Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Dumb ? - what is an asset for purposes of a trust
Old 12-07-2022, 09:24 PM   #1
Thinks s/he gets paid by the post
 
Join Date: Aug 2017
Posts: 1,017
Dumb ? - what is an asset for purposes of a trust

I am supposed to be making a list of assets for a trust. So I write down my house and my savings and so on.

Is life insurance an asset? A 401K? I don't have policy numbers or even account numbers for this I just log on at w*rk. And the life ins is term and will end when I retire - no cash value. I suppose I could name the trust as a beneficiary via the website but I don't even think they allow non-persons. Obviously I can't call anyone who might help at this hour so I thought I'd turn to you.

Google was iffy because my 401k has a beneficiary but then so does my savings account.
badatmath 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 12-07-2022, 11:15 PM   #2
Recycles dryer sheets
Morgan22's Avatar
 
Join Date: Nov 2015
Posts: 227
What kind of trust/what is the intended purpose?

Personally, I would only put my house and car in a revocable trust if I could not do a TOD on them so my kids could avoid probate. (My current state allows Transfer on Death for House and cars). All accounts that can have named beneficiaries normally are not put in a trust. You name the people or charities that you want them to be left to. Then they don't pass through probate. Easy peasy.

One reason you would name a trust as beneficiary for your retirement and other $$ accounts would be if you were afraid the person receiving the funds are not able to make good financial decisions and blow it all in the first year or something along those lines. I think that type of trust would be called a spendthrift trust.
I'm sure others may come along and give other reasons.
Morgan22 is online now   Reply With Quote
Old 12-08-2022, 01:26 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RobbieB's Avatar
 
Join Date: Mar 2016
Location: Central CA
Posts: 8,774
If you have life insurance, you should already have a beneficiary. Term life insurance is not an asset.

All assets in the name of the trust avoid probate.
__________________
Retired at 59 in 2014. Should have done it sooner but I worried too much.
RobbieB is online now   Reply With Quote
Old 12-08-2022, 06:24 AM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 32,886
You could name the trust as the beneficiary of your term life insurance policy. You might do that if the policy only allows one beneficiary but you want the life insurance death benefit to go to multiple beneficiaries. Or if the life insurance death benefit is intended to provide funds to pay off debt on trust assets to unencumbered them or to provide liquid assets to the trust.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is online now   Reply With Quote
Old 12-08-2022, 12:50 PM   #5
Thinks s/he gets paid by the post
 
Join Date: Aug 2017
Posts: 1,017
Hmm yeah maybe I need to fire my lawyer who I just met. I don't see that I need a trust at all but the point is to avoid probate. He was not encouraging about making a will only and I said its because you make more from a trust and he said well actually I make more on probate. IDK. Since all things have beneficiaries except house I do not see that I have any assets at all - for this purpose.
badatmath is offline   Reply With Quote
Old 12-08-2022, 01:43 PM   #6
Thinks s/he gets paid by the post
Souschef's Avatar
 
Join Date: Dec 2015
Location: Santa Paula
Posts: 3,944
The only reason I had a trust was when the Inheritance tax was at $1 Mil. It was a PITA especially when my wife died and it had to be split up into 2 trusts.
The trust is now closed. All our assets either are TOD or have beneficiaries.
BUT we did visit an estate lawyer to set up an estate plan. This included POA's for medical and financial matters and pour over wills.
__________________
Retired Jan 2009 Have not looked back.
AA 60/35/5 considering SS and pensions a SP annuity
WR 2% with 2SS & 2 Pensions
Souschef is online now   Reply With Quote
Old 12-08-2022, 05:05 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 32,886
Quote:
Originally Posted by badatmath View Post
Hmm yeah maybe I need to fire my lawyer who I just met. I don't see that I need a trust at all but the point is to avoid probate. He was not encouraging about making a will only and I said its because you make more from a trust and he said well actually I make more on probate. IDK. Since all things have beneficiaries except house I do not see that I have any assets at all - for this purpose.
It all depends on the nature of your assets. I spent some time doing some DIY estate planning about a year ago.

If only one of us dies, then the surviving spouse inherits all assets through either joint ownership or beneficiary designations... nothing needs to go through probate at all.

If we die simultaneously then it is a different story.

The vast majority of our estate... 65%... are financial accounts (bank, brokerage, traditional and Roth IRAs, HSAs, etc) all of which can have our kids as designated contingent beneficiaries and avoids probate.

By coincidence the two states that we live in, Florida and Vermont, each allow enhanced life estate deeds aka Lady Bird deeds that we put in place. In short, we transferred the ownership of the properties to our two kids but also jointly retained an enhanced life estate... the right to use the property, rent it, sell it and keep the proceeds, etc for as long as one or the other of us are alive... essentially all the rights that we have now as owners. When the second of us dies, then the kids' ownership is no longer encumbered by the rights that we retained. It's in effect like a beneficiary designation but for real property. So that took care of another 25%.

