UnThreaded | Threaded | Whole Thread (124) | Ignore Thread Prev | Next
Author: JAFO31 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 77150  
Subject: Re: Talk me out of a Financial Advisor Date: 6/8/2013 11:00 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
2gifts: "Actually, no, the primary reason is not that your daughter would be too young to handle the money. The primary reason for the trust (and it could be set up via the will or set up now) is that you want to protect both your wife's lifetime exemption as well as yours when passing the entire estate to your daughter. Assuming you will have a large enough estate to worry about estate taxes, when the first spouse dies, the entire estate will pass to the surviving spouse, but the lifetime exemption is then lost because there is no limit on the size of the estate that can be passed to a spouse without triggering estate taxes. However, when that spouse dies and everything goes to the daughter, only the lifetime exemption of that last spouse is used before estate taxes are due, so you have lost the first exemption.

So if you have a $10million estate, and you die, your wife inherits your half of it without estate taxes, but your $5 million exemption is not used. When she dies, your daughter then inherits that $10 million estate, but there is a $5 million exemption from your wife, and so your daughter owes taxes on the additional $5 million. If, however, you had left your half to a trust when you died, your #5 million exemption is used up. When your wife dies, her $5 million exemption is then used, and daughter has now inherited that $10 million without having to pay estate taxes because both exemptions were used."

Not a trust lawyer, but I do not think that this is necessarily the law anymore. I believe that the last tax law changed this issue (at least in part).

Regards, JAFO
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (124) | Ignore Thread Prev | Next


The Retire Early Home Page
Discussion on accelerating retirement day.
Kiddie Card Board
Should kids have their own credit card?
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Post of the Day:
Macro Economics

Anger at Wall Street
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.