Actuarial Outpost
 
Go Back   Actuarial Outpost > Actuarial Discussion Forum > Finance - Investments > Non-Actuarial Personal Finance/Investing
FlashChat Actuarial Discussion Preliminary Exams CAS/SOA Exams Cyberchat Around the World Suggestions


Reply
 
Thread Tools Display Modes
  #1  
Old 04-15-2013, 12:12 PM
snoo's Avatar
snoo snoo is offline
Member
CAS SOA
 
Join Date: Jan 2002
Location: Basestar
Favorite beer: Belly Flop
Posts: 18,098
Default Revocable Living Trust

Hey AO!

Looking for some advice. Now that our little one is here we want to make sure that she is well taken care of should anything happen to me and RP.

I have been reading about Revocable Living Trusts (RLTs) and wonder what your experience is with them and if you'd recommend them. We currently have property in one state but we expect in the future to hold property in multiple states. We have all the normal types of accounts (checking, savings, 401k, IRAs, HSAs, life insurance, 529).

We know who we want to take care of our little one but I kind of worry about how they will handle a windfall of money. So we want to balance a few things:

1. We want is our little one(s) to inherit most of the assets but throughout her (their) adult life.
2. We want to give the caretakers money so that caring for her (or them) is not a financial burden.

Is a RLT the right vehicle for us? Thanks AO!
__________________
Hello.
Follow me.
Wait.

Last edited by snoo; 04-15-2013 at 12:45 PM..
Reply With Quote
  #2  
Old 04-15-2013, 12:23 PM
radoaos's Avatar
radoaos radoaos is offline
Member
 
Join Date: Jul 2007
Posts: 3,695
Default

I've been looking at RLTs as well. Unfortunately I don't really have any really good advice for you. The only thing I would say is that, if you use these people, you'll want to get a financial advisor, accountant, and estate lawyer in the room together. This could be an expensive meeting, and typically trusts are expensive to run.

The financial advisor (if you use and trust one) will keep your big picture plans in mind.
The accountant will let you know how the trust can help with your taxes.
The estate lawyer is needed to set up and run the trust.

My wife's family has a trust with a bunch of properties in it, but I don't know much about it. I intentionally stayed out of that part of their family business. Now my wife and I are looking into setting up a trust for ourselves which would consist of two properties in different states and a large amount of cash. Not sure if it is the right call, but we will be meeting with our accountant about it in the summer.
__________________
2012 / 2013 AO English Premier League Prediction Contest Champion!!!
Reply With Quote
  #3  
Old 04-15-2013, 03:19 PM
Ninja Warrior Ninja Warrior is offline
Member
CAS
 
Join Date: Dec 2009
Posts: 1,055
Default

I have been looking into a revocable living trust as well even though I am single with no kids or other dependents.

I believe Suze Orman has a revocable living trust set available, and at one point, for free on her site.

While I do not think I would trust all my assets on some online forms, it serves as a starting point in terms of getting to learn more about it.

I thought about going to Legal zoom at some point as well to set up RLT, but I am still looking into it.
Reply With Quote
  #4  
Old 04-15-2013, 03:29 PM
Numbers Nerd's Avatar
Numbers Nerd Numbers Nerd is offline
Member
SOA AAA
 
Join Date: Sep 2001
Location: Midwest
College: University of Wisconsin
Favorite beer: Ale, Lager, you name it
Posts: 1,556
Default

Spend $1000 or so on an attorney to make sure you have things set up appropriately. For sure you'll want a revocable living trust, with a named trustee such as a trusted relative (which you can change), as that will ease the flow of your assets to your minor children in the event of your premature demise. You may also want documents such as durable power of attorney, living will, and other items I've long forgotten, as we set ours up a decade ago.

If you don't do this, the laws of your state come into play, and may result in default actions that wouldn't be your top choice.

Part of this process will then be to make sure that all of your beneficiary information is properly set up to include the trust as primary or contingent beneficiary, including your 401(k) distributions, group life, individual life, pensions, etc. Your attorney will give you guidance on all of this.
Reply With Quote
  #5  
Old 04-15-2013, 03:37 PM
the mole's Avatar
the mole the mole is offline
Member
 
Join Date: Jan 2002
Location: geneva
Posts: 4,001
Default

Quote:
Originally Posted by Numbers Nerd View Post
For sure you'll want a revocable living trust, with a named trustee such as a trusted relative (which you can change), as that will ease the flow of your assets to your minor children in the event of your premature demise.
The named trustee need not be a relative, as long as it is someone you trust completely.
__________________
Reply With Quote
  #6  
Old 02-07-2014, 08:56 PM
3.14 3.14 is offline
Member
CAS
 
Join Date: Sep 2005
Posts: 952
Default

This is more of a legal question than anything, but what the heck, someone might have an answer.

My elderly mom has had an RLT for seven years and for some reason this year New York Life changed the designation on the 1099 to D1, which means that under IRC Section 72 (U) she now has to pay taxes on distributions because she's been designated a "non-natural person" (I did ask her if she was up to anything unsavory, but she didn't find that funny).

We can hire a tax attorney to look into this, but it's not clear if that pays for itself given her distributions aren't very big. Anyway, if someone has thoughts/experience great, otherwise thanks for reading.
Reply With Quote
  #7  
Old 02-07-2014, 09:08 PM
The President's Avatar
The President The President is offline
Member
 
Join Date: Oct 2005
Location: Po'dunk USA
Posts: 15,531
Default

is this helpful?

http://www.360financialliteracy.org/...-Can-Be-Taxing
Reply With Quote
  #8  
Old 02-08-2014, 10:56 AM
3.14 3.14 is offline
Member
CAS
 
Join Date: Sep 2005
Posts: 952
Default

Quote:
Originally Posted by The President View Post
It's not, but thanks for investigating.
Reply With Quote
  #9  
Old 02-08-2014, 01:01 PM
The President's Avatar
The President The President is offline
Member
 
Join Date: Oct 2005
Location: Po'dunk USA
Posts: 15,531
Default

Quote:
Originally Posted by 3.14 View Post
It's not, but thanks for investigating.
Found it trying to figure out what a non-natural person would be.
Reply With Quote
  #10  
Old 02-08-2014, 05:06 PM
Salzmann's Avatar
Salzmann Salzmann is offline
Member
 
Join Date: Jun 2004
Location: Midwest
Posts: 5,757
Default

I just set one up- I'm 61 and up to now I didn't think I needed to. After my divorce in 1997 I drew up a new will and that had some sort of a trust document with it that specified that a brother I trusted would administer funds for my son in the event I died, since my son was only 12 at the time. Another brother and his wife would have custody. I don't think it was a RLT because it wasn't that expensive and I didn't have to go through the clumsy process of moving everything over into the name of the trust, which I'm doing with this one. The reason I chose the complicated route now is that I have a 75-year old husband who's unlikely to outlive me but not the least but interested in managing money if he did (my brother the CPA would be in charge), my son is a wonderful young man who is also not interested in managing money and says he doesn't want mine, and I have a grandchild on the way. Well, yeah, my son would be OK with using it for college expenses for her and any future grandchildren.

I've been advised that for IRAs and 401(k)s it's just easier to name a beneficiary and it will pass to the heir outside of probate.
Reply With Quote
Reply

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off


All times are GMT -4. The time now is 02:42 AM.


Powered by vBulletin®
Copyright ©2000 - 2017, Jelsoft Enterprises Ltd.
*PLEASE NOTE: Posts are not checked for accuracy, and do not
represent the views of the Actuarial Outpost or its sponsors.
Page generated in 0.49504 seconds with 11 queries