TOD/POD/Trust question

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Post Reply
Topic Author
hoops777
Posts: 4603
Joined: Sun Apr 10, 2011 12:23 pm
Location: Behind the 3 point line

TOD/POD/Trust question

Post by hoops777 »

I have read through previous threads on this but still uncertain on what is best for us.
In a nutshell....
Married with 2 grown responsible sons.
Assets are a paid off home,2 brokerage acct,bank acct,HSA and IBonds.
Live in California.
Everything will be left 50/50
Any reason for a trust?

The last question is I may want to leave something to my grandson,currently 4,which probably would change the simplicity of the above.
Or we may just do it through a 529.
Thanks
K.I.S.S........so easy to say so difficult to do.
magicrat
Posts: 1191
Joined: Sat Nov 29, 2014 6:04 pm

Re: TOD/POD/Trust question

Post by magicrat »

Depends on how much you have and whether you have a reason to want to avoid probate.
increment
Posts: 1736
Joined: Tue May 15, 2018 2:20 pm

Re: TOD/POD/Trust question

Post by increment »

In California I believe that if the stuff you leave to be distributed under the terms of your will exceeds $150000 (i.e., property not in a trust, not TOD, etc.), then the estate has to go through the regular probate process. Probate in California is considered to be more painful than in other states.
delamer
Posts: 17458
Joined: Tue Feb 08, 2011 5:13 pm

Re: TOD/POD/Trust question

Post by delamer »

Do you mean putting your assets into a trust now or do you mean creating trusts for your sons that will hold the assets that they inherit (testamentary trusts)?
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Topic Author
hoops777
Posts: 4603
Joined: Sun Apr 10, 2011 12:23 pm
Location: Behind the 3 point line

Re: TOD/POD/Trust question

Post by hoops777 »

I should have been more clear.The way I see it is all of our money will go directly to our sons via POD and the house via TOD,which is why I was questioning the need for a trust.There are zero probate issues.Since we are invested extremely conservatively,looking through my crystal ball I would say they are likely to inherit about 1.5 M plus the house which currently is at 800K.
Last edited by hoops777 on Mon Apr 01, 2019 4:41 pm, edited 1 time in total.
K.I.S.S........so easy to say so difficult to do.
Topic Author
hoops777
Posts: 4603
Joined: Sun Apr 10, 2011 12:23 pm
Location: Behind the 3 point line

Re: TOD/POD/Trust question

Post by hoops777 »

delamer wrote: Mon Apr 01, 2019 3:17 pm Do you mean putting your assets into a trust now or do you mean creating trusts for your sons that will hold the assets that they inherit (testamentary trusts)?
I never considered testamentary trusts,should I?
K.I.S.S........so easy to say so difficult to do.
delamer
Posts: 17458
Joined: Tue Feb 08, 2011 5:13 pm

Re: TOD/POD/Trust question

Post by delamer »

hoops777 wrote: Mon Apr 01, 2019 4:34 pm
delamer wrote: Mon Apr 01, 2019 3:17 pm Do you mean putting your assets into a trust now or do you mean creating trusts for your sons that will hold the assets that they inherit (testamentary trusts)?
I never considered testamentary trusts,should I?
That is what our wills set up. The trusts somewhat limit withdrawals until our kids reach a certain age.

Plus they provide protection for your kids’ inheritance against divorce and lawsuits, and may preserve their Medicaid eligibility.

In the end, it depends on how concerned you are about the above issues.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
Topic Author
hoops777
Posts: 4603
Joined: Sun Apr 10, 2011 12:23 pm
Location: Behind the 3 point line

Re: TOD/POD/Trust question

Post by hoops777 »

delamer wrote: Mon Apr 01, 2019 5:25 pm
hoops777 wrote: Mon Apr 01, 2019 4:34 pm
delamer wrote: Mon Apr 01, 2019 3:17 pm Do you mean putting your assets into a trust now or do you mean creating trusts for your sons that will hold the assets that they inherit (testamentary trusts)?
I never considered testamentary trusts,should I?
That is what our wills set up. The trusts somewhat limit withdrawals until our kids reach a certain age.

Plus they provide protection for your kids’ inheritance against divorce and lawsuits, and may preserve their Medicaid eligibility.

In the end, it depends on how concerned you are about the above issues.
Thanks.
K.I.S.S........so easy to say so difficult to do.
User avatar
FIREchief
Posts: 6916
Joined: Fri Aug 19, 2016 6:40 pm

Re: TOD/POD/Trust question

Post by FIREchief »

I think the two strongest reasons to set up a trust are asset protection and spendthrift protection. I doesn't sound like you require the latter, but I am of the opinion that in our litigation crazy society, everybody can benefit from the former.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
Topic Author
hoops777
Posts: 4603
Joined: Sun Apr 10, 2011 12:23 pm
Location: Behind the 3 point line

Re: TOD/POD/Trust question

Post by hoops777 »

FIREchief wrote: Mon Apr 01, 2019 6:24 pm I think the two strongest reasons to set up a trust are asset protection and spendthrift protection. I doesn't sound like you require the latter, but I am of the opinion that in our litigation crazy society, everybody can benefit from the former.
I should know this but are the assets in a living trust protected from lawsuits?
K.I.S.S........so easy to say so difficult to do.
123
Posts: 10415
Joined: Fri Oct 12, 2012 3:55 pm

Re: TOD/POD/Trust question

Post by 123 »

Since California now permits beneficiary deeds for the disposition of real estate many people who would otherwise have needed a trust to dispose of real estate without probate proceedings can now simply use a beneficiary deed.

