revocable trust vs. Marital Property Agreement

[timberland]

My wife of 35 yrs and I hold all our assets jointly (in WI). I have 2 adult, single children and everyone gets along, no issues. I started looking at a revocable trust, irrevocable trust, and now a marital property agreement. Then there is always talk of tax advantages for the trusts. I want to keep it simple, but don't want to lose out on any tax advantages and prevent probate or inheritance tax. I will include Power of Attorney no matter which way I go.

Any experiences out there, and why did you choose what you did?

 

[gbflyer]

Our attorney advised us that there will be probate no matter what, at least in our state. We ended up doing a will, might do a trust in the future. Regardless of your children's attitude towards one another now, that has a habit of changing when it's time to divide up the spoils.

Always good to get professional advice.

 

[Tmac]

Time to talk to competent estate planners in your area. I’d interview 2-3, pick one, and have an attorney well versed in planning review the plan and execute any documents. A living trust solves most estate/inheritance problems in my state most of the time, avoids regular probate and any challenges to the plan. YMMV.

 

[yfarm]

After observing and participating in several personal estate disputes/conflicts I believe parents most valuable gift to their children and grandchildren is an ironclad estate plan to prevent family destruction over assets. If that has already occurred due to a dysfunctional individual, even more reason to develope a plan that will survive challenges. The one time in life when individuals have an opportunity to get something for nothing brings out the worst, particularly in the spouses of the siblings.

 

[eddielasvegas]

I watched a video of hers a few weeks ago where she said that Irrevocable Trusts often have higher tax rates.

This woman impresses the heck out of me for being being on the ball.

Here is her channel link for "trust" related videos.


Eddie

 

[SDHNTR]

This is the wrong place to seek such advice. There are no uniform answers. Every single case is different. Seek professional counsel.

 

[WiscoHoundsman]

Living in Wi and currently going through this process. I’ll PM you the place we are using and they have a free webinar to watch and a free consultation to ask any questions you may have. My understanding is a properly set up trust in WI will help minimize probate but beyond that does not do much for our current taxes or estate taxes. It can also do some things regarding one spouses death and potentially remarrying. Though estate taxes kick in after $15 million individually at from the feds. Wisconsin does not have a state estate tax.

Just what I am learning as we navigate this process.

 

[yfarm]

For those of you who own real or tangible property in Illinois, beware that non residents have estate tax applied for the value of the property as a percentage of their entire estate.
Apportionment: The tax is initially calculated as if all assets were in Illinois, and then multiplied by the ratio of Illinois-situated assets to total gross assets.

 

[2ski]

Living will at a minimum. And what kind of assets are you talking? House and cars i wouldn't worry too much about more than just a living will. If we're talking more investments and additional property get with someone well-versed in your state.

 

[timberland]

Living in Wi and currently going through this process. I’ll PM you the place we are using and they have a free webinar to watch and a free consultation to ask any questions you may have. My understanding is a properly set up trust in WI will help minimize probate but beyond that does not do much for our current taxes or estate taxes. It can also do some things regarding one spouses death and potentially remarrying. Though estate taxes kick in after $15 million individually at from the feds. Wisconsin does not have a state estate tax.

Just what I am learning as we navigate this process.

Thanks a bunch, this is going to help the process a lot

 

[2ski]

I would add are we talking about business? Then if so that becomes a different conversation. And what kind of entity is that business, if so?

 

[timberland]

Nope, no business. I just want to compare the 3 options and for those who chose one, why did you go that route over the others?

 

[Jdeck09]

I went with a trust. I've got young ones so I need to protect them from themselves if something bad happens to my wife or I. I cant speak to the tax benefits piece.

