The focus for many people when they create a Trust is the distribution of their assets at the time of their death. We are seeing more clients who are living past their ability to direct and maintain their own finances. Make sure your Estate Planning documents are clear as to what you want for yourself in the event that a Conservator is appointed for you or in the event your Successor Trustee takes control of your finances during your lifetime.  What care and level of living do you want? Do you want to remain in your home for as long as possible despite the cost of home healthcare? Do you want annual gifts that you make to continue during your lifetime? Remember your Agent for Power of Attorney does not have authority or control over your Trust assets. If a Lease needs to be renewed or a Certificate of Deposit needs to be renewed and the assets are in the Trust name it will take the power of your successor Trustee to direct those assets.

Naming a beneficiary for anything is always difficult. When naming a beneficiary, or beneficiaries, on a retirement account it is important to properly name them to insure that assets, in this case your retirement account, passes to your beneficiaries without the need for probate (click HERE to the read an earlier post on why you want to avoid probate). You want your beneficiaries to have the opportunity to either “roll-over” your retirement account into a new retirement account or to stretch out the retirement account distributions over the life expectancy of the beneficiary. The “roll-over” option is mainly used if your beneficiary is a spouse and the stretch out option is mainly used if the beneficiary is a child (the use of “child” refers to ones adult child). In some cases the IRA owner may want to name a trust as a beneficiary in order to control the distribution of the retirement assets after his or her death.

Naming a trust as a beneficiary may present its own problems, such as exposing your retirement assets to immediate taxation upon your death and resulting in the loss of the “roll-over” and stretch out option.  If you want to name a trust as a beneficiary, help your beneficiaries avoid undo frustration and seek the advice of an estate planning attorney.