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Anyone see any down side to just having bank and brokerage accounts titled POD or in trust for?
Wouldn't that serve as a living trust for such accounts?
no , not the same thing . for one thing many states will not let you pass real estate without probate or trust .
minors can't receive anything even if they are the beneficiary or tod .
some brokerages let you do a tod account but it is up to you to make sure your state allows the transfer . up until a few years ago fidelity who had offices in ny were not able to pass assets via tod in ny . i had no idea until one day i read ny changed the law and now accepts them ..
it was such a wierd law . banks were okay using tod's but brokerage accounts were not . i suggest everyone check their states stance
Anyone see any down side to just having bank and brokerage accounts titled POD or in trust for?
Wouldn't that serve as a living trust for such accounts?
No disadvantage. You can re title the account any time you change your mind. No attorney needed.
My understanding is that some states may not accept the designation but the national banks and brokers will let you title the accounts that way. I would google your state to be sure. I think you are ok in most states,
TOD transfer on death is also used by some institutions.
I think in trust for is the same as POD. You are not talking about a formal trust.
Might mention your state and if the beneficiaries are minors. Minors will need someone to hold the money for them.
No disadvantage. You can re title the account any time you change your mind. No attorney needed.
My understanding is that some states may not accept the designation but the national banks and brokers will let you title the accounts that way. I would google your state to be sure. I think you are ok in most states,
TOD transfer on death is also used by some institutions.
I think in trust for is the same as POD. You are not talking about a formal trust.
Might mention your state and if the beneficiaries are minors. Minors will need someone to hold the money for them.
Just a note...a number of banks will not allow more than one or two beneficiaries on an account. So if you want, say, three or more people to be direct beneficiaries, you may be out of luck. If you trust the two that are named (to distribute fairly, according to the will), it may not be a problem.
Just a note...a number of banks will not allow more than one or two beneficiaries on an account. So if you want, say, three or more people to be direct beneficiaries, you may be out of luck. If you trust the two that are named (to distribute fairly, according to the will), it may not be a problem.
You should not expect the beneficiary to distribute money. Probably not legally enforceable. I do not think a beneficiary can disclaim an asset and if they did then the asset would go into the estate and probate. If the beneficiary did distribute the money to others I think this would be a gift and subject to the gift tax rules.
an inheritance is rarely taxable to the person receiving it as a beneficiary , except in just a handful of states who have an inheritance tax like new jersey and a few others . most folks who are over the federal limit will be using trusts .. what happens to the money after that point is up to them and whether they want to gift tax form it .
the biggest issue with any revocable trust is the house is no longer a protected asset from medicaid if it ever comes to that and you need long term care .
the house becomes a counted asset and may have to be sold and the money spent down to even qualify for medicaid .
a home is typically not counted as an asset when applying for medicaid unless it is in a revocable trust nor can medicaid take it if you think you will one day return . it becomes unprotected when moved to a revocable trust . .
Last edited by mathjak107; 06-07-2016 at 04:32 AM..
You should not expect the beneficiary to distribute money. Probably not legally enforceable. I do not think a beneficiary can disclaim an asset and if they did then the asset would go into the estate and probate. If the beneficiary did distribute the money to others I think this would be a gift and subject to the gift tax rules.
Yes, if a beneficiary distributes money, that money is then a gift and can only be parceled out up to ?? $14,000 per year per person.
My credit unions will not allow more than one primary and one contingency beneficiary on an account.
a home is typically not counted as an asset when applying for medicaid unless it is in a revocable trust nor can medicaid take it if you think you will one day return . it becomes unprotected when moved to a revocable trust . .
a house held in your personal name is protected . it's value does not count towards what you can keep if you need medicaid for long term care .
medicaid can't take it either as long as a spouse lives in it or you say you will return .
letting a revocable (living trust ) hold title removes that protective shield .
now the value of the house counts if you apply for medicaid and typically you have to sell the house and spend down the money for care before medicaid will pay . kind of self defeating in the end .
an irrevocable trust does not have those issues nor does a home held in personal names . putting the house in a revocable trust to avoid probate may actually be the worst choice if you need to get LTC .
a house held in your personal name is protected . it's value does not count towards what you can keep if you need medicaid for long term care .
medicaid can't take it either as long as a spouse lives in it or you say you will return .
letting a revocable (living trust ) hold title removes that protective shield .
now the value of the house counts if you apply for medicaid and typically you have to sell the house and spend down the money for care before medicaid will pay . kind of self defeating in the end .
an irrevocable trust does not have those issues nor does a home held in personal names . putting the house in a revocable trust to avoid probate may actually be the worst choice if you need to get LTC .
Only an irrevocable trust will shield assets from creditors.
However, its really a trade off and its difficult for me to recommend an irrevocable trust to clients for the reason that you have to surrender control of your assets to a third party. The precise reason that the law allows creation of such a trust is that the law equates "ownership" with "control". Once, you no longer have control of your assets, the law is willing to treat them as though you no longer own them. Therefore, creditors cannot seize them to pay debts.
The problem is what if the person or entity that you surrender control to fails to act in the manner in which you wish? The answer is that once you create and fund an irrevocable trust, you are probably out of luck.
IMO, its a very dangerous device to recommend to anyone. It may work in situations where families are particularly close. However, people change and you can't always count on someone having the same intentions years later that they had when your irrevocable trust is created.
I believe an irrevocable trust must also be in existence for about five years before all the protections can be obtained against creditors.
Its too risky for me. I know that.
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