Menu

The benefits of trusts

Home Estate Planning The benefits of trusts

  • Avatar Dont_know_mind 
    Participant
    Status: Physician
    Posts: 959
    Joined: 11/21/2017

    Great conversation. A seasoned and competent lawyer will take you through all these what if situations, and the first time we did it we were quite shocked on the details he was seeking. Things we would never of fathomed .

    A computer program can certainly go through a lot of those same scenarios, but it was great to have an experienced lawyer to have as a sounding board for the little details.

    When they were little the trust was pretty bland on specific directions for the kids. @alexxt it was a a.c. trust qtip I believe because 50% assets went into irrevocable status to protect current kids while the remainder would be theoretically at risk of evil step parent and solution of new children on the estate which are thought was fair.

    Fast forward 15 years later, we have two teenagers and a lot more clarity on their paths. We updated the trust this year and put in more specific language on disbursements and timing transition like access to funds earlier for education and final closing estate timing.

    Like any other financial plan, the trust should be reassessed regularly to make sure it remains relevant to your goals….and funded accordingly.

    Click to expand…

    StarTrekDoc,

    What do you figure is the relative tax efficiency of the trust compared to holding in your own name or in your spouses name ?

    Over 10 years I figure the extra accounting entity and taxation cost for a trust funded at 900k was in the order of 90k. CGT is an issue for me with this structure.

    Some benefit but costs.

    #140242 Reply
    Avatar Dont_know_mind 
    Participant
    Status: Physician
    Posts: 959
    Joined: 11/21/2017

    The appointer has the power to place or remove trustees in your trust. You could perhaps have your wife as the appointer whilst she is alive and then a company if both of you die

    Click to expand…

    This is how mine is set up.  The trustees are indicated in the trust.  This is pretty standard

     

    You could perhaps have your wife as the appointer whilst she is alive and then a company if both of you die and then the beneficiaries after they are over a specified age.

    Click to expand…

    If both parents are dead, my kids get outright control of half at 30 and the rest at 35.  I don’t see a reason to let them appoint trustees.  If I think they should be able to do that, I might as well let them have the money outright

     

    Also the Capital Gains Tax (CGT) and other tax considerations in various different options.

    Click to expand…

    Not an issue.   At the first death, kids inherit their first share, and get the step up at death.  They now own it, so no capital gains issue anymore.

    At the second death, they inherit the rest.  Again, no capital gains, as they get the step up.

    What might be an issue is estate tax.  But the kids can inherit as much as 11 million at the first death, and as that money grows, it will be estate tax free, because they already own it.

    Maybe you’re thinking of taxation on income from irrevocable trusts, which is almost entirely at the highest bracket.  But this is really not an important factor.  Anyone setting up an irrevocable trust is almost certainly already  in the highest tax bracket.

    But all of these questions and concerns are best discussed with an estate attorney.  That’s why you need one, and that’s why it costs more than filling out some forms.  The forms will do what they are supposed to do, but they may not be the forms you really wanted.

    I suggest you read some books on trusts.  I liked the books by Jeffrey Condon.   They are far from comprehensive but they will show you some scenarios and mistakes people make ( the author wants you to realize you need an estate attorney and hopes you will call him. )  Then discuss with an estate attorney.

    Trying to do it yourself is like a patient reading about their cancer and then telling the doctor how they want it treated.  They might be right half the time, but they will be wrong the other half.   If you do it yourself, you won’t know which half you fall into.

    Click to expand…

    Thanks Alex,

    This has helped me a lot to think about it. I am seeing an estate attorney again next month. This is our third meeting with them. First time I didn’t read the will properly. Second time I had to add extra guardians and this time we are sorting out my wife’s will.

    I think I am much more circumspect than you are about the relative benefit of trusts. I have had some other trusts that I’ve wound down over the years. I’ve found them costly and I didn’t really need the asset protection. Maybe it is like an insurance policy. Except very few people actually understand them.

