I mentioned in the previous post How to Buy I Bonds: Soup to Nuts that we were creating a second trust with software to buy another $10,000 worth of I Bonds each year. A reader asked me to share more details on how we were doing it. For more on buying I Bonds in a trust account in general, please read Buy More I Bonds at TreasuryDirect in a Revocable Living Trust.
Please note I’m not a lawyer. I’m only sharing what we did for our own situation. I’m not recommending that you do the same. Please take this as only an anecdote.
Background and Purpose
Many married couples have two revocable living trusts — one for each spouse. We have only one joint trust. Both setups are perfectly valid. An attorney prepared the trust for us a few years ago. It has the two of us as both grantors and trustees.
This trust uses my Social Security Number as its tax ID. It already bought $10,000 in I Bonds this year. It also holds other assets elsewhere.
Because a trust can only buy $10,000 in I Bonds each year, we wanted a second trust that uses my wife’s Social Security Number as the tax ID. As a separate trust with a different tax ID, this second trust can buy another $10,000 worth of I Bonds each year. We will only hold I Bonds in this second trust. Our existing trust will still be our main trust.
Quicken Willmaker & Trust
Nolo (formerly Nolo Press) has been publishing DIY legal books since the 1970s. It publishes a book-and-software kit called Quicken Willmaker & Trust. Amazon sells the 2021 edition for $39.
The 500-page book explains what the documents do and how you should go about them. The included software on a CD uses an interview format that leads you to complete the documents based on your preferences. This approach is similar to how tax software works.
The software in Quicken Willmaker & Trust can create a will, a revocable living trust, a healthcare directive, a durable power of attorney, and some other documents related to estate planning. If we didn’t have an attorney prepare all those for us a few years ago, we would’ve used this software to create them ourselves.
I wanted to get this book-and-software kit from the public library but they didn’t have it. Instead, I found another book at the library that ended up working better for our specific situation.
Make Your Own Living Trust by Dennis Clifford
This other book, Make Your Own Living Trust, now in its 15th edition, is also published by Nolo. The author Dennis Clifford is an estate planning attorney. Amazon sells the book for $39.
As the title suggests, this book only covers living trust, which is fine for our purpose because that was the only thing we needed. Instead of interview-format software, it includes a link at the end to download fill-in-the-blank document templates. The book explains the different choices for the blanks in the templates.
The document templates in Rich Text Format are fully editable by Microsoft Word or compatible applications. This worked better for us because it’s more customizable whereas the software in Quicken Will & Trust only works through interviews.
Simple Structure
Because we wanted to keep this second trust really simple, we went with this structure:
- A joint trust with the two of us as both grantors and trustees. Either trustee can act alone on behalf of the trust. We can amend or revoke the trust at any time. This is the same as in our existing trust. It’s also the default in the shared trust document template.
- The name of the trust mirrors our existing trust, only reversing the order of our names.
- When one of us dies, the deceased person’s share of the trust assets goes to the survivor. The survivor can amend or revoke the trust at any time.
- When both of us die, the trust assets dump into our existing (main) trust.
The document template has places for trust beneficiaries. We listed each other as the beneficiary when one of us dies and the main trust as the beneficiary when both of us die.
Notary Certificate
The document template says to attach a notary certificate after our signatures. Each state mandates specific language for what the notary certificate should say. I just Googled “[state] notary acknowledgment.” There’s a dedicated website for the notary acknowledgment language in each state but I prefer to get the language from an official state government site.
For example, here’s the link to the language in the Nevada state law, and here’s the one for California. The software in Quicken Will & Trust will probably automatically print the notary acknowledgment based on the state but we had to do this manually with the document template in Make Your Own Living Trust.
Our second trust became official after we signed the trust document and had it notarized. Because I got the book from the public library, our only cost was the notary fee. We can open an account for it at TreasuryDirect now. See Buy More I Bonds at TreasuryDirect in a Revocable Living Trust.
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If we didn’t already have estate planning documents prepared by an attorney, Quicken Willmaker & Trust is probably easier to use because the software uses an interview format. It’s also a better value because it covers more than just the living trust.
The document templates in Make Your Own Living Trust are like the “forms mode” in tax software. You can edit the document directly but you also have to be comfortable doing it. Having to find the correct notary acknowledgment language also adds another step.
Nolo isn’t the only source for living trust software or templates. I chose Nolo only because of its history and reputation. I’m not familiar with other books or websites, and I have no basis to judge their quality.
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Jonathan says
I’m not a lawyer, but ….
From my personal interactions with TreasuryDirect, my understanding is that purchase limits are affiliated with tax identification numbers, not distinct legal entities. Thus a revocable trust that reuses your SSN isn’t a valid workaround. Are you confident that the Treasury Department considers your purchases acceptable?
One can of course acquire a distinct EIN for your revocable trust, which I think would enable you to make your additional I Bond purchases without problems. Though, of course, with down the road implications for how you file your taxes…
Harry Sit says
Personal accounts and trust accounts are two different account types. They’re treated separately even though they have the same tax ID. Our existing trust using my SSN already has an account and bought $10,000 in I Bonds this year in addition to my personal account. It works.
Michael Jones says
I confirmed what Harry notes above directly with Treasury Direct as their website is also not very specific about it. They wrote back and assured me that individual accounts and trusts, even if owned by the same individuals, are in fact different accounts and each separately subject to the $10k limit.
Steve says
Harry, thank you for the article.
Jonathan, you raise an interesting point about whether a revocable trust held by an individual is considered a different purchaser for the purpose of meeting Treasury limits for savings bonds.
A related issue: If an individual and his revocable trust are considered distinct entities for I-bond purchase limits, how about if the individual has more than one revocable trust? Does an individual who has 3 revocable trusts (perhaps with different beneficiaries or terms) count as four entities for the purpose of meeting I-bond purchase limits?
There is a lengthy thread on bogleheads dot org entitled “I bonds in a living trust” from June 29, 2011 which discusses this matter. After reading the thread I was unable to determine what the right answer is to the question about multiple trusts.
I don’t own I-bonds, so I don’t have any dogs in this hunt.
Harry Sit says
I would say ‘yes’ but I’m not going to push it at this moment. One personal account plus one trust account per person plus any business account plus the tax refund is plenty for me.
Charlie says
I probably need to learn about trusts before attempting this, but is there any reason not to do this as a single/unmarried person? I’m unmarried, so I imagine it might be a minor hassle if I was to get married and wanted to create a new joint trust and transfer the I Bonds to it, but is there any barriers to doing this?
Harry Sit says
I don’t see any reason. Many married couples have a separate trust for each person. You can just keep your trust and only amend the beneficiaries as you wish.
YDG says
Curious if Harry or anyone else has an opinion about https://www.freewill.com/ and their California Revocable Living Trust. Seems free, comprehensive and convenient to my utterly untrained eye.
Harry Sit says
I’m not familiar with that site or any other books or websites. I have no basis to judge their quality. I chose Nolo only because of its history and reputation.
Coriander says
Thanks for this super helpful advice. It frankly never occurred to me that I could set up a trust so easily. I used the instructions and downloadable forms in the Dennis Clifford book, which I also got from the library. Since my credit union provides notary services for members, my cost was zero. Today I set up my Treasury Direct account for the trust, using my SSN and the same email, address and bank as for my personal account. I’ve put in my purchase order for I Bonds, and just got the confirmation that the purchase will be completed tomorrow. Remarkably easy.