Living Trust Question

[stephenson]

Hi All,

We have all our real estate in our RLT, all IRAs with beneficiaries, but still have our JT equity/bond/cash accounts as JT with TOD.

My sense is that having TOD on JT accounts works fine for avoiding probate, but that it isn't as private as having all the above in the trust.

Fidelity tells me they can register to trust status very easily.

Anyone see any negatives to this?

 

[Stormy Kromer]

You need an attorney.

 

[stephenson]

Stormy,

Given we have a trust, already, why would I need an attorney?

 

[Morgan22]

Hi All,

We have all our real estate in our RLT, all IRAs with beneficiaries, but still have our JT equity/bond/cash accounts as JT with TOD.

My sense is that having TOD on JT accounts works fine for avoiding probate, but that it isn't as private as having all the above in the trust.

Fidelity tells me they can register to trust status very easily.

Anyone see any negatives to this?

I don't understand, private from what? It avoids probate. What else do you want/need to avoid? Just curious, since we have everything TOD also.

 

[Route246]

No negatives. We can handwrite ours in without paying our attorney.

 

[JBTX]

Hi All,

We have all our real estate in our RLT, all IRAs with beneficiaries, but still have our JT equity/bond/cash accounts as JT with TOD.

My sense is that having TOD on JT accounts works fine for avoiding probate, but that it isn't as private as having all the above in the trust.

Fidelity tells me they can register to trust status very easily.

Anyone see any negatives to this?

Any negatives to what?

TOD’s are fine, as long as people die in the expected order as intended and there are no lingering unfunded debts . They can break down or not go to who you want sometimes if the beneficiary predeaces you. Also if there are lingering debts and nothing left for probate then there may be a mess. A RLT can specify in detail who you want assets to go to in whatever sequence and contingencies.

 

[pb4uski]

I don't see any negatives, but what are the positives? Why not just use beneficiary designations for the joint brokerage accounts?

I don't see a trust as being more private than beneficiary designations.

 

[mrfeh]

Hi All,

We have all our real estate in our RLT, all IRAs with beneficiaries, but still have our JT equity/bond/cash accounts as JT with TOD.

My sense is that having TOD on JT accounts works fine for avoiding probate, but that it isn't as private as having all the above in the trust.

Fidelity tells me they can register to trust status very easily.

Anyone see any negatives to this?

What is your reasoning for keeping it out of the RLT?

 

[Stormy Kromer]

Stormy,

Given we have a trust, already, why would I need an attorney?

Sorry, I missed the RLT you mentioned.

DW and I set up RLT's and placed our real estate and investment accounts that don't have beneficiaries into them. The attorney was careful that we keep them as even as possible in value. We keep an eye on this and rebalance annually. This was primarily estate tax planning so that the second spouse to die doesn't have all the assets in their name for estate tax consequences.

 

[H2ODude]

Just a comment on things to think about. I've been a fan of the RLT, deceased father used it and was easy peasy to avoid any probate. I'm aware that titling stuff properly can similarly avoid probate in most cases. However, I had decided to not bother with the RLT, sort of what's the real benefit, why bother unless the limit on estate taxes change?

We had the wills, POA, healthcare POA, and desire for natural death all done 8 years ago. With DW now with Alzheimer's it suddenly dawned on me that should I drop before she does, it leaves everything pretty much adrift. So I'm waiting to finalize the RLT, new will, and a new POA for me. Basically in event I go first everything will be in the trust and two kids will be trustees to manage her. Did the wills with attorney, $900. Predicts the RLT will be $2-3k. The cost is irrelevant considering the assets at stake and the possibilities of problems. He's brought up several issues I would not have thought of. I don't do work with ladders or legal stuff any more.

I'll just add that the POA I have over my wife is priceless. NO ONE should not have provision for wills, POA, healthcare POA. When we finally did at 65 it wasn't dramatic, we approached it even with some humor. If I had no POA over DW now it would be complicated by trying to certify her with Drs. After wrestling the car away from her I would not want to go through that. She has strong anosognosia ... failure to recognize her malady. I set up the RLT and am retitling the house and she is unaware. At this point she would not understand anyway. Having these documents is like insurance, you never know when you need them but when you do, you really do.

 

[The Cosmic Avenger]

Fidelity tells me they can register to trust status very easily.

