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Re: The SECURE Act and Non-Designated Beneficiaries

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@judger wrote:

I don't know if this is the right place to ask, but I am struggling with how to insure accessible funds for the successor trustee for a revocable living trust for final expenses, taxes, trustee fee, unnamed charitable gifts, etc. Most of our assets are tied up in IRA's, Roth's and other assets governed by beneficiary law.

 


I don't quite get this, judger...as in: what expenses??  Here's your list:

--final expenses...you mean like burial expenses?  Why not set aside some monies in taxable for this.  Why complicate the Trusts?

--taxes...what taxes?  Inheritance taxes??  Are you that wealthy?  If not, what are these taxes?

--trustee fee...what fee?? Trustees usually get an annual percent for handling trusts...at most.  Often trustees, if children, work for free.

--unnamed charitable gifts...if the gifts are unnamed, there aren't any!

Perhaps you have some real expenses in mind, but why fund them through the trust.  Set aside some funds now, even if it means taking from a ROTH... now.  Remember, is any real estate being sold upon your death...such as a house?  This will provide the monies to pay for things, also.  Your executor will simply work it out, including "paying for your just debts!"

R48

 

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Re: The SECURE Act and Non-Designated Beneficiaries

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@retiredat48 wrote:

@judger wrote:

I don't know if this is the right place to ask, but I am struggling with how to insure accessible funds for the successor trustee for a revocable living trust for final expenses, taxes, trustee fee, unnamed charitable gifts, etc. Most of our assets are tied up in IRA's, Roth's and other assets governed by beneficiary law.

 


I don't quite get this, judger...as in: what expenses??  Here's your list:

--final expenses...you mean like burial expenses?  Why not set aside some monies in taxable for this.  Why complicate the Trusts? Yes, plus any lawyers or other financial professional help.

--taxes...what taxes?  Inheritance taxes??  Are you that wealthy?  If not, what are these taxes? There will be taxes in the year after death, especially for the final RMD and maybe trust income.

--trustee fee...what fee?? Trustees usually get an annual percent for handling trusts...at most.  Often trustees, if children, work for free. We chose to give the selected kid to step up a modest but over 5-digit sum ("fee") - the amount allows for the fact that they have skin in the game too. We also figure that the kid chosen is going to have some family, if NOT legal, obligation (maybe "empathy" is a better word) to help the others that are less financially sophisticated.

--unnamed charitable gifts...if the gifts are unnamed, there aren't any! Oh, contrare! The trust states that a fixed percentage of the ESTATE is destined for named charitable organizations. But we then granted the kids the choice of about 20% for medical organization gifts that are significant to our or their experiences.

Perhaps you have some real expenses in mind, but why fund them through the trust.  See comments below. Set aside some funds now, even if it means taking from a ROTH... now. We are riding the "tax sheltered" status of Roth funds to the end with a vengeance.  Remember, is any real estate being sold upon your death...such as a house?  See comments below. This will provide the monies to pay for things, also.  Your executor will simply work it out, including "paying for your just debts!"

R48

 


R48, we run a VERY thin taxable account. This scheme would transfer funds to taxable within the successor trustee's grasp.

Next point is that we do NOT want to force the trustee into fire sales, especially the house should a kid want it. But at least to avoid poor sales prices out of desperation.

See further comments above in red.

Thank you for your comments, R48.    :-)))

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Re: The SECURE Act and Non-Designated Beneficiaries

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This is perhaps going off on a tangent, but for burial and funeral expenses it might be good to have a special trust through the funeral home. I did this for my father as part of protecting his assets from Medicaid claims on his estate. 

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Re: The SECURE Act and Non-Designated Beneficiaries

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@archer wrote:

This is perhaps going off on a tangent, but for burial and funeral expenses it might be good to have a special trust through the funeral home. I did this for my father as part of protecting his assets from Medicaid claims on his estate. 


Archer, funeral expenses are one of the smaller expenses I expect. Our final destination is far, far away from where we live.  :-)))

My parents did this, but it ties one to a specific funeral home. Where we come from, who knows who will be around.