So that takes care of 90%.

Another 1% are ibonds are held by trusts.

The remaining 9% will require a little effort. About 4% are ibonds held in our personal accounts with the surviving spouse as beneficiary. If we die simultaneously, DD will have to deal with it. Another 3% are the car, truck, boat, jet-ski, camper, etc that the kids can go to DMV with a death certificate and get retitled in their name.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is online now   Reply With Quote
Old 12-08-2022, 07:00 PM   #8
Recycles dryer sheets
Morgan22's Avatar
 
Join Date: Nov 2015
Posts: 227
Quote:
Originally Posted by badatmath View Post
Hmm yeah maybe I need to fire my lawyer who I just met. I don't see that I need a trust at all but the point is to avoid probate. He was not encouraging about making a will only and I said its because you make more from a trust and he said well actually I make more on probate. IDK. Since all things have beneficiaries except house I do not see that I have any assets at all - for this purpose.
Then it sounds like you may only want to put your house in a revocable living trust since everything else has named beneficiaries. The revocable trust will allow your beneficiaries to avoid having to put the house through probate.
Morgan22 is online now   Reply With Quote
Old 12-08-2022, 07:05 PM   #9
Thinks s/he gets paid by the post
Dash man's Avatar
 
Join Date: Mar 2013
Location: Limerick
Posts: 4,951
We are in the process of moving five properties and our taxable accounts into two trusts, one for DW and one for me, tenants in common. Our retirement accounts have each other as beneficiaries, with two trusts to be created for the boys once we’re both gone.
We have properties in three states, so a trust will avoid probate in each state.
Our taxable accounts will be split between the boys, smaller shares to siblings and a gift to charity. One of the boys doesn’t handle money well, so Schwab will manage his trust providing income until he’s more knowledgeable and comfortable handling it. It’ll also protect him from his estranged wife.
The IRAs will retain their legal protections even after RMDs are made.
The trusts also are set up to take full advantage of the spousal portability of the estate tax exemption. When the first of us passes, half the estate will be in a irrevocable trust for the benefit of the surviving spouse. It doesn’t matter this year, but may matter in 2026.
Dash man is online now   Reply With Quote
Old 12-08-2022, 07:09 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 32,886
It looks like Arizona has transfer on death deeds for real estate.

Quote:
A beneficiary deed is like a regular deed you might use to transfer your Arizona real estate, but with a crucial difference: It doesn't take effect until your death. At your death, the real estate goes automatically to the person you named to inherit it (your "beneficiary"), without the need for probate court proceedings. (Ariz. Rev. Stat. Ann. § 33-405.) In other states, this deed is also commonly called a transfer on death deed.
https://www.willmaker.com/legal-manu...s-arizona.html

It still might made sense to have a will... it will just catch anything without a beneficiary designation. But you can probably just buy Willmaker and DIY.

YMMV and above is only if you are darn, tootin sure that everything other than the house is beneficiary designation.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is online now   Reply With Quote
Old 12-08-2022, 07:29 PM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RobbieB's Avatar
 
Join Date: Mar 2016
Location: Central CA
Posts: 8,774
A will is usually included in the "trust package"
__________________
Retired at 59 in 2014. Should have done it sooner but I worried too much.
RobbieB is online now   Reply With Quote
Old 12-08-2022, 08:04 PM   #12
Thinks s/he gets paid by the post
 
Join Date: Aug 2017
Posts: 1,017
Yep darn sure all other things are TOD/POD except the house. Not like I have such a vast amount of assets I will forget.!! Unfortunately.

I asked why I can't just get the benef deed + will + POA etc and never got much of an answer just "a trust is better". Better for him I assume.

But yeah the trust did come with the will etc. It just the trust part I question the need for - not the rest. Why is everything so much trouble . . .

Maybe because I am not that interested in this process and sick to death of this new bp med that makes me feel crappy. They have agreed I can wean off and try something else.
badatmath is offline   Reply With Quote
Old 12-08-2022, 10:18 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 7,054
Quote:
Originally Posted by pb4uski View Post
The remaining 9% will require a little effort. About 4% are ibonds held in our personal accounts with the surviving spouse as beneficiary. If we die simultaneously, DD will have to deal with it. Another 3% are the car, truck, boat, jet-ski, camper, etc that the kids can go to DMV with a death certificate and get retitled in their name.
If the remaining amount is small enough, one can avoid full probate in my state by either doing a small estate affidavit and/or simplified probate. It is my understanding that many states have such laws.

So in my state, even a revocable living trust may not be necessary to effectuate the transfer of property and still avoid probate.
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is offline   Reply With Quote
Old 12-09-2022, 07:05 AM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 32,886
Quote:
Originally Posted by SecondCor521 View Post
If the remaining amount is small enough, one can avoid full probate in my state by either doing a small estate affidavit and/or simplified probate. It is my understanding that many states have such laws.

