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Funding a Trust

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  • Avatar scurry 
    Participant
    Status: Physician
    Posts: 45
    Joined: 03/28/2016

    Hi Everyone,

    I am in the process of setting up a family trust. We live in California. Can someone answer the following questions:

    1. Do retirement accounts need to be placed in a trust (401k, SEP, IRA, etc)?

    2. Do brokerage accounts, HSA, 529, cash balance plans need to be placed in a trust?

     

    I’ve read conflicting things regarding what needs to be placed in trusts. For example, ive read that 401k and IRAs shouldnt because doing so can trigger a tax event.

    Also, if I have already named beneficiaries for all the accounts, do i still need to place them in a trust?

    Thanks in advance!

    #190470 Reply
    Avatar bean1970 
    Participant
    Status: Physician
    Posts: 467
    Joined: 07/12/2017

    we only have stuff in our trust where there is no named beneficiary (brokerage accounts and home).   That is the bulk of our net worth (brokerage accounts, home not so much).

    there are some quirks with having retirement accounts and IRAs in trusts. we were advised against

    #190499 Reply
    Avatar Peds 
    Participant
    Status: Physician
    Posts: 3594
    Joined: 01/08/2016

    only items that do not have a beneficiary as that overrules everything.

     

    #190524 Reply
    Avatar Larry Ragman 
    Participant
    Status: Other Professional
    Posts: 489
    Joined: 08/30/2018
    Splash Refinancing Bonus

    While I generally agree with bean1970, I recommend James Lange’s “Retire Secure” to discuss some of the options for trusts. For example, he would not recommend putting retirement accounts in a trust, but he would make a trust the contingent beneficiary of retirement accounts.

    #190603 Reply
    Liked by Hank
    CordMcNally CordMcNally 
    Participant
    Status: Physician
    Posts: 2107
    Joined: 01/03/2017

    Setting up a trust would probably be a good reason to pay somebody well-versed in them to sit down and go over it with you.

     

    It would be a good up front investment in order to avoid a back end headache.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #190604 Reply

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