Articles Tagged with living trusts

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bank-building-300x225Most people know that the FDIC (Federal Deposit Insurance Corporation) insures bank accounts for up to $250,000 per depositor per covered bank. This insurance was increased from $100,000 to $250,000 in 2008, to reassure people during the chaos of the financial meltdown that started in that year. (This increase was supposed to be temporary, but was made permanent in 2010, as part of the Dodd-Frank Act).

So, if, for example, you are the sole owner of a bank account with $500,000 in it, that account is only insured for $250,000.  If that same bank account is co-owned by your spouse, that account is insured for $500,000 because each owner gets that $250,000 of insurance. For many of us, that’s enough insurance. But not always. I’ve had clients call me after they’ve sold a house, nervous about the fact that they have a large balance on deposit at the bank. What to do?

A living trust can help here. While it is true that everyday bank accounts that don’t accumulate much money (the ones you use to pay bills) are usually not put into a living trust, larger accounts are.  There are two reasons for this: first, large accounts should be held in trust to avoid probate at the owner’s death; second, holding a bank account in the name of a trust means additional FDIC insurance on that account.

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house imageGovernor Brown has just signed into law a bill that, for the first time, allows people in California to transfer a home at death with a deed that names beneficiaries.

Transfer on Death Deeds are an inexpensive way to transfer real property without having to go through the time and expense of probate or establishing a revocable living trust. Such deeds have been available in many other states, but efforts to permit them in California have failed for nearly ten years.

Starting in January of 2016, and lasting until January 1, 2021 (unless extended), Revocable Transfer on Death deeds will now be legal in California. Just as you can designate a bank account or brokerage account as a “payable on death account,” a Revocable Transfer on Death Deed lets you name beneficiaries for real property. Upon your death, your beneficiaries become the property owners by filing an Affidavit, a death certificate, and notice of change of ownership. That’s it. No probate and no trust administration necessary.