So in my state, even a revocable living trust may not be necessary to effectuate the transfer of property and still avoid probate.
I agree and thought of including that but just didn't want to further complicate the situation.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is online now   Reply With Quote
Old 12-09-2022, 07:07 AM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 32,886
Quote:
Originally Posted by badatmath View Post
....I asked why I can't just get the benef deed + will + POA etc and never got much of an answer just "a trust is better". ...
Hindsight is 20/20 but the followup question would be "why is it better"?

It sounds like all is done, so you can always consult another lawyer about a beneficiary deed and just not use the trust.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56
pb4uski is online now   Reply With Quote
Old 12-09-2022, 08:00 AM   #16
Thinks s/he gets paid by the post
 
Join Date: Jun 2016
Posts: 1,526
Quote:
Originally Posted by badatmath View Post
....
Is life insurance an asset? A 401K?
...

401Ks and IRAs can not be held by a trust and must be titled to an individual even if the individual has been declared incompetent by the courts.
Spock is offline   Reply With Quote
Dumb ? - what is an asset for purposes of a trust
Old 12-09-2022, 08:14 AM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
steelyman's Avatar
 
Join Date: Feb 2011
Location: NC Triangle
Posts: 5,604
Dumb ? - what is an asset for purposes of a trust

I’m also curious about this topic. There was a recent (Nov 17 ‘22) podcast by Ed Slott about naming trusts as beneficiaries.

My question is: what are the downsides of establishing a trust when not all assets are retitled to it? (apart from expenses involved with creating the trust in the first place)

https://podcasts.apple.com/us/podcas...e/id1652669094

[ADDED] This is one of the issues muddled by changes related to the SECURE act I believe (elimination of “stretch”).
__________________

steelyman is offline   Reply With Quote
Old 12-09-2022, 08:33 AM   #18
Full time employment: Posting here.
Trooper's Avatar
 
Join Date: Dec 2012
Location: Chandler, AZ
Posts: 542
Quote:
Originally Posted by pb4uski View Post
It all depends on the nature of your assets. I spent some time doing some DIY estate planning about a year ago.
I am also in the process of deciding on a DIY approach. I am leaning toward not needing a trust, for the same reasons you are.

Quote:
Originally Posted by pb4uski View Post
If only one of us dies, then the surviving spouse inherits all assets through either joint ownership or beneficiary designations... nothing needs to go through probate at all.

If we die simultaneously then it is a different story.
Exactly.

Quote:
Originally Posted by pb4uski View Post
The vast majority of our estate... 65%... are financial accounts (bank, brokerage, traditional and Roth IRAs, HSAs, etc) all of which can have our kids as designated contingent beneficiaries and avoids probate.
If I understand correctly your bank and brokerage accounts cannot have beneficiaries, but can be titled as POD/TOD, which avoids probate. Other types of accounts like IRAs, 401(k)s, annuities and life insurance can have beneficiaries.
Trooper is offline   Reply With Quote
Old 12-09-2022, 08:40 AM   #19
Full time employment: Posting here.
Trooper's Avatar
 
Join Date: Dec 2012
Location: Chandler, AZ
Posts: 542
Quote:
Originally Posted by badatmath View Post
Maybe because I am not that interested in this process and sick to death of this new bp med that makes me feel crappy. They have agreed I can wean off and try something else.
I hope you feel better!

Quote:
Originally Posted by pb4uski View Post
It looks like Arizona has transfer on death deeds for real estate.
Yes we do, and having one will avoid probate. Just went through a personal estate case where one was involved.
Trooper is offline   Reply With Quote
Old 12-09-2022, 08:45 AM   #20
Full time employment: Posting here.
Trooper's Avatar
 
Join Date: Dec 2012
Location: Chandler, AZ
Posts: 542
Quote:
Originally Posted by steelyman View Post
My question is: what are the downsides of establishing a trust when not all assets are retitled to it? (apart from expenses involved with creating the trust in the first place)
There is something called a "pour-over will" that gets included with the trust; this will provides instructions for any asset not included (funded) in the trust.
Trooper is offline   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
Don't trust Son-In-Law - Spendthrift trust? Kelor FIRE and Money 78 05-31-2019 09:21 PM
To Trust (Living) or Not to Trust (Living) stephenson FIRE and Money 14 04-19-2019 03:11 PM
Qualified Income Trust/Miller Trust tps7742 Other topics 7 02-22-2019 02:55 PM
Rental property basis in trust vs. not in trust Dash man FIRE and Money 2 04-19-2014 07:20 AM
What do you do for a living-for inspirational purposes? mudbuddha Young Dreamers 17 06-08-2006 03:19 PM

» Quick Links

 
All times are GMT -6. The time now is 11:28 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2023, vBulletin Solutions, Inc.