Funding Choices in the Estate Plan
John and Josie Grantor have a revocable trust, of which they are the co-trustees and co-beneficiaries. If something happens to either of them, the survivor will have access to the interest and principal for the rest of his/her life.
The Grantors have two children, 20 and 22. Under the terms of the Trust Agreement, the children share equally in whatever assets are left upon the deaths of both John and Josie.
Recently, John Grantor opened two payable-on-death CDs: $400,000 for their daughter and $200,000 for their son. Then the Grantors asked my opinion of this arrangement. I observed:
The Grantors may treat their children unequally, either inside or outside of the parameters of their Trust.
A Payable on Death account will work here, provided that:
Grantors won’t need this money if John dies before her;
The children both survive their parents;
Each of the children is mature enough to handle an inheritance of this size.
A payable-on-death account is easy to set up, but it isn’t flexible. If, for example, one of the children does not survive John, to whom should her/his account pass: To the deceased child’s (as yet unborn) children? To the surviving child?
What if one of the children is not yet fiscally prudent by the time John dies? Would she/he blow through an inheritance?
The Trust may provide a better, more flexible vehicle for carrying out the Grantors’ wishes. A sub-trust could be created for each child (or for only an immature child) authorizing the Trustee to distribute income and principal for the child’s health, welfare, education and support, including purchase of a vehicle, a condo, a business or any other non-speculative, worthy investment. The Trust provisions would dictate at what age the child should receive unfettered access to the remainder of her/his Trust share, and to whom any balance of the Trust share should be distributed if the child dies before becoming entitled to final distribution.
The payable on-death account may nevertheless be preferable in two situations: (a) to provide the convenience of quick access to small amounts of money at the decedent’s death, and (b) to provide bequests to non-family members, who would not otherwise be entitled to information about the trust’s provisions.
For more information, please contact Jerry Kessler in Santa Clarita at 661-255-1001.
ADVERTISE WITH US
51st Annual Frontier Toyota Henry Mayo Golf Classic Tee Up For A Good Time
Henry Mayo Newhall Hospital’s signature fundraising event is in full swing, we look forward to seeing everyone on Saturday, May 11th! The 51st Annual Frontier Toyota Henry Mayo Golf Classic will be held at the beautiful Valencia Country Club Our Golf Classic benefits...
Travel the World in 2024 with “Celebrate” Journey to New Destinations Monthly at the Canyon Country Community Center
There is so much to learn from different customs and cultures and you don’t need a plane ticket to experience it all. The Celebrate event series is back for its anticipated third year and offers insights into unique destinations from around the world. Every...
Monthly Message from Mayor Cameron Smyth Buckle up for the 2024 Cowboy Festival!
The aroma of savory barbecue wafting through the air, the joy of line dancing with friends and the chance to travel back in time to the Wild West are all experiences that make the City of Santa Clarita Cowboy Festival so unique. April 20 marks the return of...
ABOUT THE MAGAZINE
Santa Clarita Magazine has set a high standard for excellence in advertising for over 34 years. A family owned and operated business, Santa Clarita Magazine has grown with the Santa Clarita Valley since 1990 and become the #1 place to advertise locally.
FOLLOW US
SANTA CLARITA MAGAZINE
PO Box 801570
Valencia Ca 91380
For Advertising information
Call or Text: 1 (661) 294-4444