There are several issues that come up with regard to Revocable Living Trusts that are separate and apart from questions for other estate planning issues, some of those include:
If you are reviewing this after you have signed your documents and received your conformed copies, then you also received Funding Instructions. If you have not yet signed your documents, these funding instructions will help you begin the process of moving assets into your revocable living trust. If you would like a copy of your draft funding instructions before you have signed your documents, please let us know. We also have a separate FAQ just for the funding of Trusts.
Virginia and DC law requires that while you, as Grantor, are alive, a trustee, other than you, must notify you of certain actions by the trustee. What those actions are is not the issue here, but rather how the trustee must notify you is. If you are incompetent, then the trustee cannot notify you, but instead give notice to the representative(s) listed here. That is why the representative should not/can not be the initial (and therefore most likely) trustee.
Stretch IRAs are IRAs whose beneficiary designation permit the beneficiaries of the IRA to make minimum distributions based on their life expectancy. These required minimum distributions are often very small, enabling the bulk of the IRA assets to continue to grow tax deferred. The ability to continue to defer the income taxes on the IRA allows for substantial pre-tax compounding of the growth that can significantly increase the benefits ultimately available to the client's beneficiaries. The use of the term Stretch IRA refers to the fact that the withdrawal of the IRA balances is able to be stretched over the maximum period of time, thereby enabling the beneficiaries to take advantage of this tax deferred growth. Frequently a trust is the targeted beneficiary or owner and this trust must be carefully structured in order that the maximum stretch period is available to the trust as it manages the IRA.
The Retirement Benefits section of the revocable trust is there for clients who either do not listen to our advice that the trusts are not designed to get and hold retirement benefits so that they remain tax deferred, or who accidently direct tax deferred accounts into the Trust. The provisions are technical and not likely to apply, and we can always, at your request, remove them from the draft.
Items in a safe deposit box are presumed to be the property of the owner of the box. In order to have those assets presumed to be owned by the Trust, the Trust needs to own the box.
The Terminating Trust, typically found in Article 4 of your Revocable Living Trust, is a temporary entity that exists to settle your trust and estate issues. The Terminating Trust exists for as long as it is necessary for the Trustee to collect assets, pay debts, deal with taxes, etc. The Terminating Trust gets a new EIN, since it can no longer use your social security number. Once the tasks assigned to the Terminating Trust are completed, the trust ends and distributions are made to the people, entities or trusts set out in the next articles.
Although you are doing your primary testamentary estate planning through a revocable living trust, we have also prepared a Last Will and Testament. This Will is really what is called a “Pour Over Will” which has a very limited purpose or purposes. There are two primary reasons for having this Pour Over Will in place, and two other possible reasons:
More generally, remember that a revocable living trust only directs assets that have been titled into the name of the trust. While clients always intend to transfers all their probate assets into the revocable living trust, they do inadvertently leave something out of it. The Pour Over Will provides for the forgotten or new asset to go through probate and into your trust.
For more information on properly funding your revocable living trust, see our FAQ.