Keep Up Your Trust to Avoid Probate and Taxes

In meeting with clients to update their estate plans, I’ve
found that their investments have often times moved to another financial advisor or they’ve opened new accounts. I’ve also noticed a number of my clients have sold their primary homes in the last year. In both of these situations, it’s important to make sure accounts and assets are properly titled and the beneficiaries are named correctly.

For example, if your trust is “not” named as the owner of the asset (i.e. your house, bank accounts, investments, etc.), you risk having it go through probate court and your family incurring unnecessary cost and delays. Also, if you’ve created a trust to hold back money for minor children (until they’re mature enough to handle the funds on their own) and named them directly as the beneficiary of life insurance or a retirement account, this risks having to establish a conservator-ship in probate court and them receiving the inheritance at age 18.

Similar problems come up if you’ve established a trust to protect an inheritance from a child’s marital issues or financial issues. Naming the child as beneficiary (as opposed to the trust) means the inheritance isn’t protected as you planned. Finally, clients who have established trusts to avoid a tax at death need to properly title their assets. Not doing it right risks losing the expected estate tax savings or having to file an expensive tax return at the death of the first spouse.

For all these reasons, it’s critical to keep up the ownership when you have a trust so that the account, the assets, and beneficiaries name correctly. If you need any assistance with this planning, please let me know.

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