executing a trust

[jnkbell]

What is the name of your state (only U.S. law)?
California
My wife's parents have a living trust, and both are extremely poor in health and their time here is limited. Though she has a brother, her parents have excluded him from the trust, so if she is still alive after the last trustee dies, she is the sole heir of the trust, 100% willed to her.

To execute a trust, or put it in her name, or whatever it is you do when this happens, and being she is the only heir, do we need to hire an attorney when the time comes, or can we deal with all his financial institutions directly with death certs and whatever else is required to aquire investments, transfer stock, etc?

 

[curb1]

You can easily do this yourself, depending on your skills. You need to check with the financial institutions now to see what they require for the transition. The more you can do before the parent's passing, the better. It is called estate planning and there is nothing wrong by doing it.

Is wife listed as a successor trustee in the trust? Do you have a copy of the trust, or the original? If your wife is no longer alive when grantors die, who is listed to receive the assets?

Are all assets titled now in the name of the trust?

 

[jnkbell]

You can easily do this yourself, depending on your skills. You need to check with the financial institutions now to see what they require for the transition. The more you can do before the parent's passing, the better. It is called estate planning and there is nothing wrong by doing it.

Is wife listed as a successor trustee in the trust? Do you have a copy of the trust, or the original? If your wife is no longer alive when grantors die, who is listed to receive the assets?

Are all assets titled now in the name of the trust?

Thanks for your reply.

I did most of the funding of their trust when they first set the trust up, so my skills are "ok" and getting better as we go. We are in the midst of contacting the individual banks, etc., and finding out what they require. They all differ.

We have a copy of the trust, and my wife is the successor trustee. They list 2-3 more extensions in the successors, so I believe they have that covered.

Most assets are in the trust. The ones that aren't, we have already sat with the banks, gave them the copies of her POA, and verified that she is also the beneficiary. The ones that are, we are having to fax POA, along with Dr's letters stating the incapacitation (in her dad's case), and the mental incompetence of her mother.

I guess what I am most curious about is, like in the case of his stocks and cd's, if we can just transfer ownership to her, or do we have to infact cash out all assets. I would rather leave them as is. And what to do with IRA's, annuities, etc.

Should I consult an attorney, or an estate planner?

 

[curb1]

You asked, "Should I consult an attorney, or an estate planner"? Often the answer is that if you have to ask that question, you probably should. Having said that let me ask more questions.

1) Are all of the assets financial, or are some real estate. If all of the assets are liquid it shouldn't be a problem to do it yourself. Explain why you would not want to immediately turn all assets to cash and then transfer to a personal account. That would be simple. Distribute the cash to your wife into a Schwab, E*Trade (or any other) personal account. Then you could buy back the very same assets, or different assets. Pay particular attention to the IRAs you can place them into an "Inherited IRA" and retain the tax sheltered advantage. I believe there is a 60 day window to do this. What kind of IRAs, regular, or Roth?

2) Are you past the penalty period for withdrawing from the annuities?

3) When do the CDs become due? Shorten the time frame as necessary, or even put into a money market.

 

[anteater]

I guess what I am most curious about is, like in the case of his stocks and cd's, if we can just transfer ownership to her, or do we have to infact cash out all assets. I would rather leave them as is. And what to do with IRA's, annuities, etc.

Are you talking about after her parents pass away?

If so, there should be no reason why you would need to liquidate any securities.

IRA's and annuities should have named beneficiaries. If not, then the proceeds would be payable to the estate of whichever of the parents is the owner. In other words, probate would be needed.

If your wife is the named beneficiary of an IRA, there is more time to take of it than curb1 indicated. But, if your wife intends to maximize the possibilities of tax deferment, it is a simple process of re-titling the IRA as a beneficiary IRA. For annuities, you will have to check the contracts to see what options the beneficiary has.

 

[curb1]

Anteater said, "If so, there should be no reason why you would need to liquidate any securities". Either way it is simple. The advantage to cashing out is that it is easier/quicker to set up a new account with whomever you want. The transaction cost is minimal. And, some brokerages are more difficult than others. Again, this is something that can be determined immediately with communication.

P.S. why is "brother" not involved?

 

[anteater]

P.S. why is "brother" not involved?

Asking me?

 

[curb1]

No, just asking original poster. It doesn't really matter. Just curious if there could be a future problem.

