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Trusts & Estates Law/WRS and Beneficiary; Tax Consequences

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Mr. Disraeli
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?

Thanks.
DBRJ

Answer
Hi Dave,

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.

Regards,

David Disraeli  

Trusts & Estates Law

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David Disraeli

Expertise

I can answer general questions about estate planning and trusts. I can also answer questions about estate tax reduction and advanced charitable giving, family partnerships and asset protection. I may have already answered your question here: www.lifeplanblog.com or here www.pcfo.net

Experience

I have worked for 24 years with clients and their attorneys to formulate estate plans to meet client goals. I have found many mistakes made by client attorneys and were able to have them corrected. I focus on making sure that beneficiaries are protected from current or future spouses and lawsuits so the wealth stays in the family. I have also published a book on Aging Parents which can be found on Amazon https://www.amazon.com/dp/B003VP9WTG

Organizations
President and founder of The Personal CFO Inc.

Publications
www.pcfo.net www.lifeplanblog.com

Education/Credentials
Certified Financial Planner 1994

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