Trusts are useful vehicles both during life and after death. This article examines how trusts are income taxed. Grantor trusts are taxed to the grantor, regardless of whether the income is distributed to them. Nongrantor trusts are separate taxpaying entities but get a deduction for distributions to beneficiaries. Read the article to learn more.
TOD / POD, beneficiary designations, and joint tenancy can be simple ways to transfer assets at death. However, these simple methods lack some of the benefits of a trust. Read on to learn more.
Trusts have many uses. Perhaps the most important is that they can provide privacy at death. Garry Shandling is thought to have used a trust to provide privacy for those he left behind.
When planning for children with special needs, it takes special care to preserve their eligibility for public benefits. An ABLE account is a new way to preserve eligibility while gaining tax advantages. Read on to learn more about this new tool in planning for those who were disabled by age 26.
Unfortunately, the majority of americans fail to have any estate plan in place at all. Of those that do have an estate plan, the living trust plan is gaining popularity. However, not all living trusts are the same. There are many bare-bones living trusts. These trusts barely scrap the surface to an effective estate plan. Some may actually avoid probate. However, the bare-bones living trusts fail to take into consideration other very important legal issues. A living trust should meet the IRS requirements regarding IRAs. Many bare-bones trusts do not meet these requirements. Failing to meet these requirements could be at the cost of thousands of dollars in income taxes. It is also important to ensure your trust is acting in the best interest of those that are inheriting the property. These individuals are known as beneficiaries. For example, what if your beneficiary is getting governmental benefits? Leaving money directly to him/her will likely interfere with these benefits. A well drafted living trust would have special needs trust language in it to ensure these benefits are not jeopardized. Also, what if your beneficiaries are too young to inherit a lot of money? A well drafted trust would ensure that a young person’s inheritance benefits this young person but is not controlled by him/her until he/she has reached a more responsible age such as 25 or 30. Trusts can now leave the inheritance to the beneficiary so that it is protected from subsequent divorces or creditor issues.
There are many legal issues that can be covered within a well drafted living trust. The bare-bones trusts fail to cover the many other legal issues that come into play when dealing with the complicated issues of your loved one’s life. When getting an estate plan, be sure to go to an experienced estate planning attorney that offers sophisticated trusts to protect your legacy. I would be happy to offer guidance and enlightenment on why you need an estate plan. Call us at (800) 431-9776 to schedule your Free estate planning consultation. We have offices in the Madison and Baraboo area.