Sometimes people assume that trusts are only useful for very wealthy people, and it is true that high net worth individuals can benefit from the creation of certain types of trusts.
There is a federal estate tax, and it carries a $5.34 million credit or exclusion in 2014. This is the amount you could transfer to people other than your spouse tax-free. Transfers in excess of this amount are potentially subject to the estate tax, which carries a 40 percent top rate.
People who are looking for estate tax efficiency often create irrevocable trusts. Generally speaking, assets that have been conveyed into this type of trust would no longer be part of your taxable estate.
In addition to irrevocable trusts, there are also revocable trusts. These trusts would not be useful for tax efficiency purposes, because you maintain control of assets that are in this type of trust.
Revocable living trusts are often used to facilitate probate avoidance. Probate is a legal process that can be time-consuming and expensive. These trusts facilitate asset transfers outside of probate.
When does a trust end or terminate? For the most part, the answer is that it’s up to you.
You are the person creating the trust, and you have a great deal of control. For example, if you establish a revocable living trust, you create a trust agreement. In this agreement you name a trustee to administer the trust after you die.
As the grantor of the trust you leave behind instructions in this trust agreement. You could have the trustee distribute all of the resources in the trust to the beneficiary after your passing. Once the administration tasks were completed, the trust would no longer exist.
You could alternately instruct the trustee to distribute assets gradually. Under these circumstances, the trust would terminate whenever all of the resources were in the hands of the beneficiaries.
Free Report on Trust Administration
A trust of some kind can be a viable estate planning solution for a wide range of people, so you should educate yourself before you make any decisions.
We have assembled an electronic library of in-depth special reports that cover many different estate planning and elder law topics. One of these reports is dedicated to the subject trust administration.
The report is being offered to our readers free of charge, and you can obtain access through this website.
To get your copy of the report, click this link and follow the simple instructions: San Jose CA Trust Administration.
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