L1: testamentary trust
Can a testamentary trust qualify as a see through trust for designated beneficiary status even though it does not get created until after the trustor”s death?
Thanks2008-02-22 12:44, By: Steves, IP: [220.127.116.11]
L2: testamentary trustYes, as long as itwill meetthe requirements listed in Pub 590, p 39.2008-02-23 17:32, By: Alan S., IP: [18.104.22.168]
L2: testamentary trustThere are many other forums that can and should be used for topics other than SEPP 72-T. Otherwise we will get bogged down in areas that may not be of interest to most of our participants.
Anyway, a REVOCABLE TRUST automatically becomes an IRREVOCABLE TRUST at death. Be careful to determine if it is a trust with its own trust documents (thereby avoiding probate), or a trust created in and under a will (in which case it is included in the probatable estate).
Before signing off, let me alert you to a little known, and little used, nuance when investing in CDs, Taxable Bonds/Notes, and Tax-Exempt Bonds — DEATH PUTS. When these are included as a provision of the investment when purchased it means that the security is redeemable at death at the higher of Fair Market value Date of Death or FACE VALUE. I had these for a client who died a week ago, and his heirs/beneficiaries will get $100,000 more than the Fair Market Value when he died. (They get $1.1 million instead of “only” $ 1 million.) The redemption process can take 3-9 months because of pre-set redemption times by each company who issued the securities, but it”s worth the wait. And there is no tax on this “bonus” because DOD value is the DEATH PUT VALUE, just like the old “flower bonds”.
And we even benefited from his deceased spouse”s trust because he was the “income beneficiary”.2008-02-23 20:49, By: dlzallestaxes, IP: [22.214.171.124]