 

[TrustUser]

with most any asset other than real estate, you simply need to contact whomever holds your asset, and fill in their paperwork.

generally, all you need is a copy of the trust and death certs showing that the grantors have died. or in your case, a letter from the doctor, showing incapacitation. this assumes that the trust mentions incapacitation (it should if it is well written).

with real estate, you could probably manage it without having the trusteeship retitled, unless of course you wanted to sell it.

a deed will eventually need to be recorded, granting from old trustee to new trustee. depending on the situation, you may need to file a death of trustee document. the easiest thing to do is have a deed already made out beforehand, so that when the time comes, it can be recorded. but in your case, it looks like you are beyond that stage.

if you want to keep the same security, i think it is easier to just transfer title, unless you specifically do not want to use that securities company.

btw, if you have not done so, this would be an excellent time for you to get your own trust set up, such that the original transfer is from one trust to another trust.

 

[jnkbell]

You asked, "Should I consult an attorney, or an estate planner"? Often the answer is that if you have to ask that question, you probably should. Having said that let me ask more questions.

1) Are all of the assets financial, or are some real estate. If all of the assets are liquid it shouldn't be a problem to do it yourself. Explain why you would not want to immediately turn all assets to cash and then transfer to a personal account. That would be simple. Distribute the cash to your wife into a Schwab, E*Trade (or any other) personal account. Then you could buy back the very same assets, or different assets. Pay particular attention to the IRAs you can place them into an "Inherited IRA" and retain the tax sheltered advantage. I believe there is a 60 day window to do this. What kind of IRAs, regular, or Roth?

2) Are you past the penalty period for withdrawing from the annuities?

3) When do the CDs become due? Shorten the time frame as necessary, or even put into a money market.

Assets - owns his home, 2 annuities and 2 IRA's (both with their daughter listed as beneficiary) 4 cds and 6 stocks. I don't want to cash out the IRA's as the return is a good rate, and for the tax advantage as you mentioned.

My main concern were his stocks. Though they are with solid companies, they haven't rebounded near what I believe is their potential, and I would rather leave them for the investment. Annuities are 100% vested. CDs can be cashed as the returns are so low now, and they are short term (originally 12 mo or less)

Also, am I to understand correctly that with IRAs and CDs, they avoid CA probate if their daughter is listed as the beneficiary?

As for another's question.

Their son left the U.S. in the early 80's, becoming a citizen of another country. Once there, he borrowed a large sum of money from dad for an "investment opportunity", supposedly for the both of them. Basically, he bought a home, later to sell it, keep the proceeds to finance is "free spirited" traveling around the globe, dropping all contact with them in the process. They excluded him.

 

[curb1]

1) Are you satisfied with the brokerage where the stocks are placed?

2) Is the house titled in the name of the trust at this time?

3) As far as the stocks, don't get caught holding stocks just to get back to even. If there are better stocks that are moving, sell the dogs. I'm guessing that you are talking about stocks like GE, Intel, or pharmaceuticals that have been dogs. But, that is totally your call. Any stock that hasn't moved much since March should be considered suspect.

I think you and your wife are well positioned. Wish you and in-laws the best.

 

[anteater]

Also, am I to understand correctly that with IRAs and CDs, they avoid CA probate if their daughter is listed as the beneficiary?

Correct, they are not probate assets if there is a named beneficiary.

When the time comes, be careful with the IRA's. As odd as it seems, the law treats the deceased as still being the owner. To continue the tax deferment and stretch the required distributions over your wife's lifetime, the IRA cannot be re-titled solely in your wife's name or consolidated with any of her own IRA's. Either action would cause the IRS to consider that a complete distribution and, therefore, all taxable immediately. The IRA would have to be re-named to something like, "The John Smith IRA, beneficiary Mary Jnkbell." The exact wording isn't too important as long as it contains the original owner's name and your wife's as beneficiary.

If she is the beneficiary of multiple IRA's, those IRA's could be consolidated into one beneficiary IRA.

 

[jnkbell]

1) Are you satisfied with the brokerage where the stocks are placed?

2) Is the house titled in the name of the trust at this time?

3) As far as the stocks, don't get caught holding stocks just to get back to even. If there are better stocks that are moving, sell the dogs. I'm guessing that you are talking about stocks like GE, Intel, or pharmaceuticals that have been dogs. But, that is totally your call. Any stock that hasn't moved much since March should be considered suspect.

I think you and your wife are well positioned. Wish you and in-laws the best.

Stocks are held with the individual companies, and all are communications. ATT, Verizon, Vodafone, etc. They have recovered some, but I believe they have more potential.

The house is in the trust's name, but because this all happened so quick (she was entered into asst living for memory care on Christmas eve, the week later he went into the hospital, and won't be going back home because of necessary nursing care) we are by his request preparing to sell their home. (it's a mobile home, and though we're in a depressed market, his lot payment will continue, so probably best to sell) This is all new to us, and trying to be smart and at the same time dealing with the reality of the situation is quite overwhelming, and to both curb 1 & anteater, your assistance and advice are invaluable.
Thanks so much.

 

[curb1]

Good luck. Please check back if you have time. Your situation is helpful for many to learn.