Investment Account Location
We are in our late 70s and currently have two mutual fund investments held in jointly titled taxable accounts representing about 5% of our total retirement investments. I am questioning as to whether there would be any advantages to holding these two funds in an account titled in the name of our joint revocable trust. We have such an account at Vanguard along with our other tax-deferred retirement accounts but currently have no asset with the RLT account.
Can anyone share the knowledge of the pros and cons of placing these two accounts and any future taxable account in the RLT account versus regular taxable accounts? Tom D.
Permalink Submitted by Alan - IRA critic on Sat, 2014-08-16 03:43
Hi Tom. Two benefits of an RLT are elimination of probate and the establishment of trustees to look after the trustors in the event they become incapable of handling financial assets while still living. A joint account eliminates probate for the first death, but not for the second death unless the account has a TOD designation. Tax reporting is the same as long as the trustors are serving as trustees of the RLT since reporting continues with the SSN as the TIN. That typically changes to an EIN when the trustors can no longer handle things and/or the trust becomes irrevocable according to the terms. Trust documents can be expensive to change when needed, but changing a TOD or joint tenant costs nothing. In some cases such as changing custodians, transactions may be somewhat more of a hassle when done by a trustee.
Permalink Submitted by tomd37 on Sat, 2014-08-16 15:12
Thank you Alan for your comments. I appreciate you taking time to reply to my post and all the posts you make on the various forums on which you participate. You provide a valuable service to many people and we certainly appreciate that. Tom D.