Idaho Estate Planning - Why Do I Need a Trust?

Bridge 14The estate and gift tax elements of the American Taxpayer Relief Act extended the favorable rules that were previously in place. The $5 million exemption, adjusted for inflation, was made permanent—as well as the rules on portability of the exemption for married couples (i.e. $10 million per couple). The tax rate on estates over that threshold, now $5.45 million per person, was bumped up to 40%, reports CNBC in “What's the difference between an inheritance and a trust?”

This means that the estate tax now only affects about 0.2% of the population, translating to about 600,000 Americans. This was one of the big reasons why people set up trusts over the last 20 years…to avoid estate tax consequences.

Now folks are looking at income and capital gains taxes. Trusts aren’t the best for those, as heirs who receive assets through trusts versus an inheritance at death don't get a step-up in cost basis on assets like stocks and real estate. If a couple has less than $11 million, there’s no good rationale for creating a trust just for tax purposes.

Trusts are still a very useful way to provide for the administration of property and wealth for families and for philanthropy. They’re also a key component of an estate plan, along with a power of attorney and a will. Revocable living trusts offer a great way to distribute your assets after you pass away without the hassle and expense of probate. They are a relatively simple tool most estate planning attorneys suggest to solve a wide variety of estate planning issues. 

In addition, a trust is a powerful vehicle for people to manage assets for themselves, their families and other beneficiaries both during their lifetime and after they pass on. You have the ability to transfer assets to children in a controlled manner and can allow people more control over how assets are made available to others.

The truth is that anyone can set up a trust. They are not just for the very wealthy. Of course, trusts for the extremely wealthy and trusts for those of more modest means will often look different, but an estate planning attorney can set up a revocable living trust that is appropriate regardless of the size of your estate.

Whenever someone says they don't have an estate plan I remind them that isn't true. Idaho has one for you as a default. If you want the state to determine what happens to your estate when you die all you have to do is - nothing. So it's really a question of which estate plan you prefer, the one you and your family draw up through thoughtful and open discussion or the one Idaho created? Everyone has an estate and everyone needs to plan.

Print
Tags:
Rate this article:
No rating

Please login or register to post comments.

Name:
Email:
Subject:
Message:
x

Categories