Sole Beneficiary of Revocable Trust

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johnnyproctor
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Joined: Tue Apr 20, 2021 9:50 am

Sole Beneficiary of Revocable Trust

Post by johnnyproctor »

Hello,

First-time poster here, go easy on me.

Recently my parents (birth mother, adoptive stepdad) surprised me by working with a paralegal to get their affairs in order. While they had never been particularly organized or successful they have always done right by me and I had expected to help them through the estate planning process. But lo-and-behold they just went and did the damn thing on their own: advanced directive, powers of attorney (medical and financial), they even had a revocable trust drawn up.

It's worth noting I am an only child and there are no other heirs I'm aware of. So having a trust drawn up seems unnecessary. Furthermore, only two (2) line items appear on Schedule A - Shared Items Placed in the Trust:
1) Primary Residence
2) "And such additional property as there may be, including but not limited to automobiles and household furniture, bank, and other financial institution accounts, personal property and effects, etc."

And that's the end of it, no account numbers, no other details.

Do you think this would hold up? I'm not expecting much if anything in the way of inheritance, but I certainly want to avoid probate for anything that is left when they pass.

I believe my next step is to ensure their cash/investment accounts have the trust named the beneficiary.

Any thoughts or recommendations would be greatly appreciated.
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David Jay
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Re: Sole Beneficiary of Revocable Trust

Post by David Jay »

A revocable trust is a nice way to simplify handling the estate. We did one (two adult children, 50/50 split) just so there was no need of probate. They know to contact the law office in the event of our demise and everything will be handled from there. One stop takes care of everything.
Last edited by David Jay on Tue Apr 20, 2021 8:13 pm, edited 1 time in total.
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muddgirl
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Re: Sole Beneficiary of Revocable Trust

Post by muddgirl »

I am not a lawyer but I have a revokable trust. Schedule A is more or less meaningless. In general their house, cars & bank accounts need to be retitled in the name of the trust, their paralegal should tell them how to do it. that is how the trust is funded.

Retirement accounts and other POD or TOD accounts can either have the trust as a secondary beneficiary or just you as the secondary beneficiary. Presumably the spouse would be the primary beneficiary. There are pros and cons to each approach.

The important question for you is what happens to the trust when the first spouse dies and what happens when the second spouse dies. Does it disburse funds immediately to you or convert to an irrevocable trust? Again there are pros and cons to each.
Fallible
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Re: Sole Beneficiary of Revocable Trust

Post by Fallible »

johnnyproctor wrote: Tue Apr 20, 2021 10:30 am ...
Do you think this would hold up? I'm not expecting much if anything in the way of inheritance, but I certainly want to avoid probate for anything that is left when they pass.

I believe my next step is to ensure their cash/investment accounts have the trust named the beneficiary.

Any thoughts or recommendations would be greatly appreciated.
Are you the trustee or would you be if they become incapacitated? Are you able to look over the trust documents with them and ask questions of the paralegal? Have they also provided for a power of attorney? Have your parents told you why they decided on a trust (generally speaking, there can be reasons in addition to avoiding probate)?
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HomeStretch
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Re: Sole Beneficiary of Revocable Trust

Post by HomeStretch »

Congratulations to your parents on getting their estate plans in place.

The next step, if not done already, is to retitle property/accounts and set up account beneficiaries according to the advice given to them by the paralegal/attorney.

If you are named as attorney-in-fact (primary or successor) in their durable POAs and/or as their healthcare representative, be sure you receive an original of the documents or know where they are located in their home in case you ever have need of them.

If you are the executor (primary or successor) of their wills, ask to review the wills with them in case you have any questions about how to carry out their wishes. Sometimes the law firms give out questionnaires to be completed about final arrangements, digital rights, etc. Review these with your parents in case you have any questions.

Keep a copy of the law firm’s contact information in case you need assistance in order to fulfill your responsibilities.

Edit - when/if the house or cars are titled in the name of the trust, your parents likely need to change the insured information with the insurance company is order to be covered for a loss. Update the insurance at the same time as the retitle is done.
Last edited by HomeStretch on Wed Apr 21, 2021 8:16 am, edited 2 times in total.
increment
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Re: Sole Beneficiary of Revocable Trust

Post by increment »

johnnyproctor wrote: Tue Apr 20, 2021 10:30 am I believe my next step is to ensure their cash/investment accounts have the trust named the beneficiary.
It might be better for the trust to be the owner of the investment account. Perhaps this varies by state.

