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Revocation Trust
Old 12-04-2021, 04:28 PM   #1
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Revocation Trust

While preparing a draft of our income taxes the subject of Oregon's estate tax came to my attention. The estate tax kicks in at $1,000,000. Given the increase in the value of real estate and IRAs it doesn't take much to kick in. Our revocable living trust provides for the creation of a Revocation Trust at the time of first death.

Has anyone ever funded one of those? If I wanted a Revocation Trust to own IRAs of a descendant how does that work?

Should the spouse be named as the first beneficiary and the residual beneficiary named the revocation trust?
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Old 12-05-2021, 05:27 PM   #2
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While preparing a draft of our income taxes the subject of Oregon's estate tax came to my attention. The estate tax kicks in at $1,000,000. Given the increase in the value of real estate and IRAs it doesn't take much to kick in. Our revocable living trust provides for the creation of a Revocation Trust at the time of first death.

Has anyone ever funded one of those? If I wanted a Revocation Trust to own IRAs of a descendant how does that work?

Should the spouse be named as the first beneficiary and the residual beneficiary named the revocation trust?

You really should speak to an attorney that specializes in Estate Planning. Laws vary by state and the attorney will ask a lot of questions about your situation to provide you with options you can choose.
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Old 12-05-2021, 06:19 PM   #3
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You really should speak to an attorney that specializes in Estate Planning. Laws vary by state and the attorney will ask a lot of questions about your situation to provide you with options you can choose.
This.

Example, DW was an SVP in a megabank trusts & estates division and I have never heard the term "revocation trust." In our estate plan the current revocable trust becomes an irrev trust after the second death. That is the terminology here. That's why you need a local expert attorney not SGOTI.
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Old 12-23-2021, 06:32 PM   #4
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Update: We consulted an attorney who said that a "revocation trust" is a common term for a Credit Shelter Trust.

Our Credit Shelter Trust is now the contingent beneficiary on each IRA while the spouse is the primary beneficiary. The first to die disclaims to the benefit of the named credit shelter trust within 9 months. The assets in the credit shelter trust are not counted in the estate of the survivor although the survivor can use the income and must take the RMDs.

When the last to die passes our joint revocable family trust becomes irrevocable.
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Old 12-23-2021, 07:03 PM   #5
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Update: We consulted an attorney who said that a "revocation trust" is a common term for a Credit Shelter Trust.

Our Credit Shelter Trust is now the contingent beneficiary on each IRA while the spouse is the primary beneficiary. The first to die disclaims to the benefit of the named credit shelter trust within 9 months. The assets in the credit shelter trust are not counted in the estate of the survivor although the survivor can use the income and must take the RMDs.

When the last to die passes our joint revocable family trust becomes irrevocable.
Strange, I can't see how "revocation trust" can be described as a common term when I do not see any google search result for that term.

I'm interested in this because we did something similar. Could you clarify a few things:

-Is it your intent that the survivor of the first spouse to die will disclaim IRA assets to the trust, so that the assets are outside of the estate when the survivor dies? If this is the case, why don't you just name the trust as the primary beneficiary?

-Do you know whether the assets, when passing into the trust upon the death of the first spouse would qualify for the spousal estate tax exemption?

-Are you stating that the trust will remain revocable between the death of the 1st to die and surviving spouse? If so, it seems very strange the assets would not be counted in the estate of the surviving spouse.

-Was the term "QTIP qualified" used to describe the trust?

Thanks
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Old 12-23-2021, 07:13 PM   #6
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The reason for not naming the Credit Shelter Trust as the primary beneficiary is to preserve the option of not disclaiming the asset. The survivor would not want their IRA to go into the Credit Shelter Trust when they pass, the goal is to keep the assets separate. Action must be taken to put an asset into the Credit Shelter Trust. The Credit Shelter Trust provides for inheritance by our children.

My IRAs are relatively modest, other assets I own can be disclaimed to the Credit Shelter trust if I pass first.
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