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Will/trust disbursement wrt TODs/beneficiaries
Old 01-11-2010, 06:22 PM   #1
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Will/trust disbursement wrt TODs/beneficiaries

I'm divorced with one adult daughter to whom I'd like to leave most, but not all, of my estate. Much of my wealth is in accounts where I have her designated as the sole beneficiary, or a transfer on death registration with her named.

What I'd like to do with my entire estate is to leave the bulk to her, but something like 5% to each of my siblings, or their heirs if they aren't around. I don't want to leave a fixed dollar amount to them, because if for some reason my estate dwindles, I could wind up leaving more to them than my daughter. Or if it takes off and inflation runs wild, I could be leaving them just a token amount.

The money that bypasses probate because of the TOD or beneficiary designation and goes directly to her--is that considered part of the estate for this purpose? I hope it does, because it would be a headache to figure out what % to leave the others. It seems that it must, but this question has been nagging me for awhile and I haven't found the answer.

I also don't want to update my will every year, like an asset allocation adjustment, based on how much I have and in which accounts it is in.

I read the NOLO estate planning book and it talks about POD/TOD but doesn't answer this question.

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Old 01-11-2010, 07:07 PM   #2
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I think the beneficiary type assets that bypass probate are part of your total estate for estate tax purposes but they are not part of the probate estate controlled by will or trust estate controlled by the trust. I don't know if you can put something in the trust or will that considers the total estate w/ some variation of a formula like: daughter gets
80% of total estate or xxx $, whichever is more so if estate shrinks, she gets it all, and if it grows, the others get the 5% .

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Old 01-12-2010, 12:54 AM   #3
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An expert might be able to come up with something that would do what you want, but a quick and dirty approach would be to just take one or two of the accounts and make the sibs beneficiaries. You could keep track to see that what you want to do is likely to get done.

My brother who recently passed left his only good sized accounts to another brother. His probate estate is deep into the red, and lots of creditors will likely come up dry. Since I am neither creditor nor beneficiary I will watching with detachment to see how it develops, but I think at least in his state the beneficiary trumps everything except taxes, wrt to the given asset. This will not be a federal taxable estate, but I think ( I only think this, I don't know it) that even if it were taxable the payments would come first out of the probate estate, before any attempt would be made to attatch the assets which passed by beneficiary.

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Old 01-12-2010, 01:17 AM   #4
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While I cannot address the US legal/tax issue, I have a smiliar distribution issue wanting to leave modest inheritances to my siblings with the bulk of the estate going to my children. The text of the will runs something like:

1. pay all taxes expenses and discharge all liabilities etc

2. allocation of some specific chattles

3. the first $x to be divided equally among my children

4. the next $y or, if less, the balance (if any) to be divided among my siblings and my children in equal shares

5. the balance (if any) to be divided among my children

Except for a few items under #2, nothing is left to my wife!!!

The other way to deal with this issue is life insurance policies which I have also done, but insurance is expensive and I will terminate the life policy once I retire.
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