Will naming a trust as a beneficiary of CD's accomplish the same thing as having them titled to the trust?

First of all, placing an adult child's name on your bank account is playing roulette -- "helping them pay bills" is what Powers of Attorney are for, and putting someone else on the account as a joint owner is just dangerous. The pros and cons are a bit involved, but suffice it to say that it depends on what your in-laws are trying to do. I am concerned that they have an 'irrevocable' trust that is unfunded. This implies to me that whomever set up the trust either didn't explain it well, or it was not really needed in the first place. I wold strongly urge your in-laws to discuss this with a real estate planning attorney (not some trust company or a 'legal publishing company or a 'trust mill' they hear advertised on call-in radio shows) Trusts can be very valuable documents to make things easier for everyone, however, an unfunded trust is just an extra expense waiting to make things MORE difficult for everyone after someone passes away. The major difference between listing a Trust as the title owner and beneficiary is what happens if the person becomes disabled but does not actually die. Naming a trust will allow a successor trustee to come in and manage the funds whereas naming the trust as a beneficiary will do nothing so long as the person remains alive. There are other differences too, but the bottom line remains the same. Your in-laws need to schedule a time to talk to a real full-service estate planning attorney to insure they have time to ask their questions, and get real advice about what works for them and how they should be managing their assets.

A parent and child or any two people other than a husband and wife should never own property jointly. Your parents and sister should attend to those accounts immediately. The POA is the tool to use to permit someone, spouse or child, to manage assets for an individual should he/she become incapacitated. I, too, am concerned about the "irrevocable" trust. Possibly, you just used the wrong word and meant "revocable" instead. Still, an unfunded revocable trust will fail of its essential purpose of probate avaoidance and likey will not achieve desired estate tax savings either. Assuming a REVOCABLE trust: Titling the account in the name of the current Trustees is one option. Another is to have an account titled in one name and made POD to the Trust. Each has the same net effect upon death of the individual. Your parents must meet with an experienced estate planning attorney to re-work the existing structure into something more effective.

I am not sure the other two responses dealt with your question, really. There is no disadvantage to having the trust as the beneficiary of the CDs. There is little difference, in this case, to having it as the owner or the beneficiary. There *might* be a slight difference, for income tax purposes, of having the trust as the owner, as opposed to the individuals. If the goal is to avoid probate, then this can be accomplished in either way. Actually transferring title of the CDs to the trust might require closing the CDs and reopening them, since the registration is being changed. It might be simpler to just designate the Trust as beneficiary, since there is little practical difference. (The answer would change, if you did not have Power of Attorney forms.) If you did not have POA forms, then having the assets titled outside the trust would mean that they could not be accessed by someone to take care of your needs, in the event you became incapacitated. In that case, clearly they should be titled in the trust. I cannot imagine having a trust set up and not having POA forms, as well, however. I agree with the other two attorneys that joint property arrangements are not a good idea, except in the case of spouses. But I do not think this is what you were asking about. Please feel free to contact me if you have additional questions. James Frederick

The good news is that there is no automatically wrong way to answer your question. The bad news is that there is no automatically right way to do so. The answer depends on your in-laws' goals. If the goal is to avoid death probate, then a beneficiary designation or joint ownership might accomplish it. But joint ownership, like everything else, has its downsides: what if a joint owner gets sued, divorced or becomes disabled? Beneficiary designations have their downsides: what if a beneficiary dies first? It's likely the beneficiary's children would be cut out. What if a beneficiary is unable to manage money, becomes disabled, or gets sued or divorced after your in-laws' deaths? Naming someone directly as a beneficiary of a CD would cause a problem in those examples. If the goal is to avoid living probate, death probate or provide divorce or creditor protection for their heirs, or get estate tax advantages or potentially increase what can be kept if Medicaid were needed, then a trust might be better. But there are different kinds of trusts including revocable (which can be changed) and irrevocable (which is harder to change.) Both kinds of trust work great in situations for which they are designed. It sounds like your in-laws have an estate planning attorney who is advising them regarding their specific assets and they should probably follow that attorney's advice.