Podcast Summary: The Practical Planner - "Trusts, Titling & Tough Calls: A Practical Q&A"

Release Date: June 26, 2025

In this insightful episode of The Practical Planner, hosts Thomas Coleman and Anne Rhodes delve into a comprehensive Q&A session addressing some of the most pressing questions in estate planning. Drawing from real-world scenarios and professional expertise, they explore the nuances of trusts, asset titling, and strategic decision-making to help advisors better serve their clients. Below is a detailed summary of the episode's key discussions, complete with notable quotes and timestamps.

1. The Purpose and Timing of Revocable Trusts

Key Discussion: Thomas introduces the episode by highlighting the shift to a Q&A format, focusing on common client questions about estate planning. The conversation kicks off with the practicality and timing of establishing revocable trusts.

Notable Insights:

• Anne Rhodes emphasizes that revocable trusts generally make sense for everyone, but the decision often hinges on the upfront effort required to fund the trust (populate it with assets).
  "There really isn't much harm in creating a revocable trust. Everything's business as usual. It shouldn't affect your day-to-day." – [01:47]

• Thomas Coleman agrees, noting that while trusts offer significant benefits like control and probate avoidance, cost remains a primary barrier for many clients. He suggests that individuals with substantial assets or complex family situations should prioritize setting up a trust.
  "If cost is not the barrier, trust is setting yourself up better for more control, privacy, probate avoidance, you know, running your business better." – [04:12]

2. Joint vs. Individual Trusts in Non-Community Property States

Key Discussion: The hosts explore whether couples should opt for joint or individual revocable trusts, particularly in non-community property states like Massachusetts.

Notable Insights:

• Anne Rhodes explains that joint revocable trusts are administratively simpler, especially in traditional family structures without blended families or significant separate assets. However, individual trusts can provide clearer asset segregation, which is beneficial in more complex scenarios.
  "A lot of times if it's a well-drafted joint revocable trust, it's going to essentially act as two individual revocable trusts contained in one document." – [06:25]

• Thomas Coleman adds that while joint trusts are often preferred by clients in first marriages for their convenience, multiple marriages may necessitate individual trusts to protect separate interests.
  "One trust is going to make it a lot more simple." – [08:42]

3. Trust Structuring in Community Property States

Key Discussion: Transitioning to community property states, the conversation centers on the appropriateness of joint trusts and handling separate vs. community property.

Notable Insights:

• Anne Rhodes states that joint trusts are typically more advantageous in community property states due to the inherent nature of shared ownership. However, she cautions about the complexities of maintaining separate property within such trusts.
  "Joint trusts make a lot more sense in community property states on the whole." – [12:19]

4. Ownership of S Corporations Within Trusts

Key Discussion: The episode addresses the complexities of owning an S Corporation through a trust, touching on tax implications and regulatory requirements.

Notable Insights:

• Anne Rhodes highlights the risks associated with transferring S Corps into trusts, such as potential loss of S Corp status and tax complications. She advises careful coordination and possibly creating sub-trusts to maintain tax benefits.
  "You don't want to just be haphazard with it and be like, know if the lawyer says put everything into your trust and you just transfer everything in." – [14:19]

5. Taxable Accounts: Trusts vs. Beneficiary Designations

Key Discussion: The hosts debate whether it's more advantageous to own taxable accounts through a trust or to rely on beneficiary designations.

Notable Insights:

• Anne Rhodes advocates for retitling accounts into the trust, citing benefits beyond probate avoidance, such as tax advantages and creditor protection.
  "Retitling is better because a lot of people...you should avoid probate and you should get all the tax benefits and the creditor protection benefits." – [16:24]

• Thomas Coleman concurs, adding that managing accounts through a trust can simplify administrative processes in the event of incapacitation.
  "It's usually going to be trustee." – [18:00]

6. Trust Distribution Rules for Children

Key Discussion: A significant portion of the episode is dedicated to establishing effective trust distribution rules to ensure children's financial stability and prevent mismanagement of inherited assets.

Notable Insights:

• Anne Rhodes suggests staggered distributions based on age milestones, emphasizing the importance of tailoring rules to the child's maturity and potential risks like substance abuse or divorce.
  "The longer it's held in trust, the better, because it offers so many protections." – [21:05]

• Thomas Coleman adds practical strategies, such as setting specific rules for fund usage during different life stages and updating estate plans as children grow older.
  "You set those rules when your kids are young, and this is why you update your estate plan...to have some different distribution rules." – [21:53]

7. Impact of Death on Student Loans

Key Discussion: Addressing a less common but important query, the hosts discuss what happens to student loans upon an individual's death.

Notable Insights:

• Anne Rhodes clarifies that federal student loans are typically discharged upon death, whereas private loans may have varying terms, some of which also offer discharge options.
  "Student loans get discharged." – [22:02]

• Thomas Coleman echoes this, noting the importance of reviewing loan contracts to understand specific provisions related to discharge upon death.
  "Most people believe they don't. Most don't. But some of them do have parts of their contract where they do go away." – [22:27]

Conclusion

In wrapping up the episode, Thomas encourages listeners to engage with the podcast by submitting their estate planning questions, indicating a potential shift to more frequent Q&A sessions based on audience interest.

“Please don't forget to rate and subscribe and submit us your questions...we'll see you guys back here in a couple weeks.” – [22:56]

Takeaways:

• Revocable Trusts are beneficial for most individuals, especially those with growing assets or complex family dynamics.
• Joint vs. Individual Trusts should be chosen based on administrative convenience and the complexity of asset ownership.
• Community Property States often favor joint trusts but require careful handling of separate properties.
• S Corporation Ownership within trusts requires meticulous planning to preserve tax statuses.
• Retitling Taxable Accounts to trusts can provide additional benefits beyond probate avoidance.
• Trust Distribution Rules should be customized to the beneficiary's maturity and circumstances, with periodic updates to the estate plan.
• Student Loans are typically discharged upon death for federal loans, but private loans may vary.

This episode offers valuable insights for advisors and individuals looking to deepen their understanding of practical estate planning strategies, ensuring that wealth is preserved and transferred according to client wishes.