With the passage of the Tax Cuts and Jobs Act (TCJA) of 2017, many high-net-worth individuals breathed a sigh of relief, especially because of the provision that significantly raised the estate tax exemption ($12.92 million per individual for 2023).
The areas of trust planning and trust creation are vast and limited only by the imagination of the trust-makers, their attorney and the law.
The trustee acts as the legal owner of trust assets and is responsible for handling any of the assets held in trust, filing taxes for the trust and distributing the assets according to the terms of the trust.
The trustee has a large number of duties and responsibilities to the trust maker and the beneficiaries.
Most people don’t realize that how you hold title to property directly influences your estate plan. Since it’s a common misunderstanding that can dramatically alter your intentions, let’s explore why.
At some point in your life, there is a chance that you will inherit money or assets left from a grandparent, parent, or other family member. When someone that you love passes away, it is an emotional experience and going through the process of inheriting the assets they chose to leave you can add to the rollercoaster of emotions. Before you start making plans, make sure you know how the inheritance can affect your existing financial situation, including your taxes and other financial planning areas. A good place to start is to understand some common sources of inheritance, which we will discuss in this article.
There’s an often-quoted maxim regarding inherited wealth: “The first generation makes it; the second generation builds it; the third generation blows it.” Indeed, uncertainties around the next generation’s ability to exercise wise stewardship of family wealth have led to the drafting of many a trust document, many clauses in wills, and much misgiving in those who created or built the legacy that will be entrusted to those who may or may not be ready.
What is an estate plan and why do you need one? An estate plan gives directions to your family, friends, and loved ones about what should happen to you and your assets at the time of your death, or if you become incapacitated.
It’s hard to find the right time to discuss information your loved ones will need once you are gone. Initiating that discussion well ahead of time is a gift. Does your spouse know how to access all the bank and investment accounts? Do your children know how you would like to be remembered? Are the people you love in possession of what they need to take care of your final affairs?