By the way, in trust jargon the current beneficiaries of the trust are your parents.
Topic Author
johnnyproctor
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Re: Sole Beneficiary of Revocable Trust

Post by johnnyproctor »

Thanks for the feedback everyone. I got pulled away, but yes I’m the sole executor and I really appreciate the tips!
fourwheelcycle
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Re: Sole Beneficiary of Revocable Trust

Post by fourwheelcycle »

Our joint revocable trust does not have any Schedule A. It just says we are the trustees and our executor child is the successor trustee. We can add our successor trustee as an active trustee at any time. This would give them full access to all assets and property titled to the JRT, regardless of whether they also have a DPOA for finances (which they do have). We intend to add them as an active trustee if we ever need help managing our finances when we get older. We also intend to add them before the second of us dies in order to simplify their transition to the role of estate executor and JRT trustee. They would still have to submit our death certificates and get a new EIN for the JRT, but they would already be recognized as a trustee by our bank and brokerage.

We have simple pour-over wills that give any overlooked or last minute assets to the trust, DPOAs for health care, advance health care directives, and a Deed of Gift that gives all or our house contents, cars, and other possessions to the JRT.

Our checking and savings accounts and our taxable brokerage account are titled to the JRT. Our tax-deferred retirement accounts have named beneficiaries. Our house it titled to the JRT.

I have written a side letter to our children that explains our estate plan setup and provides access to the original signed documents, our house and car titles, and account information for all of our financial assets.

We chose a JRT to simplify the estate settlement and distribution process for our children. They live in different states from us, so if we sell our house and move into a retirement community before we die our executor child will not have to do very much in our state when we die - no house to sell and no need to retain an attorney to assist with probate.
Fat Tails
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Re: Sole Beneficiary of Revocable Trust

Post by Fat Tails »

I am not an estate attorney, and one of the attorneys in this forum can correct me if i’m wrong, but just because property is listed in the trust doesn’t make it so. The title of the property needs to be retitled in the name of the trust. The financial accounts can be changed to payable on death to you and don’t need to go through the trust. IRAs should have you listed as a secondary beneficiary. Your parents need a pour-over will to cover those items (such as vehicles, art, etc. that are not titled in the name of the trust.

Cheers
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Lee_WSP
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Re: Sole Beneficiary of Revocable Trust

Post by Lee_WSP »

Fat Tails wrote: Thu Apr 22, 2021 11:41 pm I am not an estate attorney, and one of the attorneys in this forum can correct me if i’m wrong, but just because property is listed in the trust doesn’t make it so. The title of the property needs to be retitled in the name of the trust. The financial accounts can be changed to payable on death to you and don’t need to go through the trust. IRAs should have you listed as a secondary beneficiary. Your parents need a pour-over will to cover those items (such as vehicles, art, etc. that are not titled in the name of the trust.

Cheers
Correct. It needs to be titled "fat tails as trustee of fat tails trust" or similar language indicating that the asset is held in trust.

But non titled assets are not titled, so it's going to vary a bit by state, but something similar should generally be sufficient, like a list saying so, but that said, personal property is not generally fought over via the trust. Art and collectibles excepted.
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celia
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Re: Sole Beneficiary of Revocable Trust

Post by celia »

Here’s the terminology you need to know:

A will has an executor carry out actions after death, while a trust has a trustee.

Your parents were the ones who created and will fund the trust (put assets in it by changing the title on taxable accounts), so they are the trustors (or grantors). The person(s) who control or manage the trust are the trustee(s). The person(s) who ends up with the assets are the beneficiaries. While your parents are alive, they take on all the roles: trustor (putting their money in the trust), trustee (writing checks, buying and selling assets), and beneficiary (for their own use, however they want to spend their money).

If they become incapacitated or are just tired of managing their accounts and paying their bills, they can resign as trustees and the successor trustee (you) then become the trustee and manage their money for them. You would have a fiduciary duty to do what is best for them, not you.

They can change (amend) the trust at any time. But after they both die, the trust becomes irrevocable (non-changeable) and the trustee must follow the terms spelled out in the trust, the best they can. Before doing anything (after they die), you should read the whole trust to understand it and write down your questions. Then get a consultation with an estate planning lawyer to answer your questions and to find out what their state requires for all trustees to do. (For example, if there are other beneficiaries, all of them need to be notified and be given a copy of the trust with a list of assets and liabilities within a specific time period.)
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