    The more I read up and have experience of trusts, it hasn’t improved my confidence in the structure.

    With the appointers – if you don’t allow your beneficiaries to take the appointer role at independence age (e.g 30) then there is risk they cannot remove bad trustees. The stories of the evil stepmother are loud. But there are probably more cases of trusts that get depleted due to incompetent trustees that we don’t hear about. Depending on the tax environment they maybe better off closing the trust.

    Since around 2005, the tax environment has been more adverse for trusts. I think this has been a phenomena in a lot of western countries, not just the US. They are perceived as vehicles for the wealthy, which they are in a way. So depending on the political climate, they maybe taxed more or less in the future.

    One positive about wills and related trusts is that if there are problems, you’ll be dead by the time the problems with the structure emerge. Which is the main thing that helps me not to worry about it too much.

    With trusts, I found worry also depends on how much in assets you have in the structure. I don’t really trust them ?

     

     

    #140246 Reply
    Avatar Dont_know_mind 
    Participant
    Status: Physician
    Posts: 959
    Joined: 11/21/2017

    To avoid assets going to evil step-parent, couldn’t one just strongly encourage the surviving spouse to do a pre-nup for future remarriage? Maybe in a letter of advice opened upon death.

    Click to expand…

    let me just start that these are the stories i have heard from my patients and are not verified, but …

    let’s just simplify for easy stories sake-let’s assume male-female marriage, and wife passed.  husband remarries with prenup to biological kids from marriage 1

    second wife has been married for ten years to husband who now has alzheimers.  the wife slowly takes on more and more responsibility and eventually has house retitled or decides to move to ranch so that she can take better care of hubby and titles in her name, transfers assets out of accounts into new ones in her name.   new wills are created and husband no longer remembers exactly how things were supposed to go and why.  signs over and later he is found to be incompetent.

    moneys in trust–trustee is convinced by wife she needs money for taking care of husband and self.  opens it for long term care costs.   everyone in town knows them as a stable married couple.  sometimes moves to new town where no one knows any prior family history.

    any pensions and health care provisions are to stepmother, and these she may choose to create her own assets for heriting to her biological kids.  spends the money formerly in trust to take care of husband while alive.

     

    i’m not even suggesting it’s an evil step parent, maybe they just want to be taken care of and are equally uncertain about the future as we are.

    heard various versions of the story many times.    i just don’t know how accurate they are, or whether its the whole story or a very biased version of story.

    Click to expand…

    Trusts were first conceived in the Middle Ages for people to look after their children in case they didn’t return from crusades.

    I think you can’t get past the primacy of the appointer role in a trust. It is like the executor in a will.

    The idea is that the appointer selects the trustees and depending on the trust deed, should have a way of nominating another appointer in the event he/she is deceased or incapable. The trustee is often a reflection of the appointer.

    I guess in this case, he should have put aside a portion of his assets to his current children. This could have been done as an outright gift when he was still capable. Or with more cost, trusts for each individual (presumably adult) child.

     

     

    #140248 Reply
    Liked by q-school
    q-school q-school 
    Participant
    Status: Physician
    Posts: 2629
    Joined: 05/07/2017

    To avoid assets going to evil step-parent, couldn’t one just strongly encourage the surviving spouse to do a pre-nup for future remarriage? Maybe in a letter of advice opened upon death.

    Click to expand…

    let me just start that these are the stories i have heard from my patients and are not verified, but …

    let’s just simplify for easy stories sake-let’s assume male-female marriage, and wife passed.  husband remarries with prenup to biological kids from marriage 1

    second wife has been married for ten years to husband who now has alzheimers.  the wife slowly takes on more and more responsibility and eventually has house retitled or decides to move to ranch so that she can take better care of hubby and titles in her name, transfers assets out of accounts into new ones in her name.   new wills are created and husband no longer remembers exactly how things were supposed to go and why.  signs over and later he is found to be incompetent.

    moneys in trust–trustee is convinced by wife she needs money for taking care of husband and self.  opens it for long term care costs.   everyone in town knows them as a stable married couple.  sometimes moves to new town where no one knows any prior family history.

    any pensions and health care provisions are to stepmother, and these she may choose to create her own assets for heriting to her biological kids.  spends the money formerly in trust to take care of husband while alive.