Trusts can still be useful in many circumstances. If you got enough to care about what happens to it a visit with a trust/estate lawyer can be a useful expenditure. Errors and oversights in estate resolution can be costly. A big issue in estate planning is the potential death of a beneficiary and what happens in that situation. For example, by the time the beneficiary problem arises the "beneficiary" may have additional descendants.
The closest helping hand is at the end of your own arm.
Topic Author
hoops777
Posts: 4603
Joined: Sun Apr 10, 2011 12:23 pm
Location: Behind the 3 point line

Re: TOD/POD/Trust question

Post by hoops777 »

123 wrote: Mon Apr 01, 2019 9:27 pm Since California now permits beneficiary deeds for the disposition of real estate many people who would otherwise have needed a trust to dispose of real estate without probate proceedings can now simply use a beneficiary deed.

Trusts can still be useful in many circumstances. If you got enough to care about what happens to it a visit with a trust/estate lawyer can be a useful expenditure. Errors and oversights in estate resolution can be costly. A big issue in estate planning is the potential death of a beneficiary and what happens in that situation. For example, by the time the beneficiary problem arises the "beneficiary" may have additional descendants.
I am assuming if you have 2 beneficiaries 50/50 and one dies the survivor automatically gets 100 % via a POD and TOD?
K.I.S.S........so easy to say so difficult to do.
Bobby206
Posts: 622
Joined: Fri Oct 05, 2018 4:01 pm

Re: TOD/POD/Trust question

Post by Bobby206 »

Trusts avoid probate at death AND avoid conservatorships at disability.

Also you can set up a trust to be a continuing trust for your kids which can give them some protections.

Also people can die and/or become disabled out of order so you need back up provisions in place.

PODs and POAs just can't do what a properly set up trust can do. Simple as that.

Generally worth it to get a trust from an experienced lawyer.

Good luck.
delamer
Posts: 17458
Joined: Tue Feb 08, 2011 5:13 pm

Re: TOD/POD/Trust question

Post by delamer »

hoops777 wrote: Mon Apr 01, 2019 9:39 pm
123 wrote: Mon Apr 01, 2019 9:27 pm Since California now permits beneficiary deeds for the disposition of real estate many people who would otherwise have needed a trust to dispose of real estate without probate proceedings can now simply use a beneficiary deed.

Trusts can still be useful in many circumstances. If you got enough to care about what happens to it a visit with a trust/estate lawyer can be a useful expenditure. Errors and oversights in estate resolution can be costly. A big issue in estate planning is the potential death of a beneficiary and what happens in that situation. For example, by the time the beneficiary problem arises the "beneficiary" may have additional descendants.
I am assuming if you have 2 beneficiaries 50/50 and one dies the survivor automatically gets 100 % via a POD and TOD?
Not if the deceased beneficiary has descendants.

And I don’t know what you mean by “automatically,” in this context.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. - Alexandre Dumas, fils
User avatar
FIREchief
Posts: 6916
Joined: Fri Aug 19, 2016 6:40 pm

Re: TOD/POD/Trust question

Post by FIREchief »

hoops777 wrote: Mon Apr 01, 2019 8:53 pm
FIREchief wrote: Mon Apr 01, 2019 6:24 pm I think the two strongest reasons to set up a trust are asset protection and spendthrift protection. I doesn't sound like you require the latter, but I am of the opinion that in our litigation crazy society, everybody can benefit from the former.
I should know this but are the assets in a living trust protected from lawsuits?
Generally, no. The asset protection comes into play with the subtrusts created for your heirs. Please see my signature.
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
BBQ Nut
Posts: 185
Joined: Sun Jun 22, 2014 9:19 am

Re: TOD/POD/Trust question

Post by BBQ Nut »

I know some states have TOD deeds but if you have multiple kids why would you want to put them all on a TOD deed?

All you've done is made them equally liable. Too many issues for my estate planning; the house is in the trust and it gets sold and the proceeds divided equally. Done.
Topic Author
hoops777
Posts: 4603
Joined: Sun Apr 10, 2011 12:23 pm
Location: Behind the 3 point line

Re: TOD/POD/Trust question

Post by hoops777 »

BBQ Nut wrote: Tue Apr 02, 2019 9:58 am I know some states have TOD deeds but if you have multiple kids why would you want to put them all on a TOD deed?

