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Setting Up a Trust
Old 03-06-2007, 04:42 AM   #1
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Setting Up a Trust

I'm thinking about setting up a Revocable Trust as I'll be receiving a sizeable inheritance. I already have about 250K in investments, CDs etc. Should I see and attorney or can I use software such as Suze Orman. I am 56, married but all these assets are in my name only. I live in FL and our house and cars would not be included as they are jointly owned. Our will leaves these to the surviving spouse. I have 2 children and 3 granddchildren. I work full time, husband is retired with minimal SS. Any info, thoughts,advice would be appreciated.
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Re: Setting Up a Trust
Old 03-06-2007, 07:06 AM   #2
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Re: Setting Up a Trust

This should cause some friction with your spouse, so think about this very carefully. My MIL passed away and my wife receive an inheritance. Her sisters said to keep the inheritance assets in her name only. For most of the 25 years that we have been married, I have contributed through employment more than 8-fold the inheritance amount to my spouse's well-being. I told her that putting the inheritance in her name only would be like me putting my salary in my name only and maybe giving her a small alllowance. She eventually came around to my point of view.

So to me it all depends on how long you have been married, how your spouse feels about this, and how you have handled your finances all along. Since you already seem to have separate finances, things may be different with your family than with mine.

See an attorney. Do not use software.
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Re: Setting Up a Trust
Old 03-06-2007, 07:36 AM   #3
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Re: Setting Up a Trust

Dancer,

About 40 years ago my mom received an inheritance. It was invested in her name. About 20 years ago she decided to set it up as a revocable trust for me, her only daughter. This never caused any friction between my parents. After my mother's death the trust passed to me outside the estate, with no tax consequences. Altogether, an excellent move.

I would have a different point of view to LOL! regarding contributions to a marriage. A spouse who does not contribute income to the family generally contributes in kind, i.e. running the household, raising kids. This work has value. I recall stories in the media about the market value of a homemaker's job being well over $100K per annum.

Use a lawyer!
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Re: Setting Up a Trust
Old 03-06-2007, 07:46 AM   #4
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Re: Setting Up a Trust

Full disclosure: My wife has always worked full-time
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Re: Setting Up a Trust
Old 03-06-2007, 08:43 AM   #5
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Re: Setting Up a Trust

You may want to read this:

http://moneycentral.msn.com/content/...ney/P72670.asp

- Ron
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Re: Setting Up a Trust
Old 03-06-2007, 09:04 AM   #6
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Re: Setting Up a Trust

Quote:
Originally Posted by Dancer373
I already have about 250K in investments, CDs etc. Should I see and attorney or can I use software such as Suze Orman. I am 56, married but all these assets are in my name only. I live in FL and our house and cars would not be included as they are jointly owned. Our will leaves these to the surviving spouse.
The terms of your will are irrelevant regarding the jointly held assets. For example, if your house is in joint name with your spouse, it doesn't matter what your will says, the house will pass to your spouse upon your death. The same thing applies to joint accounts, and the same thing applies to accounts with beneficiary designations. The beneficiary designations on each of your accounts (bank, brokerage, etc) control who gets the accounts, regardless of what your will says, and regardless of whether you have a will or not.

Unfortunately, there is a great deal of mis-information on this subject--people are so concerned about what their will says, but they don't realize that it is often irrelevant.
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Re: Setting Up a Trust
Old 03-06-2007, 09:13 AM   #7
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Re: Setting Up a Trust

Consequences of an inhhitance re taxes will depend mostly on the monetary value of the inheritance. You should find an attorney who has knowledge of this area.
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Re: Setting Up a Trust
Old 03-06-2007, 09:17 AM   #8
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Re: Setting Up a Trust

Quote:
Originally Posted by polloloco
Consequences of an inhhitance re taxes will depend mostly on the monetary value of the inheritance. You should find an attorney who has knowledge of this area.
Actually, it has nothing to do with the value of the inheritance, it has to do with the value of the entire estate. Starting in 2006, estates worth less than 1 million (not counting life insurance) do not owe estate taxes.
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Re: Setting Up a Trust
Old 03-06-2007, 09:31 AM   #9
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Re: Setting Up a Trust

Quote:
Originally Posted by Dancer373
I'm thinking about setting up a Revocable Trust as I'll be receiving a sizeable inheritance.
I'm not clear on what you want this trust to do? What do you percieve the consequence of having this trust will be vs. not having it?
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Re: Setting Up a Trust
Old 03-06-2007, 10:14 AM   #10
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Re: Setting Up a Trust

