When it comes to funding your trust with your investment accounts it is important to understand the different types of investments. It is also important to know how they are funded in your trust to ensure they avoid probate and the investments are distributed to your beneficiaries according to your trust instructions.
First, you will need to determine the type of investments account, which will govern how the account is funded in your trust.
Retirement Investment Accounts:
These include 401(k) 403(b) 457 Plan, TSPs, Traditional IRA, Rollover IRAs, SEP IRAs, SIMPLE IRAs, Inherited IRAs, and ROTH IRAs;
These types of accounts cannot be retitled in the name of your trust without considerable tax consequences and potential IRS penalties. Rather these accounts are controlled by beneficiary designation. If you chose to upgrade to an IRA Beneficiary Trust, you should name the IRA Beneficiary Trust as your primary beneficiary. However, if you are married your spouse would be the primary and the IRA Trust the contingent Beneficiary. Do not name your Standard Revocable Living Trust as the beneficiary of your Retirement accounts without first seeking advice, there are negative consequences you should consider.
Non-Qualified Investment Accounts:
These are investments accounts that are not in a Retirement Designated Account;
These types of accounts should be retitled in the name of your Revocable Living Trust. Ensure that the trust is not just a TOD (Transfer on Death). A TOD creates limitations on your successor trustee in certain circumstances.
Last, it is important that your investments regardless of the type of account is managed by a competent fiduciary. We suggest using a firm that is a ‘Registered Investment Advisor’ and ensures that your advisor holds the CFP® designation.
If you are unhappy with the performance and/or fees in your accounts, we would love the opportunity to assist you in your Investment Management. Our firm has a unique set of skills that allow us to integrate Investment options, Estate Planning, and Tax strategies within your Investment Management. This is important, as Holistic Investments Strategies will result in a more Efficient Performance yielding higher after-tax rates of return.
In addition, you will have the peace of mind knowing that Wealth Guardian Group has coordinated your investment accounts with your Revocable Living Trust.
If you are interested in meeting with me about our Investment Management Services, schedule an appointment to meet with me.