All you've done is made them equally liable. Too many issues for my estate planning; the house is in the trust and it gets sold and the proceeds divided equally. Done.
Why should there be liability issues when selling your house?
K.I.S.S........so easy to say so difficult to do.
BBQ Nut
Posts: 185
Joined: Sun Jun 22, 2014 9:19 am

Re: TOD/POD/Trust question

Post by BBQ Nut »

Suppose one of the children changes his/her mind and wants to live in the house?

Suppose one or both kid's live out of state, has a busy life and never gets around to signing papers?

Suppose the house needs repairs before selling and one kid refuses to kick in?

Suppose the tax bill is due and one kid doesn't have the money?

I know, I'm dead anyway, but I want a say in how 'my stuff' gets distributed.

Also, minors can't own real property, right?
Topic Author
hoops777
Posts: 4603
Joined: Sun Apr 10, 2011 12:23 pm
Location: Behind the 3 point line

Re: TOD/POD/Trust question

Post by hoops777 »

BBQ Nut wrote: Tue Apr 02, 2019 10:37 am Suppose one of the children changes his/her mind and wants to live in the house?

Suppose one or both kid's live out of state, has a busy life and never gets around to signing papers?

Suppose the house needs repairs before selling and one kid refuses to kick in?

Suppose the tax bill is due and one kid doesn't have the money?

I know, I'm dead anyway, but I want a say in how 'my stuff' gets distributed.

Also, minors can't own real property, right?
I get your point but not an issue in my case.
K.I.S.S........so easy to say so difficult to do.
User avatar
Artsdoctor
Posts: 6063
Joined: Thu Jun 28, 2012 3:09 pm
Location: Los Angeles, CA

Re: TOD/POD/Trust question

Post by Artsdoctor »

Hoops,

California has a reputation of having a difficult probate process. However, bsteiner, a prominent poster on the forum, has provided very convincing studies which would rebut that. If your assets are titled correctly and have beneficiaries listed correctly, settling your estate could be quite easy. I would keep an open mind when you're weighing the pros and cons.

Asset protection is not a great reason for setting up simple trusts. You can make your trusts more complicated and devise ways to have some partial protection but it's an effort.

Wanting to provide for your sons is pretty straightforward. You might want to think things through with the planning related to your grandchild and at least think about what you'd want to provide. A 529 can be a good planning tool, but there have been numerous articles written about grandparents' 529 interfering with student aid so you might want to do some more research on that.

There's nothing wrong with meeting with an estate lawyer and discussing the pros and cons of both.
Topic Author
hoops777
Posts: 4603
Joined: Sun Apr 10, 2011 12:23 pm
Location: Behind the 3 point line

Re: TOD/POD/Trust question

Post by hoops777 »

Artsdoctor wrote: Tue Apr 02, 2019 6:49 pm Hoops,

California has a reputation of having a difficult probate process. However, bsteiner, a prominent poster on the forum, has provided very convincing studies which would rebut that. If your assets are titled correctly and have beneficiaries listed correctly, settling your estate could be quite easy. I would keep an open mind when you're weighing the pros and cons.

Asset protection is not a great reason for setting up simple trusts. You can make your trusts more complicated and devise ways to have some partial protection but it's an effort.

Wanting to provide for your sons is pretty straightforward. You might want to think things through with the planning related to your grandchild and at least think about what you'd want to provide. A 529 can be a good planning tool, but there have been numerous articles written about grandparents' 529 interfering with student aid so you might want to do some more research on that.

There's nothing wrong with meeting with an estate lawyer and discussing the pros and cons of both.
Thank you.
K.I.S.S........so easy to say so difficult to do.
User avatar
Earl Lemongrab
Posts: 7270
Joined: Tue Jun 10, 2014 1:14 am

Re: TOD/POD/Trust question

Post by Earl Lemongrab »

Artsdoctor wrote: Tue Apr 02, 2019 6:49 pm Hoops,

California has a reputation of having a difficult probate process. However, bsteiner, a prominent poster on the forum, has provided very convincing studies which would rebut that.
It's not that it's difficult, but the state has high statutory fees for attorney and exectutor. Combined with the high cost of real estate there, many estates are half a million or more and have large fees. It's a good idea to at least pass real-estate outside probate.
bsteiner
Posts: 9210
Joined: Sat Oct 20, 2012 9:39 pm
Location: NYC/NJ/FL

Re: TOD/POD/Trust question

Post by bsteiner »

Earl Lemongrab wrote: Wed Apr 03, 2019 4:12 pm
Artsdoctor wrote: Tue Apr 02, 2019 6:49 pm Hoops,

California has a reputation of having a difficult probate process. However, bsteiner, a prominent poster on the forum, has provided very convincing studies which would rebut that.
It's not that it's difficult, but the state has high statutory fees for attorney and exectutor. Combined with the high cost of real estate there, many estates are half a million or more and have large fees. It's a good idea to at least pass real-estate outside probate.
Executors' commissions (fees) are comparable in other states. Of course, in most cases, the executors are one or more of the spouse and children, who rarely take commissions (fees).
Post Reply