Should bank accounts and retirement accounts go into a revocable living trust or should a beneficiary be put on each account?

Asked about 2 years ago - Lake Orion, MI

I would like to know which of the above is the best way to manage the accounts now and when they become my beneficiaries.

Attorney answers (3)

  1. Steven J. Fromm

    Contributor Level 20

    5

    Lawyers agree

    Answered . This is a loaded question and really depends on looking at the complete estate planning picture. The retirement accounts are not great candidates to be placed in trust as their are some complicated income tax implications. You need to have a comprehensive estate plan established to know what is best for you. For more on this process please read my legal guide entitled Estate Planning Mistakes: 5 Not So Easy Pieces at http://www.sjfpc.com/estate_planning_drafting_w.... After you read this you may gain an understanding of what is involved in this process.


    Hope this helps.

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    Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery Counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336 or his email address is sjfpc@comcast.net , his website for more tax, estate and business articles is www.sjfpc.com. and his blog is

    LEGAL DISCLAIMER Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia... more
  2. James P. Frederick

    Contributor Level 20

    4

    Lawyers agree

    Answered . I agree with Attorney Fromm on this. You need to have qualified tax counsel advise you as to what is the best option, here. For many retirement assets, naming a trust eliminates the options many beneficiaries might have to further defer income taxes in relation to these assets. Bank accounts are less of an issue. Either way, you avoid the need for probate when a beneficiary is named on these assets.

    James Frederick

    I am licensed to practice law in the State of Michigan and have offices in Wayne and Ingham Counties. My practice... more
  3. Mary Lynn Symons

    Contributor Level 13

    4

    Lawyers agree

    Answered . I agree with both attorneys who have answered this question that you need to consult with an attorney before naming the trust (or a subtrust thereunder) as the beneficiary of your retirement plans. It may be appropriate to name the trust or you may want to specify individuals or charities as beneficiary. An attorney can discuss your goals with you and let you know the pros and cons of each approach to achieving those goals.

    I read your question as also asking if you should transfer your retirement accounts to your trust (the way you do with your other assets). If this was also what you were asking, the answer is NO. During your lifetime, you should NOT transfer the retirement plans themselves to your trust. Doing so can have adverse tax consequences to you.

    You need to consult with an attorney. If you decide to name your trust as a beneficiary, the way that is done and the way the trust is drafted have consequences to your beneficiaries that can be dramatically different based on the language of the trust and the language of the beneficiary designation. This is NOT a " do it yourself" project!

    DISCLAIMER: THE INFORMATION PRESENTED HERE IS GENERAL IN NATURE. IT IS NOT INTENDED, NOR SHOULD IT BE CONSTRUED,... more

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