     

    i’m not even suggesting it’s an evil step parent, maybe they just want to be taken care of and are equally uncertain about the future as we are.

    heard various versions of the story many times.    i just don’t know how accurate they are, or whether its the whole story or a very biased version of story.

    Click to expand…

    Trusts were first conceived in the Middle Ages for people to look after their children in case they didn’t return from crusades.

    I think you can’t get past the primacy of the appointer role in a trust. It is like the executor in a will.

    The idea is that the appointer selects the trustees and depending on the trust deed, should have a way of nominating another appointer in the event he/she is deceased or incapable. The trustee is often a reflection of the appointer.

    I guess in this case, he should have put aside a portion of his assets to his current children. This could have been done as an outright gift when he was still capable. Or with more cost, trusts for each individual (presumably adult) child.

     

     

    Click to expand…

    I think your comments are right for an extremely good planner and very ‘defensively’ or protectively minded person.

    We have seen people with very high net worth on this board worry as retirement dates approached about whether there is enough.

    So if as the years go bye, your second wife of ten years starts whispering every night I’m not sure if there’s enough to pay for your long term care needs, I’m not sure there’s enough for me afterwards, it might start to honestly influence your feelings on locking up five million?   You might have some of the trusts redone for your own care and wife care and the lawyer probably would go along with it?  Your kids are already rich and mine are struggling shouldnt we balance things a little more?

    It’s not the same but I’ve seen tons of patients swear no dialysis.  We sent them to their lawyer, to palliative,wrote out their advance directives making this clear.  I myself reviewed it in depth numerous times with them.  The end is coming and we have this option.   They adamantly said no until they really started feeling bad and the next thing I know, bam they come to the office on dialysis.    People change their minds all the time. It’s not always rational.  It’s not always consistent.   Its part of the beauty of freedom of choice.   For me, it is part of the fabric of life.  I choose to think irrational choices are part of why people need good doctors, and ideally good relationships with their doctors.

    I am supposed to be some kind of trustee for one of my friends if something happens.  I’m not sure what I would do if exceptional circumstances develop.

    #140268 Reply
    Liked by StarTrekDoc
    Avatar AlexxT 
    Participant
    Status: Physician
    Posts: 897
    Joined: 01/13/2016
    This has helped me a lot to think about it. I am seeing an estate attorney again next month. This is our third meeting with them. First time I didn’t read the will properly. Second time I had to add extra guardians and this time we are sorting out my wife’s will.

    Click to expand…

    I had to make a few trips to the attorney as well.

    And I changed the executors and trustees also after I spent a lot of time thinking about it.

    The first trustee will be my wife.  Half the assets will definitely go to the children.

    I have the QTip trust as an option at the first death.  If the qtip is used, then the other half are safe.  If not, those assets could be transferred elsewhere.    At the next trust revision in 10 years we may decide to lock those assets in as well by making the qtip permanent for the spouse.

    There will be no second crop of children for either spouse, so there’s really no reason not to have a qtip at this point, and as our assets continue to increase, there’s little fear that the income from the qtip wouldn’t be enough.

    With the appointers – if you don’t allow your beneficiaries to take the appointer role at independence age (e.g 30) then there is risk they cannot remove bad trustees. The stories of the evil stepmother are loud. But there are probably more cases of trusts that get depleted due to incompetent trustees that we don’t hear about.

