Ask Terry Questions trust will or beneficiary

trust will or beneficiary

By Terry Savage on May 19, 2019 | Financial Planning / Retirement

I have a trust and will…I have used a high end firm in the city but am still confused as to where assets should be placed. Majors: House, investments, inherited IRA, Life insurance, Bank accounts (significant). I’ve had so many conflicting opinions. My husband is deceased and don’t want my young children left to try and figure out how to handle. I’ve heard life should and shouldn/t be put in trust with my timeline wishes. Same with bank accounts. I thank you for any assistance. Betsy

Terry Says

Your estate planning attorney should have helped you with this.  I’m surprised they didn’t — and you should give them a call and point them to this response onmyblog!

Basically, these are the rules.

Anything that has a named beneficiary– such as a life insurance policy or an IRA — shouldn’t be left to your revocable living trust, but to a named beneficiary, or several beneficiaries.

Everything of major value — including a home, CDs, a vacation home, Treasury bills, stock accounts held outside your retirement plan — all those things should be re-named in the name of the Revocable Living Trust.  Your attorneys should give you copies of the relevant pages of your RLT to give to the bank or title company to RE-TITLE those assets.  There is NO tax consequence.  And you can sell anything at any time, and any dividends, gains etc are reported on your own tax return.

What stays outside your RLT?  You daily checking account, the title to your car, your credit cards (actually these aren’t assets but people have asked about them).   The whole idea is that when you die, your named successor can easily distribute assets that have been titled  IN THE NAME OF THE TRUST — without going through the court procedure called probate.  Probate is expensive and time consuming.

This has nothing to do with estate taxes — and everything to do with distributing your estate when you die.  And if you don’t have more than $11.4 million in assets, you don’t have to worry about estate taxes at all!

Call your law firm and get them to give you certified copies of the “relevant pages” of your trust document.  Then contact every place where you have an account as described above, and ask them to change the title.  Again, there is absolutely no income tax consequence to doing this.  Don’t procrastinate.

Recent Financial Planning / Retirement Questions



a personal
finance question