Your clients have completed a Revocable Living Trust using GoGo Estate. As a helpful resource to financial advisors, we have put together this Financial Advisor Guide to help you know the best course of action now that your clients have created a trust. Nothing in this Guide should be construed as legal advice, and you should not exclusively rely on this document when helping your clients with their Revocable Living Trust.

This Guide is broken into two parts. The first outlines important features contained within the documents. The second outlines the best way to either transfer assets into the trust or to designate the trust as beneficiary to those assets.

Key Provisions

When setting up your clients' accounts, we know that your company may have internal forms to help effectuate that transfer. These forms may request certain information from your clients that they don't know the answer to. For your records, here is some general information about the Missouri Trust Plan that your clients completed using GoGo Estate:

Revocable Living Trust

Number of Trustees Required for Decisions: 1

Are Margin Loans Allowed? Yes

Does the Trust Limit the Types of Investments Allowed? No

Successor Trustees: Ask your clients for the names of their successor trustees from their trust

Co-Trustees? No

Durable General Power of Attorney

Name of Agent(s): Ask your client who they have designated as agent under their Durable General Power of Attorney

Co-Agents? No

Withdrawals: Agents can make withdrawals by any means and for any purpose

Self-Gifts: Agents can make self-gifts by any means and for any purpose

Margin Loans: Agents can use assets as collateral to obtain margin loans

Beneficiary Designations: Agents can designate or change beneficiaries

If there is other information that you need as it pertains to the Trust Plan, please ask your clients and they can provide you with the appropriate documentation.

Retitling Assets

Now, let's look at some helpful general rules of thumb for setting up client accounts properly. We'll break them down by account type or assets managed.

Brokerage Accounts/Stocks

If your clients have a brokerage account or stocks with you, that account, unless the client directs otherwise, can be owned by the trust. If the client would prefer not to have the trust be owner of this account for any reason, it is common practice to have the trust listed as beneficiary to these accounts.

Taxable Accounts

Trust cannot be owners of taxable accounts like IRAs and 401(k)s during the life of the owner. However, a trust can be listed as a beneficiary to these accounts. Following the passage of the SECURE Act, many financial advisors question whether a trust can be beneficiary to Taxable Accounts. The answer is yes. In fact, the trust your clients purchased from GoGo Estate allows their trust to be beneficiary to such accounts. If their trust is listed as beneficiary of a Taxable Account at death, separate trusts will be created for each beneficiary of the trust and the trustee will distributed Required Minimum Distributions ("RMDs") directly to the beneficiaries in the manner allowed under the SECURE Act. In other words, the trust includes "conduit trust" provisions for Taxable Accounts.

Remember, the SECURE Act requires a ten-year distribution window for inherited Taxable Accounts. This means that beneficiaries of the Taxable Accounts must withdraw the full amount within 10 years of inheriting the Taxable Account. The same rules apply for trusts.

However, there are a few exceptions to this ten-year drawdown:

  1. Surviving Spouse: The surviving spouse can stretch-out the Taxable Account for the remainder of their life just like the rules pre-SECURE Act.
  2. Minor Children: Before they obtain the age of majority, the 10-year drawdown rule does not apply. Once they reach the age of majority + one year, however, then they must withdraw the full amount within 10 years.
  3. Disabled Beneficiaries: Disabled beneficiaries (as defined by the Code) can stretch out the Taxable Account for the remainder of their lifetime like the rules pre-SECURE Act.

Trusts with these types of beneficiaries (known as "designated eligible beneficiaries") can stretch out the Taxable Accounts as before.

With that background, here are some of the ways in which people with trusts generally handle Taxable Accounts when naming beneficiaries:

Life Insurance Policies

As with brokerage accounts and stocks, life insurance policies owned by your clients can name their trust as owner of the policy or beneficiary of the policy. The trust probably doesn't need to be the owner of the policy, but it could be advantageous to have the trust listed as primary beneficiary to the policy (even if your clients are married).