Wills vs Revocable Trust

[Pilot2013]

I am not sure about Revocable, but DW and I are in the process (she is the Trustee) of terminating her parents Irrevocable Trust which only contained their home. We are trying to get with the accountant now to confirm, but the attorney we hired says that due to this trust, we will have to pay Capital Appreciation taxes for the increased value of the home. The trust (at least as set up) cannot take advantage of the home capital appreciation exclusion.

 

[kgtest]

The lawyer said he knew many people who set up the trust but never put their assets into them, so it did not have any effect. It is not automatic.

Exactly what I am fighting with dad. Retitle your properties into trust, and your IRA beneficiary. But sometimes its better to just have individual listed for IRA Beneficiary. Trust is particularily useful against probate when multiple properties in different state exist. bypass lots of probate with that out-of-state property titled as the trust.

Unless...

trust is often set up for those who want to leave enough money for the care of their spouse and then direct any remaining funds to go to their children after the spouse passes.

Mine (and dads) is/will be setup as a see-through trust with care for spouse if needed. That may change as children age and deem themselves capable, and worthy...or not capable and not worthy.

 

[Dash man]

Exactly what I am fighting with dad. Retitle your properties into trust, and your IRA beneficiary. But sometimes its better to just have individual listed for IRA Beneficiary. Trust is particularily useful against probate when multiple properties in different state exist. bypass lots of probate with that out-of-state property titled as the trust.

Unless...

trust is often set up for those who want to leave enough money for the care of their spouse and then direct any remaining funds to go to their children after the spouse passes.

Mine (and dads) is/will be setup as a see-through trust with care for spouse if needed. That may change as children age and deem themselves capable, and worthy...or not capable and not worthy.

Never commingle IRA accounts with other assets in a Trust. There may be serious tax consequences.
We just went through the process with our attorney. We have separate IRA trusts with primary beneficiaries being each other and the trust being the contingent beneficiary. This way the IRA funds go to the surviving spouse. Then the surviving spouse moves all funds into the IRA Trust which goes evenly to the kids.
None of our trusts will be funded until the first of us goes. Better protection from creditors and lawsuits. We have a pour over will into the trusts for things that do not have a contingent beneficiary or in case we go at the same time. Everything is jointly owned with right of survivorship. Surviving spouse puts everything in trust. This preserves the combined estate tax exemptions and sets new cost basis.