Personal Injury Lawyer
It is not uncommon for people to try and avoid estate taxes through the creation of different trusts. Unfortunately, most ways people try, fail. The laws for estate taxes and transfers are strict, and if you do not have expertise in the field, then it is best to contact an estate attorney for further guidance. There are three considerations most people make, revocable trusts, irrevocable trusts and portability, one of which will not help with estate taxes at all.
Revocable Living Trust
Many people believe that they can use a revocable living trust to avoid paying estate taxes, but this is not true. The only purpose of a revocable trust is to reduce the need for probate court after death. Unfortunately, people try to manipulate the estate tax laws by juggling ownership percentages among family members, which also does not work. Using a basic revocable trust is not the answer to avoiding estate tax, and if anything, it may only complicate the process.
Bypass Trust
An irrevocable AB trust, or bypass trust, will potentially save on estate taxes. The bypass works by leaving your children, instead of your spouse, some property. While the children are technically the owners of the property, your surviving spouse is able to use the property and benefit from the income it produces. Using this type of trust means that the property will not be subject to estate taxes upon the death of the surviving spouse.
Portability
It is possible to avoid estate taxes without creating a trust. As of 2015, married couples could transfer assets without owing federal gift or estate taxes. The value of the assets could not exceed $10.86 million. Taking advantage of this tax exemption is called portability. While a bypass trust can save on some taxes, the ability to combine estates before death can avoid the necessity of such actions and provide full tax exemption for a specific amount.
Estate laws are complex, and most individuals do not understand how to use those laws to benefit. An estate attorney can help you understand the regulations of estates and develop a plan to save you and your family as much money as possible. After all, why should your family have to pay more taxes on your assets? Contact a trust fund lawyer, like the Yee Law Group, to discuss your options and create a plan you can live with. Don’t assume that paying taxes is your only option.