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Copyright 2009, 2011, Marc S. Weissman Certified Specialist: Estate Planning, Trust and Probate Law Certified by the California Board of Legal Specialization of The State Bar of California Weiss & Weissman, San Francisco, California (650) 574-0362 To Contact us: email Phone/Fax/Mail Homepage Return to Estate Planning Directory |
Since I can leave $5,000,000 in 2011 Tax-Free, do I need a Trust?
There are several reasons to use a Trust. Taxes are only 1 reason. In fact, single people do Trusts as frequently as married couples, and there are NO tax benefits.
December 15, 2010 update:
After much political posturing, with each side trying its hardest to make the other side look bad, we have a new law effective for the next 2 years.
The part most relevant to me is the $5,000,000 per person exemption.
This means that an unmarried person may die in 2011 or 2012 and leave tax free $5,000,000; the excess is taxable at 35%.
Of course, this applies only if you are lucky enough to die in 2011 or 2012; if you die in later years, the tax free exemption reverts again to $1,000,000, and 55% on the excess, unless or until they change it next time.
Typical married couples use an A-B/C Trust to:
Defer all tax no matter what the couple is worth when the first spouse dies; and
Allow 2 exemptions to pass tax free.
With this new tax reality:
a) Does your Trust need attention? NOT if I did it! We were always aware that the tax free exemption has been a moving target, so no matter what it is when you die, your Trust is fine.
b) Is a Trust still appropriate? YES. The many reasons for doing Trusts continue to apply:
Probate Court avoidance.
Protection of immature beneficiaries by providing proper management of finances.
Asset Protection for heirs through Dynasty Trust, and keeping inheritances in the family for future generations.
Married couples often like the requirement that the Survivor may enjoy the family assets, but must leave whatever remains to the children / other specified heirs.
The other benefits of a Trust continue, besides tax benefits.
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