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Re: The SECURE Act and Non-Designated Beneficiaries

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@judger wrote:

@retiredat48 wrote:

@judger wrote:

I don't know if this is the right place to ask, but I am struggling with how to insure accessible funds for the successor trustee for a revocable living trust for final expenses, taxes, trustee fee, unnamed charitable gifts, etc. Most of our assets are tied up in IRA's, Roth's and other assets governed by beneficiary law.

 


I don't quite get this, judger...as in: what expenses??  Here's your list:

--final expenses...you mean like burial expenses?  Why not set aside some monies in taxable for this.  Why complicate the Trusts? Yes, plus any lawyers or other financial professional help.

--taxes...what taxes?  Inheritance taxes??  Are you that wealthy?  If not, what are these taxes? There will be taxes in the year after death, especially for the final RMD and maybe trust income.

--trustee fee...what fee?? Trustees usually get an annual percent for handling trusts...at most.  Often trustees, if children, work for free. We chose to give the selected kid to step up a modest but over 5-digit sum ("fee") - the amount allows for the fact that they have skin in the game too. We also figure that the kid chosen is going to have some family, if NOT legal, obligation (maybe "empathy" is a better word) to help the others that are less financially sophisticated.

--unnamed charitable gifts...if the gifts are unnamed, there aren't any! Oh, contrare! The trust states that a fixed percentage of the ESTATE is destined for named charitable organizations. But we then granted the kids the choice of about 20% for medical organization gifts that are significant to our or their experiences.

Perhaps you have some real expenses in mind, but why fund them through the trust.  See comments below. Set aside some funds now, even if it means taking from a ROTH... now. We are riding the "tax sheltered" status of Roth funds to the end with a vengeance.  Remember, is any real estate being sold upon your death...such as a house?  See comments below. This will provide the monies to pay for things, also.  Your executor will simply work it out, including "paying for your just debts!"

R48

 


R48, we run a VERY thin taxable account. This scheme would transfer funds to taxable within the successor trustee's grasp.

Next point is that we do NOT want to force the trustee into fire sales, especially the house should a kid want it. But at least to avoid poor sales prices out of desperation.

See further comments above in red.

Thank you for your comments, R48.    :-)))


OK judger...I don't want to carry on commenting to each item.  

But in summary, I see no big item on your list, that most families don't also face upon death.  IMO, Your Trust makes it easier on the executor, not harder.  Like, IRAs are the easiest asset to handle.

You have lots of wealth...half of families die without anything extra.  They somehow survive dispositioning estates.  Your kids will find a way.

Best wishes...

R48

 

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Re: The SECURE Act and Non-Designated Beneficiaries

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48,

"Oh, contrare!"

Ask Norbert for a quick French language lesson.😁

Bob

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Re: The SECURE Act and Non-Designated Beneficiaries

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judger must follow his heart and do what he feels is best.  I tend not to optimize what is going to happen after me.  Some people will get a windfall they don’t expect including charities that probably would have long forgotten us.  I will let them deal with the tax consequences. 

I have to share a story about a family who left a considerable estate to their 3 kids.  Over the years, the kids who sort of knew what was coming would tell me about it.  One of the kids was the executor.  She basically got together with her siblings and immediately split the inheritance in 3 without all the control stipulations in the trust that she would have been burdened with in distributing the other siblings’ portions over time.  She had her siblings sign  a release.  They were happy to get all their money at once.  The executor told the attorney a fib that her mom at the very end of her life told her she wanted it this way.  And with a trust, only the heirs can bring legal action to enforce it.  The attorney or a court don’t oversee a trust.  So even the best laid plans sometimes go astray.  But all the heirs are totally happy.

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Re: The SECURE Act and Non-Designated Beneficiaries

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@GLI2019 wrote:

48,

"Oh, contrare!"

Ask Norbert for a quick French language lesson.😁

Bob


Probably. Had to take 2 years in college. Did NOT do well. Had to take Latin in HS. Did NOT do well. HATE FOREIGN LANGUAGES! My ears don't hear them  and my memory doesn't remember them. :-(((

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Re: The SECURE Act and Non-Designated Beneficiaries

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@judger wrote:

@GLI2019 wrote:

48,

"Oh, contrare!"

