by Francis Burton Doyle, Esq., WealthPLAN
One of the problems with using a term like “integrated estate planning” is that it sounds complicated. In actual practice integrating a client’s estate plan involves more common sense than sophistication in technique. For example, if a single client owns a home, a bank account and an IRA, integrating a plan may simply mean ensuring that the home is in a revocable trust so as to avoid probate and ensuring that the titling of the bank account and IRA are such as to conform to the client’s dispositive wishes.
In most instances, the titling of the bank account should be in the name of the trust as should the title to the home. This ensures that the bank account will be distributed in accord with the client’s estate plan as set forth in the trust. Too often the titling of the bank account is at odds with the trust. One of the client’s beneficiaries is designed as a joint tenant so that upon the client’s death the account transfers by right of survivorship to that beneficiary rather than to the client’s trust. This situation causes many problems.
- First, the account is not available to pay for the expenses associated with the client’s debts and expenses of administration.
- Secondly, an ambiguity arises among the clients’ beneficiaries. The beneficiaries of the trust claim that the now deceased client wanted the bank account disputed as part of the trust while the beneficiary designated on the account as a joint tenant claims that the decedent wanted the account to go to him or her by way of survivorship. “integrating” this plan would simply have meant either titling the account in the name of the trust or providing the client with a letter which specifically stated that the client intended the account to go by way of survivorship.
The same concept applies to funds in an IRA (or other retirement plan). The client should be informed in writing that the IRA is controlled by beneficiary designation and that the beneficiary designation made by the client conforms to the client wants these funds distributed at death. In general, it is preferable to have individual beneficiaries rather than a revocable designed to receive IRA and other retirement benefits because individuals can “stretch” out the payments for income tax purposes.
Nonetheless, the estate planner should discuss this specific issue with the client and then carefully document the client’s intent and the understanding that the client will follow up and take the necessary action with the financial institution housing the IRA. Taking these kinds of precautions prevents surprises and in administering post mortem situations, remember: “the best surprise is no surprise.”
Quote To Ponder
“Do not stop thinking of life as an adventure.
You have no security unless you can live bravely, excitingly, and imaginatively;
unless you can choose a challenge instead of a competence.”
~Eleanor Roosevelt (1884–1962)
About the Author:
Francis Burton Doyle, Esq., is the founder of WealthPLAN, with over 30 years of experience in Tax, Estate-Planning Probate, Trust Administration and Litigation. He is Certified Legal Specialist inTaxation Law and Probate, Estate Planning and Trust Law (California State Bar). Frank is the Past President of both the Santa Clara County Estate Planning Council & the Silicon Valley Planned Giving Committee. Frank is also the Past Chair of the Annual Jerry A. Kasner Symposium, Planning Committee, Santa Clara University, School of Law. Mr. Doyle provides all the course development and instruction for the Advanced Legal Training Institute.
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