New Laws Impacting Your Trust Funding
Whether you created your revocable living trust this year or during the Nixon administration, laws are constantly changing, and it is a good idea to revisit your assets. The following are a few potential changes that our clients should consider discussing with our trust funding team.
Contingent Beneficiaries on Retirement Accounts
For years, the standard for retirement accounts has been to make your spouse the primary beneficiary and then to designate your revocable living trust as the contingent beneficiary. For unmarried people, the standard practice has been to make your revocable living trust the primary beneficiary. Routing your retirement accounts through your trust allows your trust’s provisions to control the distribution of the assets and allows us to plan for any contingencies, such as deceased beneficiaries. This should remain the standard for large retirement accounts.
However, if you have a smaller account, let’s say under $1 million, and you are leaving your assets to your children outright, we encourage you to meet with our team to discuss designating your children as contingent beneficiaries directly, rather than first routing the funds through the trust. Doing this makes the payout to your children easier and faster and gives them the flexibility to choose to withdraw all of the funds immediately or opt for a 10-year payout plan. These changes are the result of the recent SECURE Act and will only apply to retirement accounts, not life insurance or individual investment accounts.
Transfer on Death for Vehicles
As of January 2023, the State of Montana allows transfer on death designations for vehicles. Setting up these designations allows you to keep the vehicles in your own name, while also eliminating the risk that they trigger a probate. Completing these designations is also cheaper and easier than transferring your vehicles into your trust. If you have a large number of vehicles, or vehicles of high value, you should consult with our team about this option to avoid probate.
Homestead Declarations
A homestead declaration is a document that establishes your primary residence as your home and provides some creditor protection. Up to $350,000 in equity in your home can be protected from non-attached creditor claims just by completing and recording this simple document at the county office. The good news is that you can complete a homestead declaration for your primary residence whether your home is owned in your name or by your revocable living trust.
If any of these changes sound like they could be a good idea for you, or for any other questions you may have regarding the funding of your trust, please call our office at 406-727-2200 or contact our trust funding team Charlene Squires and Chris Crossland.