 

[7mm-08]

I'm not a lawyer so evaluate this information in light of how much you paid for it. First, every state treats estates differently. Research and pay attention to that variability when you are evaluating advice you get on the Internet. I know from resolving my parents' estate that attention to detail is critical regardless of whichever vehicle you choose to transfer assets to heirs. Here's a for example - my parents failed to follow through with their attorney's advice in getting assets (with the exception of vehicles and some other items I forget) into the ownership of the trust. At the time of the death of the last remaining party to the trust, the pour over will was critical to address those failures, which caused a probate situation - exactly what my parents did not want to happen. Assets under management of the trust (revokable) were extremely easy and simple to manage and disburse among my brothers and me (the heirs). Assets not in the trust were complicated to deal with in comparison. Good on you for addressing this issue NOW instead of creating the inevitable crap storm that destroys families following death(s). Best of luck with it.

 

[Beendare]

This is the wrong place to seek such advice. There are no uniform answers. Every single case is different. Seek professional counsel.

Agreed. there are already some totally wrong comments here above.

We did a living trust for the many advantages. We can stipulate exactly how our estate gets divvied up and who is the executor controlling it- my daughter.

There are a few things worth considering on a trust;

A trust avoids probate in every state I know of. Probate takes a big chunk of the estate in taxes and legal fees.

These are a separate entity under the law- usually a good thing.

The Executor is the key decision, they have all of the power and can charge the estate big bucks for their time. I wouldn't use an attorney for the executor. I think My Bro in law made a big mistake; His kids don't get along when it comes to money and their current business; he made them Co- Executors. He is creating a bloody fight over his estate instead of harmony.

RE gets inherited at the accelerated basis when you pass- no tax on appreciation to the beneficiary. It's a good idea for the kids to get the RE appraised ASAP if they intend to keep it to lock in that new basis.

When there is big money involved, it can create problems, lawsuits, etc. Best to address potential problems ahead of time in the trust. An example would be any protest or lawsuit against the executor cuts the antagonist off at the knees.



In my case I gave my daughter a separate guide on the charities I want money going to. If it's in the trust, the entity is notified and they will have their lawyers monitoring the trust which will cause additional costs/red tape for the executor.

 

[180ls1]

With all due respect, this is like asking "what is the best exercise" with no context.

Messing this up can cause six figure losses, years of stress and fractures family relationships. Pony up the $1,500 or so and sit with a pro.

 

[timberland]

Is there a strategy that automatically adjusts as assets change? I am fairly young and somewhat healthy, and I expect my real estate assets will come and go before I die. Do I need to constantly update these?
Also, I expect a big real estate change in the next 12 months, so I should wait a little longer to create a trust? I am trying to understand how detailed these are, like this dollar goes here, and that box goes there?

 

[Beendare]

Is there a strategy that automatically adjusts as assets change? I am fairly young and somewhat healthy, and I expect my real estate assets will come and go before I die. Do I need to constantly update these?
Also, I expect a big real estate change in the next 12 months, so I should wait a little longer to create a trust? I am trying to understand how detailed these are, like this dollar goes here, and that box goes there?

You should do a consult with an Atty.

Typically everything in the trust has to be stipulated. If it's not in there, it's not covered.

You can easily amend a trust. It will cost you a few bucks every time you do. All RE needs to be retitled in the trusts name and recorded with City/county or whatever agency in your area does that to be legit.

Values change, so we didn't stipulate $$ values but instead did percentages of certain assets.

 

[180ls1]

Is there a strategy that automatically adjusts as assets change?

Yes

I am fairly young and somewhat healthy,

People drop dead in your situation all the time.

and I expect my real estate assets will come and go before I die.

That can be accounted for, limited in scope without amending it.

Do I need to constantly update these?

Yes

Also, I expect a big real estate change in the next 12 months, so I should wait a little longer to create a trust?

Should you wait to buy life or disability insurance?

I am trying to understand how detailed these are, like this dollar goes here, and that box goes there?

Sit with an attorney. No one here can give you accurate info without being a pro and having full access to all your information.

 

[Marbles]

Irrevocable trusts do a better job protecting assets. You really need to talk to an attorney that knows your state laws and can give advice specific to your situation and desires.