No, they can't. There's forms to fill out, and apparently they NEED the exact same form filled out for EVERY account. They already have my trust information, and I can do almost everything else online (including changing ownership of accounts, just not to our RLT). USAA did that online. It's got me tempted to move all of our accounts out of Fidelity, but I don't know that it will be better anywhere else.

 

[CRLLS]

If you have a more than a simple plan for your distribution of wealth, wouldn't the Trust be an easier/better way to go? From what I have seen joint accounts, TODs and PODs have rather simplistic beneficiary assignments without any "If this- then that" capabilities. In addition, any future changes to a trust beneficiary would be made once as opposed to changing beneficiaries on several accounts, titles etc. The upside is that a TOD/POD type arrangement occurs without having executor or trustee involvement possibly misunderstanding the will/trust instructions.

Comments?

 

[OldShooter]

... I'm waiting to finalize the RLT, new will, and a new POA for me. ... Did the wills with attorney, $900. Predicts the RLT will be $2-3k. The cost is irrelevant considering the assets at stake and the possibilities of problems. He's brought up several issues I would not have thought of. ... I'll just add that the POA I have over my wife is priceless. NO ONE should not have provision for wills, POA, healthcare POA. ... Having these documents is like insurance, you never know when you need them but when you do, you really do.

Here is wisdom. I continue to be amazed by the number of people trying to save a few cents in attorney fees by DIY'ing documents that affect a large estate.

 

[pb4uski]

If you have a more than a simple plan for your distribution of wealth, wouldn't the Trust be an easier/better way to go? From what I have seen joint accounts, TODs and PODs have rather simplistic beneficiary assignments without any "If this- then that" capabilities. In addition, any future changes to a trust beneficiary would be made once as opposed to changing beneficiaries on several accounts, titles etc. The upside is that a TOD/POD type arrangement occurs without having executor or trustee involvement possibly misunderstanding the will/trust instructions.

Comments?

While you can do an if this/then that with a trust, if this/then that is rare, can easily result in litigation and the trust would still need to be changed if the circumstances change.

I agree that with beneficiaries that more changes would need to be made. that is part of the reason why many of us are trying to simpify our accounts. In a year or 2 I should be down to 7 accounts... joint brokerage, my tIRA, his and her Roth IRAs and his and her HSAs and our checking account.

 

[CRLLS]

While you can do an if this/then that with a trust, if this/then that is rare, can easily result in litigation and the trust would still need to be changed if the circumstances change.

I agree that with beneficiaries that more changes would need to be made. that is part of the reason why many of us are trying to simpify our accounts. In a year or 2 I should be down to 7 accounts... joint brokerage, my tIRA, is and her Roth IRAs and his and her HSAs and our checking account.

We must be one of the rare. Our Wills have an If/then provision and I would do the same if we had a LRT. We leave our children everything after we are both gone. In the case that they pass before us, and we haven't changed the will yet, their share gets directly divided between their spouse and their children in various percentages. There are other conditions relating to the control of the minors' shares too.

Simplifying is important to us too. To be honest, we are a bit behind on the simplifying part. 7 accounts now at Fido alone, plus a couple of treasury accounts and a few accounts at the local bank. I can't seem to make a dent in consolidating any of them for various reasons. We haven't done a TOD on our home title, and we have various vehicles in one name only. I must get to working on that simplification part.

 

[PatrickA5]

While you can do an if this/then that with a trust, if this/then that is rare, can easily result in litigation and the trust would still need to be changed if the circumstances change.

I agree that with beneficiaries that more changes would need to be made. that is part of the reason why many of us are trying to simpify our accounts. In a year or 2 I should be down to 7 accounts... joint brokerage, my tIRA, is and her Roth IRAs and his and her HSAs and our checking account.

+1

We're down to Fidelity (all IRAs and one Brokerage) and Chase (checking, Brokerage). It's about as simple as we can get it without going back to the Fidelity as a one-stop-shop using our CMA. I split the banking part out to a local Chase account just in case we get locked out of Fido somehow. If interest rates go back to zero, we might have to reopen Ally.

 

[PatrickA5]

So far, we're 1 for 2 in avoiding probate by use of TOD, POD, etc.

DF's estate went entirely to beneficiaries via POD, TOD including house and car. No probate was needed.

DFIL's almost didn't need probate, but he had about $60K in Ibonds that required we open probate (cost $3,800). Took several months to get that last piece distributed. Ugh!

We currently have everything set up to avoid probate, but things change and as mentioned above not every "if" is solved by beneficiaries.

