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Birds of a Feather / Investing For Couples
|Subject: Re: Wondering||Date: 7/15/2004 9:31 AM|
|Author: 2gifts||Number: 771 of 785|
a revocable trust sounds interesting. what all is involved in creating such a thing?
It's not that complicated, but you need an estate planning attorney to get it all set up. In our case, we have a revocable living trust that we keep everything in. In a simple sense, it means that we each own half of our assets, and when one of us dies, that half goes into the trust thereby preserving the lifetime exemption which I think is around a million dollars right now. Then, when the 2nd spouse dies, their half of the assets go into the trust using their lifetime exemption before estate taxes kicks in. By doing it this way, either spouse actually gets to have the benefit of all the assets, but they also each get to use their lifetime exemption to reduce taxes. This doesn't matter between spouses since a spouse can inherit any amount without having to pay estate taxes, but it makes a big difference to the kids.
The other thing that really drove us to the trust is that a trust is private and no one gets to know the terms. This is unlike probate which is public and would allow anybody to contest it. I'm sure that a trust could be challenged, but it is not easy and probably not likely to be successful. In our case, we fully expect DH's sister, the ambulance-chasing attorney, to contest our wills to get custody of our children and access to their money, which will be a large pile when we both die. The trust eliminates that as a risk.
I know I've probably butchered the explanation, and someone who is more knowledgable can probably do a better job, but this is the general gist.
But it needs to be part of the entire estate plan, so you need to find an estate planning attorney if it's time for you do such things. If you were in MA, I could recommend someone that we have been using for about 10 years now. In that time, we set up the trust, and we just did our first amendment. My expectation is that we will probably change the trust one more time before we do an irrevocable trust, but that won't happen til we are advanced in age. At this point, there are too many things that could change so we are not yet ready to do the irrevocable trust yet.
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