Estate Planning and Trust Accounts

[ultrarunner]

of course you are right…

The Trust’s main purpose was to minimize Estate Tax which is a mute point in 2023 because due to the current tax exemption being many many times greater than the value of the trust.

The 3 of us siblings are the beneficiaries and we 3 have a joint account at the bank since 1982.

When the Banker suggested closing with the check made payable to all three of us I readily accepted but Legal quashed it.

All I know is the Bank is about 8 staff hours into this right now with other customers having appointments becoming irate waiting around.

For my part I’m questioning the logic of continuing my business accounts once this is settled…

The hundred of online reviews are eye opening to say the least but only a few were trust specific…

My brother said make an appointment for all 3 of us and jointly we will say close the account as both parents are deceased with the funds made payable to all three of us as the listed benificaries.

 

[2manyrocks]

It was a great relief to me to be rid of US Bank and to be free of the hassle of administering a trust set up for tax saving purposes that in the end didn't actually save any taxes because of the increases in the federal estate tax exemption. Been there. Done that.

I feel your pain.

 

[ultrarunner]

I was with my parents when the Trusts were created and they really wanted to do their best.

Remember asking the lawyer what happens when the law changes and his answer is we go with the best course of action in the present.

I just added up 22k in professional fees paid to create and maintain the 2 Trusts all these years not counting my legwork the last 25 administering it for mom.

As a side note it is my understanding the partial interest the Trust holds in the rental property is not eligible for a step up in basis making the last 25 years of appreciation taxable plus subject to depreciation recapture.

The only positive that comes to mind is Dad took comfort at the time knowing they had done their best to put their affairs in order.

 

[2manyrocks]

25 years ago, the exemption was much more modest and assets were appreciating at significant rates. Once you exceeded the exemption amount, the estate tax rates were significant, if not nearly confiscatory, and there was nothing on the horizon to suggest that the exemption amounts were going to be raised. All of the signs at the time pointed towards facing a good sized estate tax bill in the future unless these trusts were used.

Then the estate tax exemptions were raised, but this wasn't the situation 25 years ago when this planning was done.

On the other hand, I know a guy whose mom refused to do any planning. After she died, he told me he had to come out of retirement and take a job just to pay his share of the estate tax bill because her primary estate asset was a piece of highly appreciated real estate and her estate didn't have the cash to pay the estate tax bill.

Considering the amount of appreciation in real estate prices over the last 25 years, especially the last four years, the estate tax projections that were done 25 years ago probably look ridiculously low in retrospect. The thing that changed was the increase in the estate tax exemption amount, and that was hoped for, but unexpected.

 

[Sigarms]

Berfore our trip to California for our family vacation, we had to make an amendment in our trust. All 3 of us were on the plane both ways, and the dumb question becomes what happens if by chance the plane goes down and all three of us perish (our son is the benificiary, but not the exectuor if something happens to my
wife and I).

In the process of changing all of our assetts into the trust including our assetts with the bank, I've learned that either the bank doesn't know what they're doing or our laywer doesn't know what he's doing, and after talking with both, my money is on the bank not knowing what they're doing.

They also "lost" our trust paperwork that was supposed to be sent via intercompany courrier so it won't get lost. Go figure.

On a sidenote, I can't help but wonder if we are the only family that has the executor of their trust not related to them in anyway? Reality is my Dad and Father in law use to be listed, they since died, and my mother in law is to old to carry that burden in our opinion. When we went over a list of prospects on who we wanted as the executor on family members, it came down to a good friend whom we trust over family.

When the son get olders (he's only 18 now) he will most likely be the executor then, but not now.

 

[2manyrocks]

Betting on friend over family might or might not be okay but I would very much consider making the son co-executor so he has equal control.

 

[ultrarunner]

I’ve been named executor for several non related individuals… one were divorced with minor children and I was the only one both could agree on.

Fortunately for me it never came to be as individuals remarried or the kids became old enough.

It’s on honor to be considered but I’m glad it never put into action.

 

[ultrarunner]

Seems lost documents are not uncommon in banking?

Just imagine if Banking were subject to a HIPAA like hospital standard?

The trust documents contain social security numbers plus other personal identifiers.

Now that everything is going Digital it’s only a matter of time until the next data breach.

I remember a time when banking was simple and a 14 year old earning a W2 paycheck could walk into a bank and open a checking account with no parent or guardian and the bank manager had real authority…

B of A branch manager Walter Kendall said anyone old enough to be holding down a regular job is old enough to have a checking account in his bank… he was also the first person to ever call me mister when he would greet me on payday coming it to deposit my paycheck.

My brother had a no co-signer credit card at 16 with a $200 limit secured by his bank account as at 16 he was a lifeguard for the park district…

I’m really showing my age…

 

[Michiganguy]

We just set up a trust.
Out of 4 financial institutions that have accounts that needed to be transferred into the trust only one handled the transfers into the trust correctly the first time. Another did all the paperwork setting up the trust account but failed to transfer any of the accounts into the trust, another listed the wrong name as successor trustee and the last never completed the trust paperwork after 2 weeks so the accounts weren’t transferred.

 

[2manyrocks]

Banking changed for the worst when Congress repealed the Depression era legislation that forbade interstate banking that used to reign in the size of banks not to mention the obvious monopolization issues that were ignored at the time.

A friend of mine who was a very experienced loan officer/underwriter once that there wasn't a banker in Nashville that hadn't been right sized, down sized or merged because of all the bank mergers that followed. Respected bank officers moved on to different locally owned banks because they had a following of customers that wouldn't put up with the new bank policies and every decision having to be run through a bureau of desk sitters that didn't know the customers and didn't care, either.

Back to Sigarms, I think you need to think about naming your son as Co-executor if you are firmly decided on having a friend as exec. Also, you need to think about whether you want your documentation to also state that if your son has attained a specific age like 25, he can serve alone without the friend. You might think you have the time to change this later, but if you suffer a stroke or accident that leaves you incapacitated to make this change, then you're stuck.