I plan to create a Revocable Living Trust and move my house and also my rental unit to the Trust. Will the trust be a separate Tax Entity ? For example will it have to file tax return for income from the rental unit ? Or do I continue to include the rental income under my own tax filing ? Thanks
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We put our house, brokerage accounts and checking account into a revocable Trust several years ago. For us there is no difference for filing federal and Georgia income taxes.
We chose not to put our vehicles in the Trust because the would be legal stuff needed with each change of vehicles.
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Same. And if you get stopped for a traffic violation or are involved in an accident, do you really want the cop or other party to see that you are one of those “rich trust fund guys”? WE know a Revocable Living Trust doesn’t mean one is a Rockefeller. But probably that’s the perception of an average guy when he see’s your car registration as “The Eunice & Thurston Howell III Trust”. (For what it’s worth, it was never stated on the show, but “Lovey’s” real first name was “Eunice”. Played by actress Natalie Schafer.)
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No. A revocable living trust is “pass through” for tax purposes.
May I ask as to what are your goals for the RLT owning your home and rental unit? Is it just for probate protection?
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My assets are mainly in 401k and IRA, the house and rental unit. My understanding (from attending a few RLT online seminars) is that IRA assets do not need to be put into RLT, only the house & rental unit. The goal is to avoid the headache of probating for the kids
Thank you.
Then you may not need a trust to do that. Depending on your state, you may be able to simply update the title of the property to name them at TOD on the title.
You may be able to save yourself the expense of a trust by paying a nominal fee to change your title.
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I’ll tell you my experience. I was DPOA for dad and in his last year I managed all of his financial/medical decisions. Dad already had his real estate and his vehicles filed with TOD. We ended up closing on his house 4 days before he died, so I don’t know how well the TOD would have worked. His truck I bought from him several months before he died so again I don’t know how well the TOD would have worked. The car was complicated. Since my sister wanted the car I had the title changed before dad died, so I was no longer listed as a TOD beneficiary. Only my sister was listed. She lives in North Carolina. She took the car there and at first they claimed that they wouldn’t recognize TOD, and they refused to allow her to title it there without my signature. Why they wanted my signature or even knew I existed I don’t know. Anyway, she started going up the chain of command with NC DMV and eventually they agreed to title the car. So the short answer, the TOD will probably work well if you keep everything in state.
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My mother had TOD on her brokerage account. Once we had death certificate transfer took about 30 minutes. Was easy. No problems.
She had a CD and had asked bank to TOD it but they failed to process the paperwork and refused to honor it when she passed. So had to be probated but not a big deal.
Keep in mind you still need a will to catch stuff that slips through the cracks.
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The Skipper’s name was Jonas Grumby.
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