I think the one consistent rule everywhere for accounts/assets is that any designated person (co-owner, listed beneficiary, TOD assignee) will override any terms of Wills and Trusts. True?
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Absolutely not - did TOD override trust in our family case where someone added TOD to herself shortly before trust owner’s death - likely did it to keep out of trust administration. Financial institution lawyers said trust overruled TOD. Added a wrinkle (and consultations) to sort that out to be able to withdraw and split between beneficiaries. Large financial institution said the personal bankers are taught that. Midwest state, in case that matters.
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Ah… was that a case where the asset was listed in the trust? Or just part of the associated pour-over will?
Someone (not power of attorney) added themselves as POD to a large checking account titled in personal trust of elderly person.
Nothing was listed in trust/no accounts were listed in trust, but all financial assets were “in trust” by title. Same with ours. Trust was created/ exists and accounts and assets were then titled/transferred with/to name of the trust.
Major bank froze account until the their lawyer panel sorted it out.
Interesting. We don’t have a trust. But when we discussed doing so with our financial planner, it sounded like having the document was useless until you somehow associated each asset (ie different from the philosophy of a will). Thinking more on it, not sure it the association would be done as a list within the trust or at the asset itself (maybe trust as beneficiary.)
Note - The answer may depend on State laws and whether it is a revocable trust or irrevocable trust.
I’m not a lawyer, but when I set up a trust I retitled assets that have ownership recorded somewhere to be owned by the trust. Brokerage accounts, home, etc. The estate lawyer filled out the transfer deed for the house and submitted it, a bit of a complicated form. Financial institutions were easy to do on my own. When a lawyer creates a trust they will also create a pour-over will that says any assets not part of the trust are left to the trust.
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My brother who is counsel for a bank says ask each place where assets are held for their power of attorney firm and complete the form at each place. That’s the safest path (tho cumbersome).
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POA is only good for before death. POD is for after death.
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Working on revising our estate plans. We have wills that establish a revocable trust once my spouse or I die. Our attorney suggested retitling most of our accounts now from joint tenancy to tenants in common. She didn’t think it was necessary to setup the trust yet and noted probate in our state is “easy.” Our bank has an estate specialist who is also an attorney who said we should push back and do the tenants in common as a trust now instead and thought this should be a minor change. Our attorney quoted a price that was not minor. We’re caught in the middle.
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What is their reason for dumping JTWROS? So that the first deceased’s share goes into a QTIP instead of going to the survivor? Do you or your spouse have kids from prior marriage? That might explain the complexity.
One scenario we’re considering is the case of us both dying at the same time. We’re planning to put our real estate in the trust now, so that it’s all setup for either the surviving spouse or our offspring.
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No previous marriages or kids or any other complicating factors.
Both the attorney and the bank estate expert recommended the tenants in common because it would make it easier to establish the trust upon the death of the first spouse.
Our attorney’s POV was that the odds of dying at the same time was statistically very small, so better to same the flexibility of not having the assets in the trust yet and that the mix of assets and terms we want for the trust might materially change between now and when one of us dies. The bank estate planner did prefer to do the trust now.
I would probably do it now, but the fee was quite high and the main benefit in our case seems to be the narrow cases of either both of us dying simultaneously or us becoming suddenly incapacitated before death vs $8K in expense now.
On the Bogleheads Forum when people discuss fees for setting up a trust from scratch it is commonly in the $1K-$4K range for uncomplicated situations. You can find several discussions on the forum on pricing and how to find an estate attorney including this thread Chambers and Partners for trusts and estates attorneys? - Bogleheads.org
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While the odds of dieing together are pretty low, it is fairly common for an elderly spouse to die without having had the time and/or opportunity to redo paperwork.
For our simple situation (2 kids, no grandkids) in a state with easy probate , I am not keen on setting up a trust (and it’s actually free service with our financial planning group). There are fees and disadvantages making a bank or lawyer the trustee. And there is nobody we’d want to burden with the responsibility. Perhaps we’ll change our mind down the road.
who is gonna be “burdened” as the Executor of your will?
(being a Trustee can be less work, particularly for a “simple situation”)
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Eldest/local kid is our executor. With the exception of real estate (which we may not have at the end), executor is easy peasy in Colorado. For estate of my mother, not wealthy but oh so well diversified with many accounts, I did not even need to hire a lawyer.
My understanding is that a Trust requires tax filing annually.
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depends on the Trust. My folks revocable Trust was treated as a pass-through while they were alive and the banks used theri personal tax ID. The trust has no income until they passed. No fillings required until then, which in reality was just the Final return.
As Trustee, it was ‘easier’ as I never had to go to probate court or file any papers.
After the folks passed, I had their house cleaned and sold/closed in <90 days.
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In Colorado, as my mother’s executor I just had to got the county courthouse… take a number and wait for a clerk who received some forms and the Will. (Happy to say it was easier than a trip to the DMV, well except for there is a metal detector to pass thru at the courthouse). I thought they would need to see death certificate, but they just wanted date of death. Then a few weeks later they sent me a Letter of Testamentary, which I used for my executor tasks.
When I called the court house to confirm procedures, decide what to do, they said about half of executors handle things without need of a lawyer. I imagine if real estate is involved it is trickier.
didn’t say that Colorado wasn’t easy. My point was that as Trustee, I didn’t have to do any of that:
– traipse down to the Court house
– stand in line
– wait for papers
– wait a few weeks for a letter from teh Court
Instead, I coudl start my Executor tasks as soon as I had the death cert. Signed with a real estate broker the next day.
btw: what happens if your kids take a job out of state? That trip to the court house becomes a bigger hassle.
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LOL - If my kid moves out of state and we kick the bucket while still in the house, there would be LOTS of chores not related to paperwork. But that’s a discussion for “Bag a Week” thread.
Since we review our situation quarterly with advisor, down the road we could adjust strategy and add a Trust when/if it makes sense.
I did a quick google check, and the estimate is about 10 to 20% of homeowners have the home in a trust. I can see why some folks might want to do that. To us the bigger priority right now is simplifying and documenting our asset situation…. ensuring that spouse is beneficiary (kids alternates, 50/50 split). It is pretty likely that we will sell our current two story home at some point, but I assume selling steps same whether or not in a trust.
Note - We’ve been told that the reason that many clients opt for a trust / avoiding probate is to keep the estate settlement details off of public records. That is a non-issue for us. For families with that concern, a Trust is the way to go.