That’s why you need a local estate planning attorney to review everything to make sure there are no major holes like absence of a residuary clause.
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NOTE: per later posts, my info was about revokable trusts - Apologies for the confusion.
For those considering a Trust (which we have decided to not do, or at least not yet) … you have to be ready to do the following things:
- Decide who should be named as Trustee
- Decide what the terms of the trust would be (example - what percentage of estate goes to kids at what ages)
- After Trust is created, go back to all the assets (which may or may not have had named beneficiaries) and point each to the Trust
- Pay several thousand dollars to set it up.
To be honest, #1 gave us pause. (Can’t use one of the kids since they are the beneficiaries. Really did not want to burden any other family. Did not think it made sense to pay bank (or other hired helper). If we had considered a Trust when kids were younger, we might have been more likely to pursue.) And for #2 we were undecided… so many TBD variables.
No this is not all correct. For a living trust you don’t need anything related to kids or how old they are at age of inheritance. You’re mixing up different types of trusts. An irrevocable trust is what we’ve been talking about and you can be your own trustee as I mentioned above with respect to mine. I’m the trustee. My assets are all in my living “irrevocable” trust, I’m the trustee. The trust is so my estate doesn’t have to go through probate. Also they are not “thousands” of dollars to set up because usually you do them in tandem with a will, HCPOA, and PPOA. These are the 4 main documents that should be prepared as a basic estate plan.
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@srparent is right… I am mixing up types of trust. Our investigations were all about revocable trust. I will go back and put a note at my prior post.
No worries!
The stinky thing is when you write a check from “your” trust and someone thinks it’s like a trust fund, when it’s just an irrevocable trust that just holds your assets and doesn’t mean you’re necessarily a multi-millionaire lol!
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Your adult kids could be your successor trustee; in my state it is common to set up a living trust, spouses as trustees, chosen kid as successor.
Yes - benes can be trustee depending on the terms of the trust. If they have full discretion to distribute to themselves, then the trust is still valid but does not provide them any creditor protection. However, if you use an “ascertainable standard” as defined by IRS and caselaw, then a beneficiary can be trustee and have some protection. Standard is usually: income and principal may be distributed for health, education, maintenance, and support. Pretty much anything can fit into one of those caregories.
An adult child can certainly be a Trustee as well as of a beneficiary of a Trust. In fact, that is not uncommon. As Trustee, the child has a fiduciary obligation to treat all beneficiaries fairly.
(I am currently the Trustee of my folks’ revocable family trust – now irrevocable since they are both dead. There are a total of 5 sibs who are beneficiaries.)
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This is a lot to process! So good to hear all the nuances - to know what to think about/avoid.
A friend just suggested using an attorney to set up trust who has a lot of financial planning expertise (maybe they would be a CPA also?) - rather than a straight trusts & estates person. Kind of helps it mesh better with the other financial planning docs/decisions.
My H has been retired over 3 years as a public employee and did the transition from state health insurance to a combo of Medicare/secondary insurance in cooperation with the state public retirement system.
I have a preliminary phone call set up later this week just to see where I fall, what I would receive and how it benefits me to wait (or not) to retire. I have 20 years in as a state public employee - I’ll never make 30 years to be fully vested. I’m 61 and our state retirement system of COURSE just recently changed so that I can’t get health insurance through them until 65. I hate that I might need to keep working to pay for health insurance - yet here we all are, right?!
I also worked paying into social security for 20+ years so I know (but not to what extent) that my public retirement will affect what I might eventually get from SS.
But I have to start somewhere to get my info together in my head and decide what makes the best life and financial sense.
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We have something similarly set up as well too in our family. But there are 2 trustees for each Trust (these are not the living trusts I was talking about previously, then when one of the trustees passes away, the child who is the beneficiary of that trust at the time becomes the trustee with the other person (non relative). If he passes away then there is a successor to him but he is not a beneficiary. These trusts were all formed for asset protection reasons. Very complicated but necessary.