    Click to expand…

    This is why I revised my will and trust to use Boston Private as the trustees after the death of the second spouse.   I think that using individuals would be a problem.  I originally had family in that role, but being a trustee is complicated, more complicated than managing investments.   My attorney had me insert language to allow family appointers use a different bank / trust company in the event that Boston Private disappears.  My attorney was adamant about not using Vanguard or Fidelity because, if I understood correctly, they don’t do much beyond managing the investments.  They don’t manage decisions around how much is reasonable to spend on a car, which expenses are reasonable for other items, etc.  Boston Private apparently does.   They charge around 1% AUM and this scales down, less for real estate, and they use Fidelity Index funds exclusively, so expenses stay fairly low.  There’s no AUM or other charge until they actually take over, which hopefully will be never.

    I would not have considered all the above if I had not met with an attorney.  I would be surprised if  Legal Zoom would have brought up these issues, or has a way to deal with them.

    #140284 Reply
    Avatar StarTrekDoc 
    Participant
    Status: Physician
    Posts: 2056
    Joined: 01/15/2017

    As AlexxT pointed out, costs are there like any managed asset.  However, nothing starts until the trust is managed (at initial death of spouse#1).  For purposes of probate avoidance in several states, this alone can pay for the Trust for the first decade.   Even if the kids are young, and one does a normal Trust completion by the beneficiaries’ 30’s, you’ll probably be ahead while protecting the assets in a measurable way for them in the safest manner.

    @don‘t Mind- confused on the cost of Trusts and winding several down over the years statement — that sounds more like LLC structures for asset protection.

    #140295 Reply
    Liked by q-school
    Avatar AlexxT 
    Participant
    Status: Physician
    Posts: 897
    Joined: 01/13/2016

    As AlexxT pointed out, costs are there like any managed asset.  However, nothing starts until the trust is managed (at initial death of spouse#1).  For purposes of probate avoidance in several states, this alone can pay for the Trust for the first decade.

    Click to expand…

    Actually, with Boston Private the costs don’t start until the death of spouse #2, and of course only if the kids are still under age 30.  Of course  I hope that they will be of age by the time of the second death

    In my case, I’m already trying to teach them about investing.   I hope that by the time they are in their 20’s that i’ll be able to lower the ages at which they get control of their money, maybe to get it all at 30, or maybe 25 and 30 instead of 30 and 35 ( or maybe it’s 35 and 40, I don’t recall ).

    As far as taxes go, that’s not an issue.

    EDIT:  I just reviewed the taxation of trusts and edited this post.  I’m not a CPA and not an expert, but I think that the following is correct:

    Trusts are taxed  at the higher rate: because the IRS doesn’t want you to keep spinning off trusts to avoid a higher tax bracket.  So they tax them in the highest bracket to stop you from doing that. So the more assets you have, and the higher your tax bracket, the less of an impact this will have on you.

    Any income distributed out of the trust and to the recipients is taxed at the recipients regular rate.  In other words, if you use the income, it’s taxed just like money that’s not in the trust.

    Only income left in the trust and reinvested is taxed at the higher rates.  Even that may not be a big deal, depending on what your regular tax rate is.

    Tax brackets within the trust are compressed.  If trust income is over around $12,000, that income will be taxed at the highest bracket if it’s left in the trust.  If the income in the trust is over $12,000, qualified dividends will be taxed at the highest dividend rate.

    If your trust contains the family home, there will be no income and so no taxation.

    Any income distributed from a trust will be taxed at the recipient rate, so dividends and interest that you distribute to use as living expenses will be taxed at your regular rate.

    Bottom line: if you distribute the income from the trust to pay for living expenses, then the tax rate is the same.

    If you don’t distribute the income, and leave it in the trust, if you’re already in the highest bracket, your tax rate will be the same.

    Even if your taxes are higher, the cost will be minimal compared to the alternative of higher estate taxes or the risk of someone misusing the inheritance.

    #140299 Reply
    Avatar AlexxT 
    Participant
    Status: Physician
    Posts: 897
    Joined: 01/13/2016
    Since around 2005, the tax environment has been more adverse for trusts.

    Click to expand…

    I just corrected my post above.  I was mistaken in how they are taxed.  Please see the post now for a corrected version.  While they are taxed at a higher rate, this won’t really have much effect on most trusts.

