Revocable Trusts in Club Accounting

If your club is using the BI or ICLUB sample partnership agreement, you will find a provision (currently in item 16, Addition of Partners) for handling revocable trusts:

(a) Transfers to a Trust. A partner may, after giving written notice to the other partners, transfer his interest in the partnership to a revocable living trust of which he is the grantor and sole trustee.

 When this change happens, the name of the partner is changed in myICLUB or Club Accounting 3, which is as simple as  [Member Name] Revocable Trust. A revocable living trust uses the same Social Security number as the grantor of the trust, so no change is needed there.

At the partner’s death (or when any future withdrawal is made), the payment is made payable to the Trust, not the Trustee (who would be someone other than the member upon the trust owner’s death). The Trustee has the responsibility and authority to determine the use of the payment.

This is the only commonly used method of accommodating heirs in an investment club . We don’t recommend joint ownership or “beneficiaries.” Beneficiaries can be problematic for a number of reasons, including problems that may arise from conflicts in a will or other claimants to a deceased’s property, so clubs should steer clear.

Members who take advantage of a revocable living trust will have to work with their own estate/financial planner in order to get it in place, but historically they are not very complicated or expensive to create.