Quote:
Originally Posted by JustCurious
Actually, it has nothing to do with the value of the inheritance, it has to do with the value of the entire estate. Starting in 2006, estates worth less than 1 million (not counting life insurance) do not owe estate taxes.
I was thinking in this case that the entire estate went to one person. In this assumption does the estate equal the inheritance?
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Re: Setting Up a Trust
Old 03-06-2007, 10:17 AM   #11
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Re: Setting Up a Trust

Quote:
Originally Posted by polloloco
I was thinking in this case that the entire estate went to one person. In this assumption does the estate equal the inheritance?
You should not assume.
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Re: Setting Up a Trust
Old 03-06-2007, 01:19 PM   #12
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Re: Setting Up a Trust

I can in-vision several situations where an inheritance trust would be wise. Should the grant-or die it would insure that the proceeds be used for heirs and not to support a subsequent spouse.

You can have several revocable trusts, each with different provisions (a marital trust as well as an inheritance trust). You can be the sole grant-or of your inheritance trust and make your spouse one of the beneficiaries of the trust. To the extent that the trust generates taxable income you should pay the tax out of the trust proceeds just to keep it clean.

For domestic peace I would assure her that this is for the benefit of her and your children.
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Re: Setting Up a Trust
Old 03-06-2007, 03:11 PM   #13
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Re: Setting Up a Trust

Quote:
Originally Posted by JustCurious
You should not assume.
So,,, in this case does the estate equal the inheritance or not?
A simple yes or no will suffice.
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Re: Setting Up a Trust
Old 03-06-2007, 03:21 PM   #14
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Re: Setting Up a Trust

Quote:
Originally Posted by polloloco
So,,, in this case does the estate equal the inheritance or not?
A simple yes or no will suffice.
I don't know. You will have to ask the person who is involved in that situation, assuming of course that they know the value of the estate.
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Re: Setting Up a Trust
Old 03-06-2007, 04:11 PM   #15
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Re: Setting Up a Trust

Let us make this a simple matter.
Suppose a widow with one son dies.
She has an estate worth $500,000.
There are no debts to pay from the estate.
The entire estate is left to her son.
Is his inheritance from his mother valued at $500,000?
Less any legal fees involved in the affair.
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Re: Setting Up a Trust
Old 03-06-2007, 05:04 PM   #16
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Re: Setting Up a Trust

Quote:
Originally Posted by polloloco
Let us make this a simple matter.
Suppose a widow with one son dies.
She has an estate worth $500,000.
There are no debts to pay from the estate.
The entire estate is left to her son.
Is his inheritance from his mother valued at $500,000?
Less any legal fees involved in the affair.
You said "She has an estate worth $500,000 . . . The entire estate is left to her son."

Then you asked "Is his inheritance from his mother valued at $500,000?"

Is that a serious question? What am I missing here?
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Re: Setting Up a Trust
Old 03-06-2007, 06:50 PM   #17
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Re: Setting Up a Trust

I will be inheriting about 2 million in the next few years from parents (in their 80's) who have a trust. I currently have about 250K in Vanguard, CDs etc. My husband is much older than I and receives minimal SS income. I am the total support and have been most of our married life. I want to be sure that my assets go directly to my children (and grandchildren). I was just wondering if I HAD to use an attorney or if a document produced using software would hold up as well , legally. Thanks for any insight..
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Re: Setting Up a Trust
Old 03-06-2007, 06:59 PM   #18
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Re: Setting Up a Trust

Are you seriously considering trusting (pun intended) $2,000,000 to a piece of software?
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Re: Setting Up a Trust
Old 03-06-2007, 10:43 PM   #19
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Re: Setting Up a Trust

Quote:
Originally Posted by Dancer373
I will be inheriting about 2 million in the next few years from parents (in their 80's) who have a trust. I currently have about 250K in Vanguard, CDs etc. My husband is much older than I and receives minimal SS income. I am the total support and have been most of our married life. I want to be sure that my assets go directly to my children (and grandchildren). I was just wondering if I HAD to use an attorney or if a document produced using software would hold up as well , legally. Thanks for any insight..
You don't HAVE to do anything, but if you wish to assure that your inheritance passes to your children you NEED to engage an experienced estate planning attorney.
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