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Blog 2013 August What Misconceptions Do People Generally Have About Trusts?
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What Misconceptions Do People Generally Have About Trusts?

Posted By Law Offices of Steven M. Simrin || 8-Aug-2013

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 the process.

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 and legal answers you’re seeking by calling(510) 444-4430 today.

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