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Estate plan structure

Mill Valley, CA |

How would you structure an estate plan for a married couple in California containing only the following assets?

1. Roll over IRA.
2. Home with title held as community
property with right of survivorship.
3. No personal property.
4. Insufficient assets for A-B Trust

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Attorney answers 3


Consult a local attorney who is either a CPA as well, or has a Masters in Taxation. Your total asset value, assets includable in your taxable estate at either the Federal or State [or both] levels will play a very important role in how to structure you estate. Those considerations will affect the "personal" structure of your plan, and how you get assets to the intended beneficiary(s). Although you say you have "insufficient assets for an A-B trust", that is in fact 2 trusts, and unless you know what the estate/inheritance tax structure in your state of residence is, and if you have counted all your assets [life insurance death benefits may need to be counted], you can not know, unless you know enough to plan your own estate. Additionally, many of my clients now consider "A-B" type trust arrangements to protect their spouse following their death for reasons beyond estate taxes - creditor, fraud, disinheritance protection are a few.

The assets you list include an IRA which has it own set of rules relating to income taxation during your life, and following your death, that do not necessarily work well with the estate tax structure at the Federal level. Should consideration be given to "stretch" planning for the IRA, etc. Additonally, the community property assets need to be planned by someone who understands how they are treated for tax purposes, if you have a taxable estate [either state or Federal or both]. What about probate in your state, the costs, pitfalls, etc?

In summary, you need to provide more information, but often without the assistance of an attorney who is well versed in this area of planning, will you even know what you have of consequence, or how to plan for it.


The home would be deeded by quitclaim to a revocable trust to be prepared by an attorney. The plan should include two pour-over wills to cover assets not transferred into the trust during the couple's life. If the spouse is to get everything under the estate plan, the spouse should be the primary beneficiary of the IRA. Whether the children or the trust is the contingent beneficiary depends in part on whether the children are minors (trust) or adults (children themselves) The plan should include a durable power of attorney for health care decision making. Further, on the IRA, a power of attorney should be executed to give another person access to the IRA in the event of the IRA-holder's incapacity. If the spouse is to get everything, one alternative to the A/B trust is a disclaimer trust which allows the spouse to revoke or amend the entire trust on the first-to-die's death, but which gives the spouse the ability to disclaim (refuse) assets to protect the first-to-die's exemption (the free amount that a person can die with and pay no estate taxes) under which arrangement the disclaimed assets would pass to an irrevocable trust for the survivor's use. The disclaimer must be made within 9 months of the first-to-die's death, which allows the survivor the ability to look at the size of the estate, the size of the exemption and the survivor's life expectancy in determining whether or not to protect the first-to-die's exemption.


I would certainly stay away from a "Simple Trust," since the unpredictable nature (and future) of our estate tax could result in a potential tax problem. As stated above, a "Disclaimer Trust" is essentially a "Simple Trust," which also allows the surviving spouse to elect to "convert" the trust into an A/B Trust if such is needed. I would definitely name the other spouse as the primary beneficiary of the if each other's IRAs so that each spouse could roll it over and continue to enjoy the tax deferred growth, and the Trust as the secondary beneficiary, so that the IRA proceeds are afforded all of the same protections as the other trust assets. I would certainly be sure to transfer title of the house into the trust, since joint tenancy has some negative tax implications in this situation. Overall, I would use a "Disclaimer Trust," as noted above, and also include the standard ancillary documents (POAs, Healthcare Directives, etc.)

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