I am one step away from enrolling in several DRP programs. The only thing holding me up is what the account name should be. As far as taxes and such go, should I enroll my wife and I as joint tenants or should I enroll the stock under the name of our revocable living trust? This will be a long-term investment probably for retirement purposes (37+ years from now). Any assets outside of the trust would be covered under a pour-over will - but that would also make them subject to probate.Any suggestions are appreciated.Thanks.
If you've gone through the trouble of setting up a trust, why would you want to sidestep it?If you both die in the same car accident, the Jointly titled asset would have to go through probate. One of the purposes of the Trust is to avoid probate.
Bobbcat wrote:If you both die in the same car accident, the Jointly titled asset would have to go through probate. One of the purposes of the Trust is to avoid probate.Not necessarily. If the assets are titled "joint tenants with right of survivorship," in most states those assets will pass outside of probate by "operation of law." The law is so in CA.However, this form of ownership can have negative consequences re: asset protection. JTROS assets are often more easily attached by creditors of one of the joint owners. (This is because of some ancient and ridiculously complicated legal theories about the nature of title...)In addition, assets that are held JTROS do not receive a full step up in cost basis to FMV at the time of death of the deceased. They only get a half-step up in basis. Assets that are held as community property (which can be inside of an RLT) get a full step up in basis to FMV as of the date of death. So if the heirs sell the assets shortly after death, there will be minimal capital gains taxes and they will get the assets free and clear.The step up in basis and asset protection, as well as avoiding the costs of probate court which you mentioned, are really good reasons to hold property as CP (if you live in a CP state) within an RLT.Additionally, if the RLT contains a bypass trust, you can also achieve estate tax sheltering to the (current) maximum of $1,300,000. If assets are held jointly and outside of the RLT, it is probable that only $650K worth of assets will be sheltered from estate tax. If the original poster is married, this is perhaps the best reason to keep his assets in his RLT.My apologies in advance for being a bit long-winded...Fool on!
CCSand writes (in part):If the assets are titled "joint tenants with right of survivorship," in most states those assets will pass outside of probate by "operation of law." The law is so in CA.I reply:I think you missed the point of Bobbcat's hypothetical. He assumes that both joint tenants die simultaneously. If so, assets in joint tenancy will pass through probate (because there will be no surviving joint tenant), but assets in a trust will remain in the trust, and avoid probate. --Bob
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