In Law We Trust (Not)!

October 8, 2012 | Posted by Ken Eisner | No Comments

I frequently receive calls from clients requesting that as part of their estate plans, they want me to draft trusts. I analogize this request to me going to my physician and telling him what medication I want before the diagnosis. Almost always, when I ask why they want a trust, they respond they want to avoid taxes. Apparently, what they were told was that they could avoid probate; what they heard was that they could avoid taxes.

Trusts-Wills-Estate-PlannerIn fact, unless the trust has certain characteristics, including primarily being irrevocable, trusts do not save any taxes. In many instances, trusts have become far more voluminous and expensive than the probate process. In certain states, probate fees are significant. In Pennsylvania, they simply are not.

Misnomers regarding living trusts have become so widespread that the Pennsylvania Attorney General has sued no less than 16 individuals, including many attorneys over these living trusts sales scams.

Here is the nitty gritty on trusts:

  1. There are many type of types of trusts. In its simplest forms, trusts are either: (a) revocable trusts, which can be changed at any time and irrevocable trusts, which have significant limitations as to change; and (b) living trusts which are created and go into effect during your lifetime, and testamentary trusts, which are drafted as part of your Will, and do not go into effect until you die.
  2. A trust makes sense if you want (a) to avoid probate and desire privacy as to your financial matters; or (b) for Medicaid planning purposes in the event significant nursing home care may be anticipated.
  3. Trusts for the most part have minor tax implications. However, if certain assets are placed into an irrevocable trust, there can be significant tax savings, including federal estate taxes.

If you want to prepare your estate plan, regardless of whether you think a trust is the way to go, I recommend that you contact a law firm that specializes in estate planning. I hear that Eisner Law is excellent.




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Category : Eisner Law Blog, Estate Planning

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