    #140415 Reply
    Avatar Dont_know_mind 
    Participant
    Status: Physician
    Posts: 959
    Joined: 11/21/2017

    To avoid assets going to evil step-parent, couldn’t one just strongly encourage the surviving spouse to do a pre-nup for future remarriage? Maybe in a letter of advice opened upon death.

    Click to expand…

    let me just start that these are the stories i have heard from my patients and are not verified, but …

    let’s just simplify for easy stories sake-let’s assume male-female marriage, and wife passed.  husband remarries with prenup to biological kids from marriage 1

    second wife has been married for ten years to husband who now has alzheimers.  the wife slowly takes on more and more responsibility and eventually has house retitled or decides to move to ranch so that she can take better care of hubby and titles in her name, transfers assets out of accounts into new ones in her name.   new wills are created and husband no longer remembers exactly how things were supposed to go and why.  signs over and later he is found to be incompetent.

    moneys in trust–trustee is convinced by wife she needs money for taking care of husband and self.  opens it for long term care costs.   everyone in town knows them as a stable married couple.  sometimes moves to new town where no one knows any prior family history.

    any pensions and health care provisions are to stepmother, and these she may choose to create her own assets for heriting to her biological kids.  spends the money formerly in trust to take care of husband while alive.

     

    i’m not even suggesting it’s an evil step parent, maybe they just want to be taken care of and are equally uncertain about the future as we are.

    heard various versions of the story many times.    i just don’t know how accurate they are, or whether its the whole story or a very biased version of story.

    Click to expand…

    Trusts were first conceived in the Middle Ages for people to look after their children in case they didn’t return from crusades.

    I think you can’t get past the primacy of the appointer role in a trust. It is like the executor in a will.

    The idea is that the appointer selects the trustees and depending on the trust deed, should have a way of nominating another appointer in the event he/she is deceased or incapable. The trustee is often a reflection of the appointer.

    I guess in this case, he should have put aside a portion of his assets to his current children. This could have been done as an outright gift when he was still capable. Or with more cost, trusts for each individual (presumably adult) child.

     

     

    Click to expand…

    I think your comments are right for an extremely good planner and very ‘defensively’ or protectively minded person.

    We have seen people with very high net worth on this board worry as retirement dates approached about whether there is enough.

    So if as the years go bye, your second wife of ten years starts whispering every night I’m not sure if there’s enough to pay for your long term care needs, I’m not sure there’s enough for me afterwards, it might start to honestly influence your feelings on locking up five million?   You might have some of the trusts redone for your own care and wife care and the lawyer probably would go along with it?  Your kids are already rich and mine are struggling shouldnt we balance things a little more?

    It’s not the same but I’ve seen tons of patients swear no dialysis.  We sent them to their lawyer, to palliative,wrote out their advance directives making this clear.  I myself reviewed it in depth numerous times with them.  The end is coming and we have this option.   They adamantly said no until they really started feeling bad and the next thing I know, bam they come to the office on dialysis.    People change their minds all the time. It’s not always rational.  It’s not always consistent.   Its part of the beauty of freedom of choice.   For me, it is part of the fabric of life.  I choose to think irrational choices are part of why people need good doctors, and ideally good relationships with their doctors.

    I am supposed to be some kind of trustee for one of my friends if something happens.  I’m not sure what I would do if exceptional circumstances develop.

    Click to expand…

    Yes, I guess people should be allowed to change their minds but they can’t after they get Dementia. Should they be allowed to ? It gets a bit murky.

    On the other end of the spectrum, should we allow kids to fail financially. A trust fund may have unintended consequences. I guess that determines what you think you should set as independence age -25,30,35,40,50 ?

    Maybe a well drafted letter and the option to vest at age 25 might be best. But also the option to have it keep going as a fallback.

    Even though I see the negatives in trusts, there are a lot of creative things it can do. The trust could subject to the legal setting at the time, lend the child the money for their first house, take first mortgage over the house, repossess the house when they become bankrupt. Buy them another house. And would they learn anything from it ?

