Even under the old federal estate tax limitations, most households do not have to worry about tax-saving estate planning devices. Now that the old limitations have doubled, meaning a married couple could conceivably have up to a combined twenty-two million dollar estate before they had to get tax-creative, it would seem that even less families have to worry about tax-saving estate planning devices.
In other words, if they have no reason to believe their estate would go over the now humongous exemption going into effect under the tax bill, they believe they have no reason to need a trust. Nothing could be farther from the truth. In fact, a trust drafted by a business lawyer may be the only way to save property and guardianship rights.
Use a Trusts Lawyer for Property Owners and Parents
While it’s true that most of the tax-haven estate planning is no longer necessary with higher estate tax exemptions, attorneys are rightfully turning more to the practical aspects on why any property owner or any parent absolutely, unequivocally, needs a trust.
These more simplistic trusts—which any non-price gouging business attorney will charge you a more palatable rate than if they were doing a large tax-haven trust—are only aimed at one thing: avoiding having your property tied up in probate court.
Probate court is slow, expensive, and often maddening. There is simply no upswing in putting off setting up a trust when the alternative is probate court. All the way around, especially financially, doing the trust now with a trusts lawyer is a better option.
Don’t Leave Your Property in Probate
An example of why this is important is as follows: You own your home and have modest savings. You and your spouse die and leave behind three children. The only practical way to have someone take care of your children is if your house gets sold, (either because no one is around to pay the mortgage or the capital gains on a sale is needed for their future care). If the house is not owned by the trust, then the only owners, you and your spouse, are dead and ownership is now in limbo.
To determine who owns the house now, it goes through probate. A year later, likely still in probate and your estate continuously spending money on an attorney, who is paying the mortgage until you executor has court permission to sell? These situations can end up with the house in default, and your kids not seeing a dime.
Same scenario but a trust owns your house. Then, the trust can sell your house just like any other typical buyer/seller real estate transaction. No probate, no waiting, no attorney’s fees.
Next, who is getting the kids? Did you happen to tell your best friend you wanted him and his wife to get them the last time you shared a beer together but never set up a guardianship provision in a trust? Your friend might get the kids, but he’ll have to be in probate court, paying attorneys, and waiting on the court calendar to try to prove you two had the arrangement. And, if a family member contests…
Whereas, if it is properly written in your trust, it may as well be written in stone on who gets your kids.
Prepare Your Trust With Ijames Law
Just because the great majority of us will never exceed the new estate tax limitation, the rationale behind every homeowner and parent from creating at least a defined trust on the care of your property and children, and of even your business interests, is still alive and well. Trusts are no longer the documents of the rich; they are the documents of the prepared.
If you have any questions regarding trusts, or would like to speak to a trusts lawyer to create one, please do not hesitate to give Ijames Law a call.