Trusts

JTWROS — at death, where does the deceased's share go, and probate?

To the surviving owner(s) automatically (right of survivorship). AVOIDS probate. Equal ownership, any relationship (not just spouses). Overrides the will. Most common for married couples.

Tenants in Common (TIC) — at death, where does the share go, and probate?

To the deceased's ESTATE (their own heirs), NOT the co-owners. GOES THROUGH probate. Ownership can be UNEQUAL (e.g., 40/60). Default when a joint account doesn't specify survivorship.

JTWROS vs. TIC — the key contrast?

JTWROS: share → surviving co-owner, avoids probate, equal ownership. TIC: share → deceased's estate, goes through probate, can be unequal. Survivor vs. estate is the whole distinction.

Tenancy by the Entirety (TBE) — who and what's special?

Married couples ONLY (some states). Like JTWROS (survivorship, avoids probate) PLUS creditor protection — one spouse's creditors can't force a sale. Requires both spouses' consent. Converts to TIC on divorce.

Community property account — who and how owned?

Married couples only, in 9 community property states. Assets acquired during marriage owned 50/50 regardless of who earned them. Both spouses consent to transactions.

Transfer on Death (TOD) / Payable on Death (POD) — what is it?

A beneficiary DESIGNATION (not an ownership type) on an individual or JTWROS account. Assets pass directly to named beneficiaries, AVOIDING probate. Owner keeps full control during life; beneficiary has no rights until death.

TOD on a JOINT (JTWROS) account — when does it transfer?

Only when ALL owners have died. While any owner survives, the survivor takes the deceased's share first; the TOD beneficiary inherits only after everyone is gone.

Individual/sole ownership account — at death?

Passes through the ESTATE by will (or intestacy) → goes through PROBATE, unless a TOD/POD designation routes it directly to beneficiaries.

Which account registration allows UNEQUAL ownership?

Tenants in Common (TIC). JTWROS, TBE, and community property are all EQUAL ownership.

Which registrations avoid probate?

Survivorship types (JTWROS, TBE, community property with survivorship) and TOD/POD designations. TIC and plain individual accounts go THROUGH probate.

Living (inter vivos) trust — what is it and its main benefit?

A trust created during the grantor's LIFETIME (inter vivos = 'among the living'). Main benefit: AVOIDS PROBATE if funded. Can be revocable (flexible, stays in estate, grantor taxed) or irrevocable (removed from estate, creditor protection). Contrast with a testamentary trust, created by the will at death and subject to probate.

Living trust vs. testamentary trust?

Living/inter vivos: created while alive, AVOIDS probate, can be revocable or irrevocable. Testamentary: created BY THE WILL at death, goes THROUGH probate, always irrevocable. Living trust's whole selling point is probate avoidance.

Revocable living trust — control, estate, taxes?

Grantor keeps full control (can be trustee), can change/revoke anytime, and it avoids probate. BUT assets stay in the taxable estate and the grantor pays the income tax (grantor trust). No creditor protection. Flexibility without tax savings.

ILIT (irrevocable life insurance trust) — purpose and trade-off?

Holds a life insurance policy so the death benefit stays OUT of the grantor's taxable estate (saves estate tax) and provides estate LIQUIDITY (fast cash at death). Trade-off: it's IRREVOCABLE — the grantor gives up control and can't change it.

Why does an ILIT keep the death benefit out of the estate?

Because the TRUST owns the policy, not the insured. Since the insured doesn't own or control it, the death benefit isn't counted in the taxable estate. This requires irrevocability — if the grantor kept control, the benefit would be pulled back into the estate.

Living will — what is it, and is it tested on the Series 65?

A living will is a HEALTHCARE/medical directive stating end-of-life care wishes — it is NOT a securities, trust, or account-registration document. It's rarely tested on the Series 65. Don't confuse it with a LIVING TRUST (an estate-planning trust that avoids probate). Related estate docs: durable power of attorney, health care proxy.

Durable power of attorney vs. regular power of attorney?

A DURABLE power of attorney REMAINS valid if the principal becomes incapacitated (that's the point). A regular/non-durable POA TERMINATES upon the principal's incapacity or death. Relevant for who can act on an account if the client is incapacitated.

Special needs trust — purpose?

Provides for a DISABLED beneficiary WITHOUT disqualifying them from means-tested government benefits (Medicaid, SSI). The assets are held in trust so they don't count as the beneficiary's own resources. Lets a family support a disabled person while preserving their benefits.

Totten trust — what is it?

Essentially a payable-on-death (POD) bank account — the simplest 'trust.' The owner controls the funds during life; at death, the balance passes directly to the named beneficiary, avoiding probate. Revocable during the owner's lifetime.

Grantor trust — who is taxed?

The GRANTOR is taxed on the trust's income. A REVOCABLE trust is always a grantor trust (the grantor kept control, so the IRS treats the income as theirs). This is why a revocable trust gives no income-tax or estate-tax benefit.

Charitable remainder trust (CRT) — how does it work?

The donor (or a named beneficiary) receives INCOME from the trust for life or a term, and the REMAINDER goes to a CHARITY at the end. Provides an income stream now plus a charitable estate/tax benefit. The reverse (charity gets income first, remainder to heirs) is a charitable LEAD trust.

Bypass (credit shelter / 'B') trust vs. marital ('A') trust?

Used by married couples for estate-tax planning. MARITAL ('A') trust supports the surviving spouse (qualifies for the unlimited marital deduction). BYPASS/CREDIT SHELTER ('B') trust holds assets up to the estate-tax exemption and passes to heirs — using BOTH spouses' exemptions so less is taxed.