Oakland, CA | Piedmont; Estate Planning, Trust Accounts, TOD and Beneficiaries

Hi, I’m Eric Wolfers. I’m the founder and managing member of First & Main Financial. We’ve been helping clients with their personal finances since 2001. Today I want to talk just a little bit about some estate planning issues.

In the state of California, you can avoid the probate process by having assets in a trust that are not already tied to or designated with beneficiaries. In an IRA (individual retirement account) or 401K, you can designate your beneficiaries—both primary and then secondary. If you designate beneficiaries in an IRA or 401K account, the money moves by what is called, operation of law, and one simply has to submit proof of the person passing and then the assets can be split and moved quickly and easily. Some institutions make that process extremely challenging—I don’t know why—but, if we were helping somebody with it, it would just take a couple days,

There is also something called a TOD, or transfer of death, which can be attached and beneficiaries can be designated for a taxable account—an account where buying and selling of securities may result in taxable consequences, or dividends will be taxable, in the year in which they’re paid. This works the same way as with beneficiaries on an IRA—assets will transfer and pass by operation of law. However, a house or a taxable account that doesn’t have beneficiaries designated—if those are in the name of a trust, the trust becomes the legal document that binds a set of instructions to those assets—as created by the person who created the trust.

It’s usually a good idea to have an estate attorney help create trusts. There are people that will do it online and there are services that will help create the documents online. I have heard stories where the results are not exactly what the person intended, because they use generic documents. I’m not an expert or an attorney, but I do know that there are estate attorneys that for a very fair price will do excellent work.

Complications can arise when someone has minor children who they designate as beneficiaries. A trust can be designated as beneficiary on behalf of the children, in which case the crafting of the trust needs to be very precise and with very clear intent.

On another topic, we have clients who will inherit money and sometimes they want to keep this money separate from their their spouse or their partner—which is normal, people do this all the time. They simply have the money they’ve inherited kept in their name or in the name of their individual trust.

We work with this stuff all the time—we’re happy to help. It’s good to make sure it’s all set up right. It’s not good to to pass away and have your assets go through probate, if you really want them to go to someone quickly and easily.

If you are looking for some financial guidance; whether for a one time financial plan or continuing advice on your investments, we invite you to meet with a First & Main Financial planner for a free consultation. We would be more than happy to sit down with you, assess your situation and review our services to help navigate your financial future.