Trusts & Estates Law/WRS and Beneficiary; Tax Consequences
Currently my wife and I are creating Revocable Trusts, with the original owner the initial Trustee, followed in succession by the surviving spouse, and finally, the children. We both have ROTH IRA's, with each other as initial beneficiary, followed again by the children. As I understand it, upon passing, the surviving spouse automatically becomes the owner of the IRA's, and it never appears as part of the original owner's estate for probate or tax purposes. If this is so, is there any purpose served in including them in the Trusts before then?
In a like fashion, we have joint savings accounts, WRS, as well as a joint brokerage account, again WRS. Does this also assure exclusion from probate and tax considerations, and again make inclusion in the Trusts – at least initially – unnecessary?
First let me apologize for the wait. I normally respond the same day. I was moving and haven't checked my email as you would imagine.
Roth accounts are part of your estate although it probably doesn't matter since you can each leave $5mil. If you did move the Roth into the trust you lose all the future tax benefits of the Roth. Not recommended and as you pointed out, no reason to do it. You will not have any probate if you do what you proposes. Don't confuse probate and taxes. They may very will lower the current $5mil exemption (per person) on estate and gift taxes. Your gross estate is still your total estate regardless of how it is owned.
Regarding Joint accounts and all other no probate-able assets: There are many other considerations besides probate that go beyond this email forum. There are disability issues and others as well. If you would like, I offer a free consultation for these types of complex matters. Just let me know when you are available and I will try and work around your schedule.