    #140454 Reply
    Avatar Dont_know_mind 
    Participant
    Status: Physician
    Posts: 959
    Joined: 11/21/2017

    As AlexxT pointed out, costs are there like any managed asset.  However, nothing starts until the trust is managed (at initial death of spouse#1).  For purposes of probate avoidance in several states, this alone can pay for the Trust for the first decade.   Even if the kids are young, and one does a normal Trust completion by the beneficiaries’ 30’s, you’ll probably be ahead while protecting the assets in a measurable way for them in the safest manner.

    @don‘t Mind- confused on the cost of Trusts and winding several down over the years statement — that sounds more like LLC structures for asset protection.

    Click to expand…

    Unfortunately, I got sucked into setting up 2 trusts in the mid 2000’s for property before they increased taxation on them. They were marketed as asset protection vehicles and better streaming than LLC’s but this was not the case. I think people were using it to steam CGT and income in dodgy ways. Which I didn’t envisage doing but the properties I used this for were riskier than usual. One was a rural property that a Tennant wanted to set up a sawmill. I was told it would be better asset protection than other structures. As it turns out the Tennant never got the sawmill going but the property appreciated much more than I expected. The whole trust space got cracked down and I tried not to think about it.

    I find it hard to sell now due to CGT but the extra tax and other costs associated with this structure costs me in the order of 10k/year.

    It’s made me somewhat paranoid about trusts.

    #140455 Reply
    Avatar Dont_know_mind 
    Participant
    Status: Physician
    Posts: 959
    Joined: 11/21/2017

    As AlexxT pointed out, costs are there like any managed asset.  However, nothing starts until the trust is managed (at initial death of spouse#1).  For purposes of probate avoidance in several states, this alone can pay for the Trust for the first decade.

    Click to expand…

    Actually, with Boston Private the costs don’t start until the death of spouse #2, and of course only if the kids are still under age 30.  Of course  I hope that they will be of age by the time of the second death

    In my case, I’m already trying to teach them about investing.   I hope that by the time they are in their 20’s that i’ll be able to lower the ages at which they get control of their money, maybe to get it all at 30, or maybe 25 and 30 instead of 30 and 35 ( or maybe it’s 35 and 40, I don’t recall ).

    As far as taxes go, that’s not an issue.

    EDIT:  I just reviewed the taxation of trusts and edited this post.  I’m not a CPA and not an expert, but I think that the following is correct:

    Trusts are taxed  at the higher rate: because the IRS doesn’t want you to keep spinning off trusts to avoid a higher tax bracket.  So they tax them in the highest bracket to stop you from doing that. So the more assets you have, and the higher your tax bracket, the less of an impact this will have on you.

    Any income distributed out of the trust and to the recipients is taxed at the recipients regular rate.  In other words, if you use the income, it’s taxed just like money that’s not in the trust.

    Only income left in the trust and reinvested is taxed at the higher rates.  Even that may not be a big deal, depending on what your regular tax rate is.

    Tax brackets within the trust are compressed.  If trust income is over around $12,000, that income will be taxed at the highest bracket if it’s left in the trust.  If the income in the trust is over $12,000, qualified dividends will be taxed at the highest dividend rate.

    If your trust contains the family home, there will be no income and so no taxation.

    Any income distributed from a trust will be taxed at the recipient rate, so dividends and interest that you distribute to use as living expenses will be taxed at your regular rate.

    Bottom line: if you distribute the income from the trust to pay for living expenses, then the tax rate is the same.

    If you don’t distribute the income, and leave it in the trust, if you’re already in the highest bracket, your tax rate will be the same.

    Even if your taxes are higher, the cost will be minimal compared to the alternative of higher estate taxes or the risk of someone misusing the inheritance.

    Click to expand…

    I think there can be local differences with states levying differentially also on property with different thresholds (in trust or not).

