A decedent's probate estate and tax estate are not the same. You can remove assets from the probate estate by, eg transferring them to a revocable trust (in tax law known as a grantor trust). The grantor is taxed on them, both for income and estate taxes, as though he still owned them. You don't need to file a separate trust income tax return. The advantage of using a grantor trust is that it takes the assets out of probate. The trustee or successor trustee can manage them or distribute them immediately. You also typically avoid local probate taxes. A power of attorney will not accomplish this, as it terminates on the death of the person who granted it. I have never heard of brokerage accounts that were POD (payable on death). EE Bonds use that terminology. I'm not saying they don't exist, just never heard of them. The typical setup would be a joint account with right of survivorship.
Thanks for the info. Maybe it's obvious from your post, but I just want to clarify this for myself. Are you saying you can shift assets from a decedent to a trust, in other words, after death? Who is empowered to do this and by what means? OldTrader
That was not what I was saying. A grantor trust would be established by a person who wanted the assets to be outside probate. It is what in law is known as an inter vivos transfer, ie while living. A grantor trust is taxed as though the grantor never set up the trust. It uses the grantor's SS number. An inter vivos trust can also be irrevocable, meaning you can't reclaim the assets, in which case the trust has to file an income tax return under its own Employer ID number. Typically the assets would be outside both the probate and tax estate, but the rules are very complex and I don't want to get too specific. Basically, an irrevocable trust is more of a tax avoidance device while a grantor trust is designed to avoid probate. You can provide through your will for specified assets to be "poured over" into a trust upon your death. That is known as a testamentary transfer, ie by will. That is not what we are talking about here, because you would have to own the assets at the time of death for them to pass under your will.
OK, I more or less knew this in a sort of generalized way. I thought you were saying this could all be accomplished after death. What I was attempting to say in my post earlier was that IF you gave an asset to a beneficiary after death as the OP seems to believe you can do, then it would seem to avoid estate tax. It may well be a moot question however since I'm suspicious that such a transfer can take place. I've never personally seen of or heard anything about that setup. OldTrader
I think you should definitely transfer to a different brokerage firm because most of them all allow you to assign beneficiaries. I currently use Firstrade and all I had to do was fill out a Transfer On Death (TOD) form.
if they don't offer that service than go to a broker who does, you don't have to do business with interactive broker. and make sure you don't have more than $5000 in your interactive broker account.
It's called a TRANSFER ON DEATH & some firms offer this as a service to their clients. See above. Actually, you are the idiot. TOD's are available at a number of firms. You are incorrect. To transfer assets in kind, it's called TRANSFER ON DEATH (TOD).
Neither have I. There is such a thing as POD.. Pay On Death to someone else, like a spouse or partner... and only on certain types of accounts.. like a checking or savings account... but "beneficiary" is not the same. The only place I recall seeing "beneficiary" is on qualified retirement plans, life insurance, and trusts.