 

[PatrickA5]

We must be one of the rare. Our Wills have an If/then provision and I would do the same if we had a LRT. We leave our children everything after we are both gone. In the case that they pass before us, and we haven't changed the will yet, their share gets directly divided between their spouse and their children in various percentages. There are other conditions relating to the control of the minors' shares too.

One thing we found out from visiting our lawyer had to do with grandchildren inheriting our money in case our daughter predeceasing us. Lawyer said that SIL (grandkids father) would have to legally obtain guardianship through the courts in order to gain access to the grandkids inheritance. In other words, just being the grandkids father doesn't entitle him to take control of the money. Lawyer also said that she (and many other estate lawyers she knows) no longer take on Guardianship clients due to the complexity and hassle involved. So, we may have to look into an RLT if we feel the small possibility that exists is worth it.

 

[Stormy Kromer]

While we're all planning here folks I'll throw this in too.

Preplan your funeral.

DM passed away a couple of weeks ago, next day I met with the funeral director and told her mom's wishes. It all went well until we got to he cremation permit for our state. It turns out that if there is no surviving spouse 51% of the children need to sign the permission permit. I am only 50%. I have a brother who is estranged from the family and we had to get him to sign off. He is homeless and really, a mean guy.

I knew what town he was last seen in and knew someone on the police department who tracked him down with the form. He refused to sign it. We tried again and he said he'd sign it if we met his terms. He had the power and he used it. DM was the sweetest person on this earth and didn't deserve this disrespect OK...rant over.

My point is, preplanning your funeral is the only way to guarantee it will be done according to your wishes and it can save some people more grief in a time of grief.

To get back to the topic. DM didn't have a trust, she held her real estate in life estate and bank accounts with a TOD. The attorney said probate won't be necessary.

 

[Ncc1701]

I too never fully understood the benefit of a RLT in my situation. We are married couple with one 18 year old child. We have him listed as the TOD beneficiary on every asset except the house which we left in the will. I and the Mrs. have DPOA on each other in case one of us is incapacitated.

What is a trust going to do for me? I don't get it.

 

[LateToFIRE]

Here is wisdom. I continue to be amazed by the number of people trying to save a few cents in attorney fees by DIY'ing documents that affect a large estate.

+1, I have been part of a handful of estate resolutions, ranging from simple to complex, and practically insolvent to seven-figure. And even the simple ones had complexities needed an attorney to help resolve. In a seven-figure estate, best to find an estate specialist - NOT a generalist - who can anticipate what will be needed long before it is needed.

 

[Stormy Kromer]

I too never fully understood the benefit of a RLT in my situation. We are married couple with one 18 year old child. We have him listed as the TOD beneficiary on every asset except the house which we left in the will. I and the Mrs. have DPOA on each other in case one of us is incapacitated.

What is a trust going to do for me? I don't get it.

When we set up our trusts the attorney told me it was only necessary for estate tax purposes. (many states have lower thresholds than the federal limit). When the first in the couple passes, the assets go to their trust and not into the surviving spouses future estate. She told us that by using TOD on accounts, placing real estate in Life Estate and listing beneficiaries on Retirement accounts couples can often keep other assets low enough to avoid probate.

BTW, we titled our vehicles in our trusts. With the value of today's autos a couple of them alone could put you over the probate limit.

 

[mrfeh]

I too never fully understood the benefit of a RLT in my situation. We are married couple with one 18 year old child. We have him listed as the TOD beneficiary on every asset except the house which we left in the will. I and the Mrs. have DPOA on each other in case one of us is incapacitated.

What is a trust going to do for me? I don't get it.

Got over to bogleheads.org and search for "RLT" or "living trust".

 

[PatrickA5]

I too never fully understood the benefit of a RLT in my situation. We are married couple with one 18 year old child. We have him listed as the TOD beneficiary on every asset except the house which we left in the will. I and the Mrs. have DPOA on each other in case one of us is incapacitated.

What is a trust going to do for me? I don't get it.

In your current situation, probably nothing.

My lawyer suggested we don't need a trust. If we were to die today, we wouldn't even have needed a Will. But, things change and a Trust does add value in certain circumstances.

 

[pb4uski]

We have a will but only to cover off the vehicles that we own. The real properties are covered by enhanced life estate deeds and our financial accounts are covered by beneficiary designations... the remainder is less than 5% of our net worth and I'm working on reducing it further.