Discontinue recovable trust

1

I’d like a second opinion on my thinking.

My mom and dad have a revocable trust and has over $1 million dollars in cash at a credit union earning
nearly 0% interest. That money is the proceeds from the sale of real estate.

We’re in the process of setting up several online bank accounts and my question is whether or not it’s
really necessary to continue this trust. I realize it can help avoid probate when they pass away, but other than that I see no benefit.

I feel like it’ll be a real hassle to try to set up accounts with online banks for this revocable trust.

Should we dump the trust or jump through the hoops to keep it.

2

That alone is a HUGE benefit! In Cal, probate can take months and cost your heirs tens of thousands$$$.

Invest the money how you want, set up the accounts, but leave the trust as the owner.

RE broker friend says people inheriting a house[s] want to sell, but without a trust, the probate process is an expensive nightmare.

3

My Mom has a Charles Schwab brokerage account which is part of her Revocable Trust assets. Isn’t the Trust just a legal “wrapper” and you can put anything inside that you want? Her house, her bank are also in the Trust. Who led you to think you had to invest a certain way and earn no interest in orderto have a Revocable Trust? I’m sure Schwab charged her $0 to set up the Trust account.

4

It should not be that hard to title assets (including bank accounts) in the name of the Revocable Trust. I don’t see the reason to go through probate if you can avoid it. Here is a small guide that I keep in my reference material:

5

It’s not that big a hassle. They may have to send something in the mail, instead of opening an account online in 15 minutes. But it’s much less of a hassle than probate. The time (and cost) of setting up the trust in the first place is the big hassle (but still less than probate, most likely). Since that’s already done, they should keep it.

6

For what it is worth, not an expert, but have a family trust which has my farm in it.

I remember the attorney telling me not to have my retirement funds destined to the trust, because there was a specific time frame that those funds would need to be removed or there were tax implications. I have my retirement account set up with individuals to receive the funds.

One website says: Should you put retirement accounts in a trust?

There are a variety of assets that you cannot or should not place in a living trust. These include: Retirement Accounts: Accounts such as a 401(k), IRA, 403(b) and certain qualified annuities should not be transferred into your living trust. Doing so would require a withdrawal and likely trigger income tax.

So since each state is different and each situation is different, the correct answer for you is probably “Consult an Estate Attorney in your state”.

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7

Not necessary at all. All my retirement accounts have beneficiary clauses.

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8

One other benefit of a RLT is that the successor trustee can take over if mom & dad are still living but unable to act as trustees.

I guess you’d have to submit a copy of the trust document to set up the new online accounts you’re talking about. There should be a short form of it naming them trustees and the successor trustee(s).

I think (someone correct me if I’m wrong) that if they open new online accounts outside the trust and the accounts offer transfer-on-death options and they name beneficiaries, that you (their executor/administrator) would not have to open a probate to transfer the $$$ out of their names into beneficiaries’. The beneficiaries would have to submit death certificates and all the other required paperwork to get the money.

9

Privacy is another benefit. Probate court actions are in the public record.

10

Couple other advantages to RLT over probate:

  1. if an executor/administrator is out-of-state, they could have to post a bond, but the trustee can be anywhere
  2. some states require executors/administrators to hire an attorney to do the probate, but a trustee isn’t required to have attorney help
11

As usual, everyone has been a “voice of reason” for me on this one.
Thank you all for your responses.

I’m going to keep the trust in place and make
the extra effort get the new accounts opened in the name of the trust.

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