Over the past few years, we’ve seen an influx of trust administration cases. And with nearly every trust and every client, there has unfortunately been some sort of planning failure. Some of them are small, easy fixes, while others are bigger challenges that cost more time and money. The worst part is that they could have been avoided if the right thought process and planning were in place from the start. It’s true there is a lot to think about when it comes to setting up your trust and estate plan, but to truly protect your legacy and beneficiaries, you must think through a variety of scenarios you may not have considered.
In this episode of Absolute Trust Talk, Kirsten is joined by fellow Absolute Trust Counsel attorney Madison Gunn for another installment of Trustee Do’s and Don’ts. Kirsten and Madison will be walking through a handful of common mistakes that trustees and executors typically run into. These items include:
- How to avoid probate even if you have a trust
- Why it’s important to title your assets correctly, specifically your federal assets
- How to navigate trust administration if you have a minor or special needs person as your beneficiary
- How to use your trust as your “main vehicle” to avoid compounding court cases
And more!
Our goal with this episode is to educate you to see what holes may need patching up in your plan or, if you’re just getting started, what you should think through to ensure you build a comprehensive plan that protects everyone involved no matter what comes your way.
Big Three from Episode #086:
- Using your trust as the primary vehicle avoids A LOT of problems, so title your assets accordingly, and your beneficiaries can avoid things like conservatorship, guardianship, and probate! Yes, even though you have a trust, probate is possible if assets aren’t titled correctly.
- You must plan ahead and think about what will happen to your beneficiaries when this money gets to them. For example, what happens when people die out of order? Is someone a minor or special needs? Would this impact certain benefits or access to inheritance?
- Keep your trust up to date and make regular changes. Don’t set it and forget it!
Time-stamped Show Notes:
0:00 Introduction
2:22 Trust administration has picked up over the last few years, and so have the pitfalls that clients are falling into. In this episode, Kirsten and Madison continue their quest to educate on trust administration do’s and don’ts!
3:42 What sort of failures are Kirsten and Madison talking about? Tune in to learn more about ‘federal assets’ and why states can make it challenging to plan for your future properly.
5:53 Did you know? If joint owners (husband and wife) of a federal asset, like a bond, have died and there is no death beneficiary named, the federal government will ask for letters of testament, which is a big red flag because it means probate. Here’s what you need to know.
7:58 You heard it here first! Kirsten’s big takeaway from this episode is, “trusts solve everything!” What does this mean exactly? Start listening now to hear Kirsten explain her reasoning.
8:42 Another form of federal assets that gives people trouble is planes and boats. Just because you name someone the executor of your will, doesn’t mean they have the authority to sign specific paperwork required for these assets by the federal government, which means more court time.
10:55 So, how does one avoid issues with their planes and boats? Hint: it has to do with titling them in the name of your trust.
11:43 When a minor is a beneficiary, it can be difficult to navigate the trust administration because they aren’t of legal age to sign checks, contracts, or direct bank accounts to do things, etc. Here’s what has to happen.
15:59 A similar problem happens when a special needs person inherits a large sum of money, which can be a problem if the special needs person is receiving needs-based government benefits.
17:15 You must think about your beneficiaries and plan for them. Use your trust as the main vehicle to avoid all problems. It’s as simple as that. Otherwise, your heirs could face court-related issues that compound on top of each other. Kirsten and Madison share some scenarios to consider.
18:48 Madison shares the importance of including a provision in your trust about special circumstances like if a minor inherits or a special needs person is a beneficiary.
20:04 Audience Q&A: If a minor child needs a guardian of the estate and there are two parents, who will the court appoint? It’s very dependent on the situation, especially if the child’s parents are at odds and are fighting for the role.
21:24 Audience Q&A: Can I add my child as a co-owner of my US savings bond? Easy answer: yes, BUT if you die while they are still a minor, then they will not be able to access the bond. They will have to have guardianship filed on their behalf for the estate. They won’t be able to cash it in until they are of age. An alternative would be to include the savings bond in your trust and add your child as a beneficiary.
22:57 Audience Q&A: So, how do I change the title on my US savings bonds to my trust? Madison shares that there is a form called the FS4000, which you can find on TreasuryDirect.gov.
Resources/Links Mentioned in this Episode:
- https://www.TreasuryDirect.gov/Indiv/Forms/Forms_SavingsBonds.htm
- Absolute Trust Talk Episode 41: Special Needs Trusts: Don’t Let an Inheritance Blow Up Your Government Benefits
- Absolute Trust Talk Episode 44: Estate Administration Executor & Trustee Dos and Don’ts
- Absolute Trust Talk Episode 64: Trust Failures: Don’t Let This Happen to You
- Absolute Trust Talk Episode 70: Trustee Do’s and Don’ts Part Two
- Absolute Trust Talk Episode 76: Don’t Let an Inheritance Destroy Government Benefit Eligibility
- Absolute Trust Counsel would love to offer access to our Incapacity Planning resource page: https://AbsoluteTrustCounsel.com/Incapacity-Planning/. We’ve collected our top planning information all in one place so listeners can find videos, guidebooks, blog posts, a host of information with tips and strategies on implementing, planning, and protecting themselves and their loved ones.
- We’re pleased to provide you with a library of e-books to address common estate planning questions and concerns in practical, easy-to-understand language. https://AbsoluteTrustCounsel.com/Resources/.
- ASK KIRSTEN: If you’d like Kirsten to answer your question on the air, please email her at Info@AbsoluteTrustCounsel.com.
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If you have any questions or need any help, please feel free to contact us by calling 925.943.2740 or sending an email to info@absolutetrustcounsel.com.
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