funding a trust account

[liz888]

I am considering setting up a trust . Can I put all my bank accounts, funds, stocks, etc in a trust account? Or, is it only used for real assets?

And, if it is possible to add the accounts will it be necessary to use forms, other than the 1040s every April?

Thanks Liz

 

[FlyingRon]

You can put anything that has an owner into a trust.
Whether you should or not depends on what you are trying to accomplish.
My stocks are all in the trust.

 

[curb1]

All of my assets are in a trust, but I have had second thoughts about doing that. My current feeling is that in many cases (perhaps most) it is better to keep bank accounts and brokerage accounts separate and have them in TOD (Transfer on Death) accounts. The TOD accounts bypass probate the same as a trust and seem to be much cleaner in many situations.

You would still use the IRS Form 1040 for your personal assets that are yours in the trust.

 

[liz888]

Since I am hoping to avoid some taxes, I was thinking that it would be better to put the banks accounts, etc in the trust.
We currently have them as PODs on each account. As I understand it, they would not be included in probate, but would be considered income to the surviving person and therefore, it would be necessary to pay the additional income taxes during the next tax year.

But, if they were put into a trust, taxes would not be paid as either estate or income. Am I incorrect in my thinking?

Liz

 

[curb1]

Yes, you are incorrect.

You said, "would be considered income to the surviving person and therefore, it would be necessary to pay the additional income taxes during the next tax year".

 

[LdiJ]

Since I am hoping to avoid some taxes, I was thinking that it would be better to put the banks accounts, etc in the trust.
We currently have them as PODs on each account. As I understand it, they would not be included in probate, but would be considered income to the surviving person and therefore, it would be necessary to pay the additional income taxes during the next tax year.

But, if they were put into a trust, taxes would not be paid as either estate or income. Am I incorrect in my thinking?

Liz

I am a tax professional and I think that you are completely misinformed as to what would be taxable, and completely misinformed as to what a trust can or could do.

I think that it would be in your best interest to get a consult with a tax professional to talk about all of this, and to get a clearer picture, based on the details, of what might or might not be taxable.

For example, unless your estate is HUGE, estate taxes are likely not an issue for you. If your estate was huge enough that estate taxes would be an issue, its unlikely that you would be seeking advice from an internet forum.

Bank accounts that pass to a beneficiary would rarely result in any tax, other than the normal tax on interest earned after the passing of the decedent. Retirement accounts could result in tax, but only if the beneficiary chose not to roll the retirement account into a retirement account of their own. Stock accounts could result in tax, but only if the stocks are sold....etc.

Please get yourself a consult with a tax professional.

 

[anteater]

Retirement accounts could result in tax, but only if the beneficiary chose not to roll the retirement account into a retirement account of their own.

LdiJ - You really need to be careful. There are different options available for spousal and non-spouse beneficiaries. A non-spouse beneficiary cannot roll the account into "a retirement account of their own."

Now, you may be assuming that readers understand that you are speaking of re-titling/rolling to an inherited/beneficiary IRA for a non-spouse beneficiary. But there are some who may take that to literally mean their own account, like, say, "The Anteater IRA" or "LdiJ's IRA."