Ask Norbert for a quick French language lesson.😁

Bob


Probably. Had to take 2 years in college. Did NOT do well. Had to take Latin in HS. Did NOT do well. HATE FOREIGN LANGUAGES! My ears don't hear them  and my memory doesn't remember them. :-(((


MSU Bob...I didn't write Oh, contrare...judger did! :-)

(I'm color blind, so don't know if I got the color correct.)

I went to a Big10 school, thus I know I better not use French mantra's.

R48

 

 

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Re: The SECURE Act and Non-Designated Beneficiaries

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Sorry 48. I do appreciate the highlight in Green. 😁

Judger speaks Yooper and some day will teach me. 😉

Bob

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Re: The SECURE Act and Non-Designated Beneficiaries

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@GLI2019 wrote:

Sorry 48. I do appreciate the highlight in Green. 😁

Judger speaks Yooper and some day will teach me. 😉

Bob


Ya, heh!!! You betcha, Bob!!!   :-)))

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Re: The SECURE Act and Non-Designated Beneficiaries

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Judger, reads like your getting some good experiential advice!

one of the best was "consult an estate attorney skilled in IRAs and trusts."

it seems like you have two sets of questions.

1. what can surviving spouse do with the Roth IRA?
2. what can beneficiaries do with the Trust after surviving spouse dies?

since i've never had a trust, i'll leave that to others.

wrt the Roth IRA, based on the research i did last year and this year ...

A Roth IRA's beneficiary has four options – assume (make it theirs), inherit (create an Inherited Roth IRA), lump sum (take the money and run), or disclaim it (let someone else deal with the rules :^).
there are many variations based on if spouse is/is not sole beneficiary, if they are younger than 59 1/2, etc.

in my analysis, the best option for me an my wife is spouse assumes the decedent’s IRA to their Roth IRA. they can continue to make additional contributions and can begin to distribute assets at any time according to Roth IRA regulations. they DO NOT have to liquidate it w/in 5 or 10 yrs. that applies to non-spouses when dealing w/ a Trad and/or Roth IRAs. (unless i mixed up some info :^).

here are some sources i read/reviewed:
IRS = https://www.irs.gov/retirement-plans/required-minimum-distributions-for-ira-beneficiaries
https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-beneficiary

Schwab.com = https://www.schwab.com/resource-center/insights/content/inheriting-ira-understand-your-options

TD Ameritrade = https://tickertape.tdameritrade.com/retirement/inherited-ira-secure-act-stretch-provision-16710

NerdWallet = https://www.nerdwallet.com/blog/investing/inherited-ira-options/

 

good luck!!!

- - - - - - - - - -
peace, love, enlightenment and energy!
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Re: The SECURE Act and Non-Designated Beneficiaries

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IGNORE - post lost while entering

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Re: The SECURE Act and Non-Designated Beneficiaries

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Erperez, thank you for the thoughtful suggestions and links. I agree that the question to answer is what the spouse does with the Roth. The kids are taken care of as sole, equal beneficiaries of the trust and estate as well as named beneficiaries of all other IRA's and Roth's (along with a small amount in an IRA to named charities).

This is what I am proposing:

  • Create new Roth from existing Roth or new Roth conversion - we are old enough and Roth's old enough to allow this
  • Make spouse primary and trust contingent - covers if spouse dies 1st or we die together
  • If I pass first, spouse makes Roth her own in new Roth as required and makes trust primary
  • Spouse passes, the successor trustee has full access to new Roth funds for all uses
  • Successor trustee makes sure all IRA's and Roth's are distributed to proper beneficiaries - kids and a few name charities
  • Successor trustee distributes all remaining trust and estate assets to kids and closes the trust 

PS: Passed by TIAA lawyer that although couldn't give legal advice but stated that my solution seems to fit my goals.   :-)))

View solution in original post

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Re: The SECURE Act and Non-Designated Beneficiaries

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judger, it looks like you got it nailed.  Good for you.

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Re: The SECURE Act and Non-Designated Beneficiaries

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@gilvkona wrote:

judger, it looks like you got it nailed.  Good for you.


 Thank you. I hope so.

I will run this past a top lawyer from TIAA who has been very generous commenting on my goals and trust steps. Being a lawyer, and one like some here who would have done our trust differently, especially regarding gifts, I need to be very explicit with him for advice or he gets "legal" with this non-lawyer and loses me.   :-)))

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