Retirement Plans Left to Minors

I've been reading Denis Clifford Nolo books on making living trusts, simple wills, and estate planning in general, but have a question that I didn't see answered. As to background, I just want to leave everything to my wife, or if we both die concurrently, to my minor kids. My wife is beneficiary, or specified as POD recipient on all accounts or joint owner, so almost nothing would go through probate as long as she outlives me. The question has to do if we both die at the same time.

Say I create a basic shared living trust (my wife and I as co- trustees) and a third party "Bob" as successor trustee. Is it possible/wise/prudent to specify, for my retirement accounts, "Bob as trustee for (my) living trust" as the secondary beneficiary (wife being primary)?

If I die, my wife as primary beneficiary would get the proceeds directly (not through the trust nor through probate). If my wife and I die concurrently, "Bob" becomes the trustee of the living will and also gets the proceeds so he can administer to my kids, all outside of probate court. Seems like it should work, but then again logic has nothing to do with it...it's law, after all ;)

--Dale--

Reply to
sengsational
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A (living) Revocalble Trust better fits your needs as it allows for more complicated scenarios than a simple Payable On Death designation on an account. You can title your accounts into a Revocable Trust. A common feature of trusts is that a beneficiary has to survive you for a certain number of days (e.g. 30) to qualify as beneficiary. If they don't live this much longer it is as if they pre-deceased you. That avoids your estate having to go to your wife and then to your children if you die at the (nearly) the same time. It also avoids all the "who died first" questions if this can't be readily ascertained.

Just as a matter of language do not refer to "Bob" as beneficiary or "gets the proceeds". Refer to him as a trustee or guardian. Your children are the alternate beneficiaries. Wanting to leave an estate first to a wife and second to children is very common and any estate lawyer should be familiar with it. There are specific methods to do this (guardian for minor children) well. I would have a lawyer draw up your trust as your children's future depends on it and you don't want to make any mistakes here. Especially not listing Bob as beneficiary on an internet Revocable Trust. Lawyers are expensive so it is worth understanding as much as you can before you hire one.

Of course some new whiz bang estate planning thing seems to come along every10 years or so, so I wouldn't go nuts creating the end-all, be- all trust. You may want to update/repalce it several times before you go. You may feel differently as your children become adults and you have grandchildren. "Revocable" is a cool concept.

Happy New Year To All!

Reply to
camgere

I was trying to avoid that hassle. Things will work out fine as long as my wife and I don't die at the same time (if being dead is "fine"); I can't see doing all of that work for the (hopefully) vanishingly small possibility of concurrent deaths.

I'm not sure I get this for this scenario. I'm not sure I mentioned that I'm talking about retirement accounts that must have beneficiaries specified. If the "bank" holding the account transfers the funds to my wife after I die, she would have to specify a beneficiary at that time, I suppose.

Yes, I don't want mistakes, for sure. I like simplicity too (easier to avoid mistakes). That is the way it is now. Very little would go through probate, as long as one of us is around.

By the way, I found, on page 70 of "Make Your Own Living Trust" by Denis Clifford, the answer to the original post. It was mixed in with AB trust stuff, so I must have skipped it the first time. It says "...you may understandably be concerned with what happens to your retirement account if .... significant funds remain in the account at your death. You can LEAVE THESE FUNDS TO YOUR AB TRUST by naming your successor trustee as beneficiary of your account" (caps are mine). I don't see why this wouldn't work for a plain living trust. The paragraph goes on to warn about your spouse losing rights to roll-over the account, but since the successor trustee would only be the beneficiary if my wife wasn't there, that's not a concern.

That's great advice. I think I'll take it! Leave the plain old will in place, with the wife as beneficiary or POD on assets (or have assets jointly held). All of that escapes probate. If my wife and I both cash-in concurrently, well, the probate lawyers will have a party at my kids' expense, but the will should get the money to the financial guardian I've specified.

--Dale--

Reply to
sengsational

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