I was posting on another forum about estate taxes and whether they were fair or not. I was just curious about how some people protect their estate. do you use a trust or a will. what other methods would be useful?
I'm with REWahoo. I'll be dead, so I won't care, and we'll probably have spent it all anyway.I was posting on another forum about estate taxes and whether they were fair or not. I was just curious about how some people protect their estate. do you use a trust or a will. what other methods would be useful?
In my experience the advantage of a trust while you are living is that the trustees you designate can easily pay your bills and manage your finances when the time comes that you cannot. They do not need to ask a court's permission to do that.
Just like a will you specify how you want any residue disbursed after you pass away. In some states all persons named in the trust receive a copy of the trust at your passing. If you state that the named individuals receive a % then the trustee must provide the heirs a financial statement. [There is an advantage to setting a specific amount for troublesome heirs for that reason.]
For people with substantial assets estate tax maneuvers can be included in the trust's design.
Having our parent's assets in trusts really helped us manage their affairs.
I was posting on another forum about estate taxes and whether they were fair or not. I was just curious about how some people protect their estate. do you use a trust or a will. what other methods would be useful?
Congress can also change that amount in future years.
The cons...incude but are not limited to....
- having to file tax returns each year for a trust.(since it is it's own legal entity) ..so it potentially increases accounting cost...depending.
- a Trustee must follow prudent man statutes....so assets may or may not grow to the extent otherwise possible....outside of a trust.
- selecting the trustee and alternate trustees is a pain ...for many. Who do you trust that long to administer it properly. ?
- Trustees can collect trustee fees...which can reduce the income to a fairly significant degree. Last I knew it was something like .06% principle asset base and 5% of income....EACH YEAR. Depending on assets and income generating ability this can become significant. Lower then executor fees...but with a trust...can go on for years depending on ow it is structured...
Just a few things to think about. Good luck...!
You don't need a tax ID for a revocable living trust, you use the grantor's SSN.
If you ask a financial institution, attorney or CPA to be your residual trustee (you manage the trust yourself as the grantor trustee, just as you would an IRA, until you pass off the responsibility) then they are entitled to a fee. In our case we managed our parents trusts for no fee when they could no longer do so.
Meet with an attorney in your area who has experience in estate planning, they are the experts. If you change states of residency have an attorney in that state review the document (and your other estate planning documents) to make sure that it squares with that state's laws.
If you can figure out how to make your resources exactly match your lifetime please share your methodology.