There are also no age restrictions for when the money can be taken out as there are with most trusts but there are provisions similar to what @momma2018 said that the beneficiaries (who would also be a trustee) can always take the money for education purposes, standard of living, etc. and the other trustee can’t really prevent the distributions. The caveat is really for protection of the assets and generational wealth.
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Abasket- the wealth manager person I am talking to apparently knows a lot about the health benefits side of jobs and can help calculate the need to keep working in light of what is necessary to pay for health coverage.
Good you are investigating - it’s obviously such a huge, huge factor in any decision-making …
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Per estate planning in simpler situations, it seems like the first pass could be done without deciding about revokable trusts (unless need for them surfaces during the planning with professionals).
I’ll draft an estate planning checklist ++ Others can help refine it.
- Make a list of assets (bank accounts, stocks, investment funds, 401K etc) and/or maintain a summary spreadsheet.
- Confirm co-owner and/or beneficiaries (and alternates) are assigned to each asset
- Confirm or arrange “lawyer docs”
- Will
- POA (power of attorney)
- medical POA
- Health care proxy / living will … it’s not a financial doc, but it’s handy to have a lawyer do it along with the others
- Gather insurance policies (life and/or Long Term Care)
- Make sure family knows where all of the above paper docs are filed (strongbox or safety deposit box or lawyer’s office or county offices or other)
++ This draft checklist is inspired by my late mother’s excellent estate planning and prep. Her assets were moderate, but she was VERY diversified. Luckily most assets had co-owner or beneficiary defined, which made things easier.
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Make a list of passwords or have a way some one can access your passwords, important especially when a spouse dies and the remaining spouse knows nothing or when the main financial person is temporarily incapacitated.
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Really important and I will add that to my list. I have a “Black Binder” that contains all account statements, life insurance, etc. I update it annually with new statements. I created a table of contents, tabs by category (so it’s easy to follow), and a summary on the tab page describing each account / phone numbers/ beneficiaries (I will add website and ID / PW).
Wife isn’t interested in looking at it. Finance oriented S knows exactly where to go and what to do in case something happens. He’ll move away this summer, so I’ll make him a separate binder.
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That’s a great idea. Having everything in a single place is huge. Not to mention that, in an emergency you can grab it and go.
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Yes - very important.
Also important if you have a power of attorney and health care proxies - give copies to your agents. It does not good if they cannot access them in an emergency. Also a good idea to give your primary care physician a copy of health care proxy to scan into their portal so it can be easily accessed by doctors.
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My FIL showed me where everything is & went through all of it with me. He passed away in January, and I went right to work getting things straightened out for my MIL. She got mad at me and told me to stay out of her business. Now she is struggling to figure out the things I didn’t get to, and she is paying the trust lawyer to do what I was fully able to do.
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These lists and tips are so helpful! Very useful to have some actionable items that will make a difference, before diving into the complexities of trusts, etc.
What I might add is what some health care people told me - the living will/advance directive is good, but it’s pretty bare-bones. What’s also important is to have those conversations with your loved ones - this is what I would like done, this is not. They are often the ones making those heat-of-the-moment decisions with medical staff and it’s really good if they understand fully what your wishes are.
I’ve also kinda forced my family to talk about arrangements (e.g., I want to be cremated, etc.). Very un-fun conversations, but I’ve lived through the heartache of not truly knowing what your parent wanted done (after death) and just hoping for the best. Don’t want my kids to suffer that.
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We coincidentally were reviewing our wills etc during Covid. We looked at a “7 day” clause in health proxy and started wondering about covid ventillators etc … then went “phew” when we saw it was timeframe AFTER it had been decided there was no more hope of recovery.
I knew we’ve mentioned this before, but it seems a good time to plug this helpful book again
Being Mortal by Atul Gawande Being Mortal by Atul Gawande Plot Summary | LitCharts
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