    I’m not an accountant either so what I am saying is just my guess too.

    The tax environment may change in the next decade. What I have in my will is estate goes to wife who can at her discretion set up testamentary trusts.

    Currently, most trusts are pass through entities for CGT and income. I think this is the main legislative/tax risk with trusts. At some stage they may cut the CGT discount starting with trusts as pass through as they are easy targets.

    Currently trusts for minors through a will are not treated well, compared to internationally, so if anything this might improve in the future. I figure a vote winner would be more tax breaks to widows and orphans and tax the capital gains of the rich more.

    The long term CGT discount has been a huge bonus taxation wise for everyone but this might one day end. My main worry is that I get out of my remaining trust before this occurs as I think they may well target trusts before everyone else. But this could just be my own paranoia.

    In terms of will, that makes me err on the side of setting a lower independence age. If the tax environment is adverse I wouldn’t want my beneficiaries to be stuck in that vehicle. But I would give them the option of continuing with it if the tax environment favours it.

     

     

    #140466 Reply
    Avatar AlexxT 
    Participant
    Status: Physician
    Posts: 897
    Joined: 01/13/2016
    Unfortunately, I got sucked into setting up 2 trusts in the mid 2000’s for property before they increased taxation on them.

    Click to expand…

    These trusts are designed to protect assets, and to see that the wishes of the deceased are carried out.  They work well for those purposes.   They have little to no financial cost in terms of taxation.

    I think you should talk to a financial planner or CPA who is experienced in estate planning, if you can find one ( an estate attorney will be more expensive ) or read several books on the subject.   I don’t think that your concerns are valid.

    There will likely be no taxation, because the income would be limited to the dividends on index funds, which is 1.89%.  AUM fees would eat up around 1% of that, leaving only $8,900 in income per year per million invested. That would all probably be removed from the trust for living expenses, and taxed at the children’s tax rate.  Even if left in the trust, they would be taxed at the highest capital gains rate.  If that’s already  the children’s tax rate, there’s no cost.  If their rate is even 20% higher in the trust than out, ( unlikely ) then they would pay an extra $1,780 a year.  Not a lot in the greater scheme of things.

    I admit I’m not considering state taxes.  But I think your prior experience with trusts set up for a very different purpose is clouding your judgement.  Talk to a professional.

    #140476 Reply
    Avatar StarTrekDoc 
    Participant
    Status: Physician
    Posts: 2056
    Joined: 01/15/2017

    @don‘t_Mind – Yeah, was also tempted by the bright lights of irrevocable trusts as an asset vehicle.  LLCs definitely more geared for asset protection and ease of management of owners and managers.

    That’s not what the vast majority of folk look at trusts to accomplish.  The ones most folk look at is the revocable trusts at death for the purposes of probate avoidance, protection of assets to designated beneficiaries, and structuring of release of said assets per your wishes as if you were there making specific decisions for your children.

    If one doesn’t care or sweat the specifics cause one is gone already, trusts aren’t worth the time.

    #140489 Reply
    Avatar AlexxT 
    Participant
    Status: Physician
    Posts: 897
    Joined: 01/13/2016
    The ones most folk look at is the revocable trusts at death for the purposes of probate avoidance,
    protection of assets to designated beneficiaries, and
    structuring of release of said assets per your wishes as if you were there making specific decisions for your children.

    Click to expand…

    A quibble:  Yes, the purposes are 1. and 2., as well as minimizing estate taxes ( not so important with increased limit and spouse portability ).

    But #3 is something that my attorney said should be avoided.  You shouldn’t try to control behavior from the grave.  But you are trying to protect the heirs from spending the money before they know how to manage it.  You want to protect them from guys selling whole life insurance, from their uncle’s business idea, from their college roommates internet startup, etc.

    #140545 Reply

Reply To: The benefits of trusts

In case of a glitch or error, please save your text elsewhere, clear browser cache, close browser, open browser and refresh the page.

Notifications Mark all as read  |  Clear