Trusts are powerful legalcreations, yet they can often be misunderstood by the very people who have them.Some want to know how to set up a trust, while others are asking â€œhow do I getrid of the trust I already have?â€
These conflicting questions arenot an indictment of trusts, but they are really the consequences of ourcurrent legal and tax environment.
Trusts, of course, are amongstthe most powerful tools for moving wealth outside of the reach of the gnashingteeth of the estate tax. However, the estate tax level has not been predictablefor much of the last two decades. While the estate tax level was recently twiceset to drop to lows not seen in a decade or more, Congress miraculously hikedit back up to far more generous exemption amounts with far less damagingtaxation percentages.
In other words, some taxpayershave found that a trust might not be doing the work for which they establishedit simply because Congress got it right. Following this thought, The Wall Street Journal recentlypublished an article titled â€œHow to Dismantle a Trust.â€
As the article notes, there is away to properly blow up your trust. On the other hand, do not be too quick withthe dynamite. Why? There are far more important reasons to keep your trustindependent of any present or future estate tax exposure.
For example, the probateavoidance enjoyed through a properly funded revocable living trust can savetime, money and inconvenience in the event you become incapacitated and uponyour death. Moreover, the inheritance protection available for your heirs canbe an important consideration.
If you have yet to set up a trust, there are stillmany great reasons to establish one for yourself and your heirs. On the otherhand, if your current trust is more burden than benefit, it can be shut down.
For more information on this and otherestate planning subjects, contact IdahoEstate Planning and schedule aconsultation. Remember,good planning is no accident