What to put into Revocable Living Trust?

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Loyalnine
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What to put into Revocable Living Trust?

Post by Loyalnine » Sun Nov 10, 2019 3:41 am

I have a question about what to put inside a Revocable Living Trust. I have read multiple theories. Some say that you don’t need to bother moving accounts to it that have beneficiaries, because they will avoid probate anyway. However, since I have young kids (5, 3, and 1 month) I prefer to have a “pot” managed approach to their inheritance rather than even/equal distribution in case one of them has higher medical needs/other needs. I’ve specified that approach on my will. However, does having beneficiaries listed on my life insurance, for example, bypass that pot-based approach? In other words, should my secondary beneficiary (after my spouse) for my life insurance be the RLT (rather than my children themselves) to ensure this pot-based approach?

Ragnoth
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Re: What to put into Revocable Living Trust?

Post by Ragnoth » Sun Nov 10, 2019 4:19 am

This is a question for a trust and estate attorney. But in general, your designated beneficiary will normally supersede instructions in a will (so if it the beneficiary is all the kids equally—that is how that money is distributed). Naming the trust as the beneficiary in lieu of your children should ensure that your “pot” approach is actually used... but... again... you should probably run that past an estate lawyer.

Gill
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Re: What to put into Revocable Living Trust?

Post by Gill » Sun Nov 10, 2019 7:22 am

Yes, for the reasons you stated, the RLT should be the contingent beneficiary or maybe even the primary beneficiary of the life insurance.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal

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changingtimes
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Re: What to put into Revocable Living Trust?

Post by changingtimes » Sun Nov 10, 2019 8:07 am

It's a different situation than yours, since I am widowed and have no kids, but my estate attorney had me make my trust the owner of both my house and my taxable brokerage account. The reasoning was that if I am declared unable to handle my affairs, my trustee will have immediate access to some money to pay for care (and can sell the house if I'm not coming back) with a lot less hassle.

I have beneficiaries named on all other accounts. I don't have the trust named as a beneficiary anywhere.

fourwheelcycle
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Re: What to put into Revocable Living Trust?

Post by fourwheelcycle » Sun Nov 10, 2019 8:18 am

Our first wills, prepared when our children were young, put all of our assets, including our tax-deferred retirement accounts, into a single trust with provisions that the funds should be used to raise and educate our children, with any remaining funds distributed as equal shares when each child reached age 26. Now we have a joint revocable trust that includes all of our taxable assets, with our now adult children as equal share beneficiaries.

You can consult an experienced estate attorney, and also look for articles on the internet by Bruce Steiner, to understand issues related to naming your trust as the secondary beneficiary for your retirement accounts, after each spouse.

inbox788
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Re: What to put into Revocable Living Trust?

Post by inbox788 » Sun Nov 10, 2019 5:06 pm

Gill wrote:
Sun Nov 10, 2019 7:22 am
Yes, for the reasons you stated, the RLT should be the contingent beneficiary or maybe even the primary beneficiary of the life insurance.
Gill
No, OP, you shouldn't be thinking "or" or "maybe". It needs to be what you want, and you need to ensure that what you want and how you say you want it is consistent with how the trust and will and accounts say and will be dealt with if you're gone.

If you want to ensure the "pot based approach" (I don't understand what it is), then the will better be clear about who and how it's handled, and that the executor of the trust is able to carry it out. Anytime there is interaction between will and trust, there's a chance that's going to create a problem. Anyway, you can't designate both a beneficiary individual and have it go to a pot that gets divided differently. The less what if's, the easier it's going to be to correctly prepare the proper designations and documentation. Some lawyers tend to overcomplicate things, so avoid that unless you really have to.

Gill
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Re: What to put into Revocable Living Trust?

Post by Gill » Sun Nov 10, 2019 6:37 pm

inbox788 wrote:
Sun Nov 10, 2019 5:06 pm
Gill wrote:
Sun Nov 10, 2019 7:22 am
Yes, for the reasons you stated, the RLT should be the contingent beneficiary or maybe even the primary beneficiary of the life insurance.
Gill
No, OP, you shouldn't be thinking "or" or "maybe". It needs to be what you want, and you need to ensure that what you want and how you say you want it is consistent with how the trust and will and accounts say and will be dealt with if you're gone.

If you want to ensure the "pot based approach" (I don't understand what it is), then the will better be clear about who and how it's handled, and that the executor of the trust is able to carry it out. Anytime there is interaction between will and trust, there's a chance that's going to create a problem. Anyway, you can't designate both a beneficiary individual and have it go to a pot that gets divided differently. The less what if's, the easier it's going to be to correctly prepare the proper designations and documentation. Some lawyers tend to overcomplicate things, so avoid that unless you really have to.
I’m not clear on how your comment relates to my quoted response. Quite simply, if OP wants the life insurance proceeds to be distributed according to the terms of the trust, name the trust as beneficiary of the policy.
Gill
Cost basis is redundant. One has a basis in an investment | One advises and gives advice | One should follow the principle of investing one's principal

inbox788
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Re: What to put into Revocable Living Trust?

Post by inbox788 » Mon Nov 11, 2019 3:52 pm

Gill wrote:
Sun Nov 10, 2019 6:37 pm
inbox788 wrote:
Sun Nov 10, 2019 5:06 pm
Gill wrote:
Sun Nov 10, 2019 7:22 am
Yes, for the reasons you stated, the RLT should be the contingent beneficiary or maybe even the primary beneficiary of the life insurance.
Gill
No, OP, you shouldn't be thinking "or" or "maybe". It needs to be what you want, and you need to ensure that what you want and how you say you want it is consistent with how the trust and will and accounts say and will be dealt with if you're gone.

If you want to ensure the "pot based approach" (I don't understand what it is), then the will better be clear about who and how it's handled, and that the executor of the trust is able to carry it out. Anytime there is interaction between will and trust, there's a chance that's going to create a problem. Anyway, you can't designate both a beneficiary individual and have it go to a pot that gets divided differently. The less what if's, the easier it's going to be to correctly prepare the proper designations and documentation. Some lawyers tend to overcomplicate things, so avoid that unless you really have to.
I’m not clear on how your comment relates to my quoted response. Quite simply, if OP wants the life insurance proceeds to be distributed according to the terms of the trust, name the trust as beneficiary of the policy.
Gill
I'm afraid the trust and the will may not be in agreement. Involving them both could just add confusion. A contingent beneficiary can also further add more confusion. OP, did the same lawyer draw up both the will and the trust? Aside from spouse, who else would be a contingent beneficiary? What state are you in, and are there peculiarities to the state laws? Can you transfer out all the assets, then revoke and dissolve the trust? Could spouse if beneficiary? Or any contingent beneficiaries?
Loyalnine wrote:
Sun Nov 10, 2019 3:41 am
I’ve specified that approach on my will.
https://www.investopedia.com/ask/answer ... nflict.asp

bsteiner
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Re: What to put into Revocable Living Trust?

Post by bsteiner » Mon Nov 11, 2019 4:41 pm

Whether to have a revocable trust and who gets what are different issues. You can put the same dispositive provisions (who gets what) in a Will or in a revocable trust.

Revocable trusts make sense in some cases and in some states. OP: in what state do you live?

If you want your life insurance to go to your spouse if he/she survives you, or if not then to a trust or trusts for your children, you should say that on your beneficiary designation.

You can provide for your children (in your Will or in a revocable trust) either in a single pot trust that divides at some point (such as when the youngest living child reaches a specified age), or in separate trusts from the inception.

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