Seniors Act | Couple Decides What To Include In Their Confidence – Santa Cruz Sentinel
Dear Len & Rosie,
We updated our confidence and had two different opinions on checking accounts and CDs. Should we have our regular checking account in the trust? Should we have the money market account in the trust? Should we have the CD in the trust?
Everything should be in your confidence, with a few exceptions. Don’t bother going to the DMV to transfer your vehicles into the trust. If you die in possession of an automobile, your heirs can rename it to their name at the DMV 40 days or more after your death. All they need are your death certificates, the vehicle title, and the DMV REG-5 form, which is readily available at www.dmv.ca.gov.
Unless your lawyer advises you to do otherwise, do not transfer any retirement account into your trust, and do not name your trust as the beneficiary of the retirement account. Transferring a retirement account to a trust means you cash out the account and will have to pay tax on all of that deferred income all at once. In addition, under the SECURE law passed in 2020, retirement accounts paid into trusts must be fully cashed within 10 years of your death, while spouses can roll over spouses on their own.
The easiest way to manage a retirement account is to designate your spouse as the primary beneficiary and your children or others as secondary beneficiaries. The only reason you would leave a retirement account in your trust is if you have a disabled or spendthrift beneficiary who cannot or should not receive the money directly.
If you and your spouse name each other as the primary beneficiary of each of your retirement accounts and you name your children or other chosen heirs as secondary beneficiaries, your children will have to cash their shares within 10 years of the death of the surviving spouse, but each child can decide for themselves when to cash out their share instead of a trustee who makes the decision for everyone.
We advise our clients to keep their checking account outside of their trusts. Instead, keep the account on behalf of both spouses and add one of your children to the account when one of you starts slowing down and may need help paying the bills.
When you and your wife pass away or become incapacitated, your successor trustee will take over, but it cannot happen overnight. It takes a few weeks to round off death certificates or doctor’s letters to allow your revocation as a trustee. Adding someone to your checking account now will make their job easier when the time comes.
Len and Rosie
Len Tillem and Rosie McNichol are seasoned lawyers. Contact them at Tillem McNichol & Brown, 846 Broadway, Sonoma, CA 95476, by phone at (707) 996-4505, or on the Internet at www.lentillem.com.