Estate Plan Trusts

Using an Irrevocable Life Insurance Trust to Avoid Estate Taxes

Establishing an irrevocable life insurance trust is a way to avoid paying taxes on life insurance proceeds. Ownership of insurance policies are transferred to the trust and proceeds are exempt from estate taxation.

The irrevocable life insurance trust includes a contract which is used to distribute proceeds to designated beneficiaries. The trust itself is designated as the primary beneficiary. Upon death, proceeds are transferred into the trust and held to provide benefits to a spouse, children, or other beneficiaries. Read more…

Facts of Independent Significance

When putting together an estate plan, a testator has several options available to most precisely create a testament that reflects his or her wishes. Although many people may only think the specificity is the goal of each estate plan, some testators may also aim to be intentionally vague with some of their wording. Known as facts of independent significance, certain terms in a will or trust may be modified naturally.

A fact of independent significance works on the basis that some language may intentionally be undefined. One example of facts of independent significance is when a testator leaves property behind for a largely unspecific group of beneficiaries. For example, if a wealthy benefactor creates a will that provides a special part of an inheritance to his or her house workers, that property will go to any workers at the time of the will’s execution. Anyone hired since the creation of the will may be permitted to receive this property, while anyone fired will be discounted. Read more…

Which Type of Trust Is Right for You?

If you have decided to explore the possibility that it’s time to set up a trust, your research may leave you overwhelmed with more questions than answers. A wide array of options is available and choosing the best one to meet your needs is essential. Some types of trusts are complex and contain options that can be combined in almost limitless ways. Some are extraordinarily expensive to create and administer. So, what trust is right for you? You may ultimately decide that you don’t need a trust at all. You may, however, decide that a simple revocable trust will meet your needs. What if, after your research, you still don’t know what’s best? Read below for some thoughts to help guide you in this extremely important endeavor:

Serving Your Personal Needs

If you’re merely trying to just take care of yourself, a simple revocable trust will most likely be your best bet for the following reasons: Read more…

President Obama Delays Estate Tax Uncertainty For At Least Two More Years

In a wise, but surprising turn of events, the President has agreed with the Republican Congress and adjusted the estate tax levels for 2011 and 2012. For the next two years, the estate tax will be levied on all estates over $5 million for an individual and $10 million for a married couple and at a rate of 35 percent. Historically, Republicans have often been known for their disdain of excessive taxes and Democrats have been known as the party that favors big government and higher taxes. With the referendum against the Democrats in the last election and the heavy shift to a Republican House and Senate, the President had no choice but to cave to the Republican demand for a lower estate tax. If not, the amount of estate taxes paid by the families of middle-income voters would have been a hot button topic during the 2012 Presidential election, and could have been the cause of a loss of the White House.

So where does this leave us? While the estate tax is held in check for the next two years, there is no definitive answer as to where it goes after that. In 2013, we could have another year of no estate tax or we could have a 55 percent estate tax on everything over $600,000. Who knows? The only thing that we can do is hope for the best and prepare for the worst. A trust-based estate plan will ensure the most tax savings no matter what the estate tax number is in the year you die. In addition, there are more advantages to having a trust than just estate tax protection. Read more…

Tips for Choosing an Estate Administrator

Appointing an estate administrator is an important decision. This person will be responsible for settling your estate upon death, so it is best to select someone who can be trusted to make decisions for the good of your loved ones.

Most people designate family as their estate administrator. For many, this is the most logical choice. However, if family strife exists, appointing family members can cause Administrators additional grief. Sadly, it is not uncommon for war to break out over inheritance property. Read more…