Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev | Next
Author: opaalex Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121182  
Subject: Re: Inheritance and Trusts and more. Date: 2/26/2001 12:54 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I'm not a tax professional nor a trust attorney, but here is what I know about trusts. WTR's reply is correct, but there is more to it. I suggest that you educate yourself in this matter more in-depth. There is a ton of free information on trusts and estate taxes on the www.
I did exactly that before I created my own trust. My wife and I created a revocable marital living trust with a disclaimer (by-pass) option. We funded this trust with most of our assets, except for our IRA's and annuities. We are leaving everything to each other and are each other's trustee. Because of the unlimited marital exemption there are no estate (death) tax consequences. If I were to die, the trustee has to determine the value of my estate which, like in most marital cases, is about one-half of the market value all marital property at the time of my death. The trustee will have to file an estate tax return if the value of my estate is greater than the personal lifetime exemption, now at $675,000. We avoid probate and then acting trustee disburses the decedent's estate in accordance with his trust and pour-over will. My wife can keep it all, or by-pass some of my estate to our children under the "disclaimer" option. Today she could by-pass up to $675,000 to our children totally free from estate (death) taxes. Our children would not realize any capital gain taxes unless they were to sell the inherited assets for more than than determined value or cost basis at the date of my death. An IRA is fully taxed at time of death unless it can be rolled over into the IRA of a qualified beneficiary. In case your dad has annuities you should seek the advise of an tax attorney.
If my wife were to die later, her trust would achieve the very same outcome as discussed, without probate, under the control of my daughter, the successor trustee of our individual trusts. Thus, if we were to die in a plane crash, the successor trustee could by-pass each of our current $675,000 personal exemption, free from death taxes.
If your dad's estate is greater than the current $675,000 estate tax free exemption (it will go up to $1,000,000 by 2006) he could spend it down through annual gifts of up to $10,000 per recipient. Why pay the estate or death tax which starts with 37%? Of course, we can pray for the repeal of the estate tax.
I do hope that the information that I provided here helps you and your dad in planning his estate. If I can be of any additional help you are welcome to contact me at alexulb@charter.net.

Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (3) | Ignore Thread Prev | Next

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
Post of the Day:
Apple

Apple and Ninety Years Ago
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
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.
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 "#1 Media Company to Work For" (BusinessInsider 2011)! 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.
Advertisement