after your passing will depend on the type of trust created. There are many different types of trusts.

This may help:

https://www.hg.org/types-of-trusts.html

I would now personally never be comfortable doing as I "see fit." I did that previously (when I didn't know any better) and had to revoke that old trust in its entirety while creating the new one this year (when I did know better). Even if you intend to spend money developing a comprehensive estate plan with an attorney, I still recommend reading the Nolo book I posted above (they are experts on law publications) or one like it, before seeing the attorney. The Nolo book is an easy read, and in layman's language. Estate planning is complex, and the reading an EP book before seeing an estate attorney will save you money and give you a better understanding of the entire estate planning process. It will also give you a better idea of what questions to ask when meeting with an attorney, if using an attorney is even necessary.
Options is offline   Reply With Quote
Living trusts
Old 03-31-2016, 04:53 PM   #15
Thinks s/he gets paid by the post
Souschef's Avatar
 
Join Date: Dec 2015
Location: Santa Paula
Posts: 1,469
Living trusts

My late wife and I had a living trust, because at the time the estate tax started at $1M, and with a home in California that amount is easy to pass. I admit when the lower limit was increased, I was lazy and did not change the trust from an AB trust to something easier.
When my wife passed I had to divide all our assets between the 2 trusts. It took me 10 years to get everything back into my name within the terms of the trust.I dissolved the trust in accordance with the trust document, and now have everything in either joint tenancy or TOD accounts.
__________________
Retired Jan 2009 Have not looked back.
AA 50/45/5 considering SS and pensions a SP annuity
WR 2% SI 2SS & 2 Pensions
Souschef is offline   Reply With Quote
Old 03-31-2016, 06:01 PM   #16
Thinks s/he gets paid by the post
 
Join Date: Mar 2010
Location: Kerrville,Tx
Posts: 3,038
One does have to check the costs of various secenarios in your state For roughly $1 million estates for both of my parents the legal bills in tx where on the order of 15k. (including the lawyer checking the 1041s for the estates). So probate costs depend greatly on the state in question.
meierlde is online now   Reply With Quote
Old 03-31-2016, 06:29 PM   #17
Thinks s/he gets paid by the post
 
Join Date: Jun 2004
Location: E. Wash
Posts: 1,112
We recently did a RLT, primarily to deal with any risk of cognitive impairment as well as simplifying the management of the rental property post death. Also included our taxable investment accounts but none of the IRA/Roths
Nwsteve
nwsteve is offline   Reply With Quote
Old 03-31-2016, 06:41 PM   #18
Recycles dryer sheets
 
Join Date: Nov 2011
Posts: 109
If your state has an estate tax, a trust can also help preserve the estate tax exemption at the state level for the first spouse to die where most states do not have portability which is available at the federal level.
523HRR is offline   Reply With Quote
Old 03-31-2016, 08:56 PM   #19
Recycles dryer sheets
 
Join Date: Jan 2012
Posts: 265
Quote:
Originally Posted by MasterBlaster View Post
Private trusts are at risk of unfair disbursement when morally-challenged executors help themselves.

There are no trust-police and pretty much no one is watching.

The good thing about a will and probate is that it is open for everyone to see and supervised by the court. There is less chance for funny-business.

If you have Pay-on-Death arrangements with most of your financial assets, there may be little need for a trust. Most Pay-on-Death arrangements pass outside of probate. If your entire $2MM estate goes to probate the fees (in California) would be around $66k. The $66k is a fair amount of money but only about 3% of a $2MM estate. The fees would be less with assets outside of probate being subtracted off the estate.

In my opinion most people of moderate means do not need a trust. The exception, where a trust would be useful, would be to provide for children of mixed marriages.

- Just my two cents after watching a number of these things unfold.
+1

I visited my attorney last week and that is pretty much what i understood from what he said to me. One thing he did recommend was to set up a durable power of attorney (medical )/or something similar and establish trust worthy kids/siblings etc to execute my desires in the event I am unable to make decisions regarding my healthcare towards end of life.

Thanks
Rickt is offline   Reply With Quote
Old 03-31-2016, 08:57 PM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,893
Quote:
Originally Posted by DrRoy View Post
We evaluated the options and have had a living trust for 9 years. Bypassing probate is well worth it.
I think you may have missed some of the content of the previous posts, or misunderstand probate.

A trust is only one way to bypass probate. Naming beneficiaries, and keeping accounts as TOD, and other techniques avoid probate as well. There are pros/cons to each.

Quote:
Originally Posted by Options View Post
... All trusts require regular review (perhaps every ten years or so) as one's circumstances change. ...

Even if you intend to spend money developing a comprehensive estate plan with an attorney, I still recommend reading the Nolo book I posted above (they are experts on law publications) or one like it, before seeing the attorney. ...
Absolutely agree on a NOLO or similar book. Possibly to DIY, but definitely to educate yourself before seeing the 'pros'.

But do all trusts require regular review? I mean, if I open a new account, it's not hard to figure out if it should be in my, or DW's trusts name. Sure, if your life-status changes, a review is in order. But otherwise?

-ERD50
__________________

ERD50 is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Tell Me Why TOD Isn't Enough sengsational FIRE and Money 4 04-07-2013 09:08 AM
TOD/POD on Joint Accounts PatrickA5 FIRE and Money 16 11-09-2012 01:16 PM

 

 
All times are GMT -6. The time now is 07:40 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2018, vBulletin Solutions, Inc.