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I believe in being very open and straight forward in telling heirs of what assets there are and how I recommend that they should be handled. I do not think that the heirs need to know how MUCH each asset is valued at. And I let heirs know that my hope is to live long enough to spend most of it
So, my kids know what banks have accounts, the type of accounts and which ones they are the beneficiary for. They know that if they must buy something to celebrate my death, or their newly found riches, this is the money to blow on the new car or whatever they think they must have on the spur of the moment.
They know about inherited IRAs I inherited from my parents and that they are now the beneficiaries for. They know that this money should be taken out at the slowest possible rate to reduce the tax burden, and they would get a small amount of money each year for their lives if they follow this process, maybe enough to reinvest each year, or for an annual trip, or if I spend enough of it, maybe just an annual dinner.
They know that they may inherit an IRA from me and that they are listed as beneficiaries, but it is not much and my goal is to spend this one down to nothing first. They are beneficiaries on the account.
They know that I have a IRA -similar account from my work that they are beneficiaries for and this account has lots of funding. They likely should reinvest the annual amount they would receive from this account.
They know that three houses are all paid for, the other one will be paid off in a few months, where the insurance policies and deeds are kept. They have started taking over the filing of papers and bill paying--filling out checks for me to sign (they are 13 years old) so are aware of utility accounts.
They know they are beneficiaries to an investment account and that they should leave it alone and let it grow.
They know that all these things have money now, some more than others, and that I can spend them all to nothing, or keep investing to make more. My goal is to teach them to manage money so that when they inherit it they do not blow it. So far they are doing pretty good in understanding how to manage money and have saved over $15k each, which is pretty good considering they do not get that much money passing through their hands. No allowance here, if they want money they work for it. However, there is always work to be done
After I retire and move to another state I will be establishing a Trust mainly to avoid probate for the real estate. And another Trust for my adult handicapped daughter.
They know I want to be cremated and I likely will buy a Neptune Society policy in the next few years.
I'd suggest the OP consider telling his sons WHAT he had, and where, just not the value.
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for the OP, you should probably have the house in a Trust, and your accounts with them as beneficiaries should go directly to them upon presentation of a death certificate and not have to go through probate in most states, but ask a lawyer. Not sure about retirement accounts.
I'd just leave instructions sealed in a letter with your will, etc. for after you kick the bucket.
And you might want to not take them climbing Half Dome, but if you do, don't get too close to the edge. Also have them go down stairs in FRONT of you.
Remember the goal is to silde in broke with a bottle of Southern Comfort in one hand, a cigarette in the other, and with a smile on your face, use your last breath to say, "It was one h#ll of a ride!"
for the OP, you should probably have the house in a Trust, and your accounts with them as beneficiaries should go directly to them upon presentation of a death certificate and not have to go through probate in most states, but ask a lawyer. Not sure about retirement accounts.
Retirement accounts and life insurance do not go through probate if you have beneficiaries listed.
for the OP, you should probably have the house in a Trust, and your accounts with them as beneficiaries should go directly to them upon presentation of a death certificate and not have to go through probate in most states, but ask a lawyer. Not sure about retirement accounts.
I'd just leave instructions sealed in a letter with your will, etc. for after you kick the bucket.
And you might want to not take them climbing Half Dome, but if you do, don't get too close to the edge. Also have them go down stairs in FRONT of you.
Remember the goal is to silde in broke with a bottle of Southern Comfort in one hand, a cigarette in the other, and with a smile on your face, use your last breath to say, "It was one h#ll of a ride!"
In my state, it is almost always more advantageous not to have the house in a trust and to transfer upon death because you receive a step up in basis on the home value and the taxed amount is based on that amount if you sell the house. Having a will and a trust established will help prevent probate, but placing that property in trust before death can create some serious tax issues for the estate.
After I retire and move to another state I will be establishing a Trust mainly to avoid probate for the real estate. And another Trust for my adult handicapped daughter.
Consider an irrevocable trust for her now. You could move income producing assets to the trust and the income would no longer be taxed to you but her. I assume your tax rate is higher. Be sure to look at costs of administrating the trust and what you can and cannot do. Depending on how the trust is set up you can lose the step up in basis of your assets at death. I would suggest you talk to an Elder Attorney.
In my state, it is almost always more advantageous not to have the house in a trust and to transfer upon death because you receive a step up in basis on the home value and the taxed amount is based on that amount if you sell the house. Having a will and a trust established will help prevent probate, but placing that property in trust before death can create some serious tax issues for the estate.
I think they get up a step up anyway even in a trust. If the estate is less than $10 million and some changes, that should not be an issue.
$5.45MM is the kick-in for federal estate taxes. But estate planning should really be done with a qualified professional, not on Internet message boards.
$5.45MM is the kick-in for federal estate taxes. But estate planning should really be done with a qualified professional, not on Internet message boards.
Lawyers sometimes can be wrong. I'm going to look into mine since it was set up pre-2013 when the law changes.
In my state, it is almost always more advantageous not to have the house in a trust and to transfer upon death because you receive a step up in basis on the home value and the taxed amount is based on that amount if you sell the house. Having a will and a trust established will help prevent probate, but placing that property in trust before death can create some serious tax issues for the estate.
In CA the houses can be in a Trust and if the Trust is a 'family type trust' and the trust is taxed under the trustor's SSN then you also get the stepped up tax basis upon the Trustor's death. If the Trust paid taxes under an EIN then you may not get the stepped up tax basis on the house.
I just went through this in my mom's death, and we got a EIN for the Trust AFTER she passed just to have the stepped up basis--and we could not sell the houses under her SSN.
So the quoted answer may be based on HOW the Trust is set up, and state the Trust is located in, but for federal taxes, what I wrote applies.
In CA the houses can be in a Trust and if the Trust is a 'family type trust' and the trust is taxed under the trustor's SSN then you also get the stepped up tax basis upon the Trustor's death. If the Trust paid taxes under an EIN then you may not get the stepped up tax basis on the house.
I just went through this in my mom's death, and we got a EIN for the Trust AFTER she passed just to have the stepped up basis--and we could not sell the houses under her SSN.
So the quoted answer may be based on HOW the Trust is set up, and state the Trust is located in, but for federal taxes, what I wrote applies.
What about state tax? I think I need to do research on this before I contact my lawyer.
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