I have been practicing exclusively in the area of estate planning for over 27 years. Yet, last week a questioned posed by a young couple seemed to resonate in my mind like never before. "What is the number one benefit of doing a trust?" My mind quickly raced to the 1980's movie "City Slickers" when the old crusty cowboy said to Billy Crystal, the city slicker, that he must find "just one thing" that is important to him in life and uses that as a motivation to have a happy and successful life.
While it may be trite to observe that no two individuals are the same, it is not a clich to say that everyone of us can benefit from estate planning tax advice, if only to learn that we will not have to worry because our estates will not be large enough that a tax is applicable. The estates of those just beginning their careers may not require a lot of estate planning tax avoidance measures, while the estates of their grandparents very well might.
Your beneficiaries are those individuals who will inherit your estate when you die. It is important that you carefully consider and name your beneficiaries. Choose the appropriate individuals for the estate you will be leaving behind. Many times, beneficiaries are children and spouses. However, if you have young children, you may not feel comfortable setting up your estate so that they inherit a large sum of money directly. How will they spend it? Are you sure that they would make wise choices? If you would like to have more control over the estate after you die, then it is important that you set up a Trust for your beneficiaries. By establishing a Trust, you can allocate a certain portion of your estate towards a child's education, first home, or other purpose of your choosing. Consult with a qualified attorney for more information about how to set up your estate for your beneficiaries.
If you find that they are, it will be worth your while to discuss with an expert the estate planning tax strategies which will let you preserve as much of your assets as possible for your heirs. These strategies can include things placing your assets into a living so that you can control them during your lifetime, and prevent them from being included in your taxable estate when you die. Having a living trust will also benefit your heirs, because it will exempt you assets from being tied up in the expensive and lengthy probate process.
Restrictions and Incentives for Children - The key question here relates to the timing in which a child should gain unrestricted access, an outright distribution, to the assets after the death of both parents. We would all agree that if a child is a minor, then the assets should be controlled and restricted by an independent trustee for a period of time. What we may disagree on, is the appropriate age in which all restrictions and the independent trustee should be removed. Some clients say age 25, some say 30, and I have had many that say 50 or 60. My experience is that the older my clients are, the higher they will set the ages for their children to gain control. For example, if the kids are minors, then most couples will set the restriction to be lifted at age 30. However, if the couple is much older, and the kids are already over age 30, then these couples may set the restrictions to age 40 or 45. We may also want to build certain "incentives" into the estate plan. A common incentive is "if you earn a buck, then the trust will pay you another buck". So, you create an incentive for a child to go out and earn a living. Over the years, I have seen the destruction that is brought to a "trust fund baby". Money and inheritances can ruin a child and ruin a life. That is why many wealthy people will leave large portions of their wealth to charities, instead of their children (and yes, there are income tax advantages and estate tax advantages of doing this, but the primary reason would be to encourage the child to have a productive life). You may also want to provide incentives depending on if a child graduates from college or achieves some other educational benchmark. I do see the risk of using the trust as a "carrot" that is dangled in front of a child to be manipulative. But, some well thought out incentives can really go a long way to help a son or a daughter cope with the vicissitudes of life and be blessing to them, and not a curse.
Because life events, such as divorce, loss of job, etc., may change your assets, it is important to periodically revisit your plan to ensure that it is always current. Many people die without reviewing their assets, so their plans cannot be carried out as they had desired. By regularly reviewing your plan, you are able to help your beneficiaries inherit the assets you leave behind for them without having to fight for them in court or with other beneficiaries.
While it may be trite to observe that no two individuals are the same, it is not a clich to say that everyone of us can benefit from estate planning tax advice, if only to learn that we will not have to worry because our estates will not be large enough that a tax is applicable. The estates of those just beginning their careers may not require a lot of estate planning tax avoidance measures, while the estates of their grandparents very well might.
Your beneficiaries are those individuals who will inherit your estate when you die. It is important that you carefully consider and name your beneficiaries. Choose the appropriate individuals for the estate you will be leaving behind. Many times, beneficiaries are children and spouses. However, if you have young children, you may not feel comfortable setting up your estate so that they inherit a large sum of money directly. How will they spend it? Are you sure that they would make wise choices? If you would like to have more control over the estate after you die, then it is important that you set up a Trust for your beneficiaries. By establishing a Trust, you can allocate a certain portion of your estate towards a child's education, first home, or other purpose of your choosing. Consult with a qualified attorney for more information about how to set up your estate for your beneficiaries.
If you find that they are, it will be worth your while to discuss with an expert the estate planning tax strategies which will let you preserve as much of your assets as possible for your heirs. These strategies can include things placing your assets into a living so that you can control them during your lifetime, and prevent them from being included in your taxable estate when you die. Having a living trust will also benefit your heirs, because it will exempt you assets from being tied up in the expensive and lengthy probate process.
Restrictions and Incentives for Children - The key question here relates to the timing in which a child should gain unrestricted access, an outright distribution, to the assets after the death of both parents. We would all agree that if a child is a minor, then the assets should be controlled and restricted by an independent trustee for a period of time. What we may disagree on, is the appropriate age in which all restrictions and the independent trustee should be removed. Some clients say age 25, some say 30, and I have had many that say 50 or 60. My experience is that the older my clients are, the higher they will set the ages for their children to gain control. For example, if the kids are minors, then most couples will set the restriction to be lifted at age 30. However, if the couple is much older, and the kids are already over age 30, then these couples may set the restrictions to age 40 or 45. We may also want to build certain "incentives" into the estate plan. A common incentive is "if you earn a buck, then the trust will pay you another buck". So, you create an incentive for a child to go out and earn a living. Over the years, I have seen the destruction that is brought to a "trust fund baby". Money and inheritances can ruin a child and ruin a life. That is why many wealthy people will leave large portions of their wealth to charities, instead of their children (and yes, there are income tax advantages and estate tax advantages of doing this, but the primary reason would be to encourage the child to have a productive life). You may also want to provide incentives depending on if a child graduates from college or achieves some other educational benchmark. I do see the risk of using the trust as a "carrot" that is dangled in front of a child to be manipulative. But, some well thought out incentives can really go a long way to help a son or a daughter cope with the vicissitudes of life and be blessing to them, and not a curse.
Because life events, such as divorce, loss of job, etc., may change your assets, it is important to periodically revisit your plan to ensure that it is always current. Many people die without reviewing their assets, so their plans cannot be carried out as they had desired. By regularly reviewing your plan, you are able to help your beneficiaries inherit the assets you leave behind for them without having to fight for them in court or with other beneficiaries.
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Frank Miller has a Debt Consolidation Blog & Finance, these are some of the articles: Forex Trading In Today's World. Nothing But The Best Tips! You have full permission to reprint this article provided this box is kept unchanged.
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