One major misconception people have is in thinking they’ll save taxes
by putting money into a trust. Trusts are used legitimately to save estate
tax, but that only comes into play for estates above $5.4 million (that’s
the amount for 2015, it’s indexed for inflation). If you have an
estate in that neighborhood, you can set up a trust with certain provisions
that can minimize or even eliminate federal estate tax, but you can also
do the same with a will, so the trust isn’t better for that.
When people come to me and ask if they should set up a trust, I tell them
yes, if they want to avoid probate. Frankly, if they’re going to
go to the trouble of setting up a will sophisticated enough to save estate
taxes, they should know it doesn’t cost much more to set up a trust
that can do the same thing. I don’t think I’ve ever drafted
a will to avoid estate tax.
How Often Do You Clean Up a Trust?
It’s not uncommon for a trust to be set up and then for the beneficiaries,
typically the children of the person who set up the trust, to have a dispute
either with each other or with the trustee regarding how the terms of
the trust will be carried out. That happens fairly frequently and that’s
when attorneys will get involved.
Sometimes that could have been avoided if the trust had been drafted a
bit differently. So if you are considering setting up a trust, you should
consider hiring an attorney with substantial experience to guide you through
More Information on Trusts
If the trust agreement does not specify that the trustee is not to get
a fee, then the trustee will be entitled to a reasonable fee, and financial
institution trustees will charge a substantial fee, so this is something
to consider; it’s one of the most common disputes about trusts.
Sometimes, they’ll have one child serving as the trustee and the
other children frequently dispute how much the trustee is entitled to.
The main thing to understand is, there is incredible flexibility with trusts
and that if you are either interested in or thinking about a trust, or
you have a life situation that involves finances and you’re not
sure how to deal with it, you should contact an attorney who is experienced
in dealing with trusts and discuss your particular situation with them.
For more information on
Misconceptions About Trusts, a free initial consultation is your best next step. Get the information
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