From the Rummel Wealth Management Mailbag, where, as always, these are real questions from real clients. (Of course the names are changed to protect the innocent.)
"Sally" in Reese, MI writes:
Ed, I really liked your "September" post - but it came out in October… What's up with that? My question is do I really need to work with an attorney to create a trust?
Yeah, the September mailbag was delayed a little bit. We has a few gnomes running amuck in Frankenmuth. Thanks for pointing that out!
On to your real question if you really need a trust?
If life is pretty simple with 1 marriage, kids are grown up in both age and maturity, and all have the same parents, you technically may NOT need a trust. A good estate planning attorney will let you know if you do or do not based on your individual circumstances, so please seek council. That said, here is more if you end up not using a trust…
I would suggest using "Payable Upon Death" designations for accounts like checking and savings at banks and credit unions. This is similar to naming beneficiaries. For your retirement accounts like IRAs and 401(k)s you would name your spouse as the primary beneficiary and adult children as contingent beneficiaries, usually equally. Same goes for life insurance policies. For taxable investment accounts (not IRA, not 401(k) or 403(b)), generally using a "Joint With Rights Of Survivorship" you could have something like a Joint Transfer on Death Account Agreement. This means that a couple maintains ownership of an account until the second of them dies. Upon the death of second of couple, the account passes to beneficiaries which would likely be your adult children.
This is all fine and good. However, understand you still should have the following documents to be drawn up by qualified attorney: Durable/Springing Power of Attorney, Medical Power of Attorney, HIPAA authorization, Will, Medical Directives, etc. These documents help assist your adult children - or other family members or friends - work through the systems our society has put in place and take care of your business when you are unable to.
Trusts are not always required, but the above documents that are part of the estate planning process are super helpful for those that have to run the "clean-up in aisle 9" after you are gone. Help make their jobs easier. Get these documents in order. Make sure your banking and investment accounts point to the correct people. And then let others know what your wishes are, in writing.
As always, loyal readers, please submit your questions to efoltz@RummelWealth.com where real life meets real people and we give real advice.