Estate Planning Lawyer
If you are considering how best to plan your estate, contact a law office to schedule an appointment with a living trust lawyer. Putting legally recognized documentation into effect before one’s passing is a responsibility that many people avoid, to the detriment of their heirs and their final wishes. An attorney can make this process as easy as possible for you. It will also offer you peace of mind knowing that you have taken care of your loved ones in advance of your passing. Losing you will cause enough grief, but not knowing your final wishes will likely compound their confusion and bereavement.
A living trust can benefit nearly anyone, not just for the affluent within your community. Having a will in place can be important, particularly if there are minor children involved, but a living trust is also an essential tool. For individuals as well as a married couple, a living trust specifies how the deceased’s assets should be distributed to heirs. In addition, a living trust created with the help of a living trust lawyer offers these benefits:
- A living trust can hasten the process for heirs to receive their inherited assets, regardless of their individual and total monetary value. This is because unlike a will, assets that are passed on through a living trust do not need to go through a probate court first.
- A living trust makes it possible for the trustor (the person who created the trust) to establish a college education trust for their minor children.
- A living trust can be set up so that heirs cannot inherit property until they are of legal age. In fact, by law, minors cannot inherit property and so the living trust’s trustee can manage that property until the minors reach adulthood, thus safeguarding it for the children’s future.
- A living trust enables the trustor to include children from previous marriages as heirs.
- A living trust can allow individuals to inherit assets without having to pay gift taxes.
- A living trust makes it possible for another person of your choosing to take control of your trust and its assets should you become incapacitated.
What are the income tax consequences of a living trust?
There are two forms of trusts, and each is dealt with differently when it comes to income tax consequences. Tax obligations are an important consideration and your living trust lawyer can provide you with more detailed information. Here is a general overview:
- Irrevocable trust: If the trustor or the trustor’s spouse is the primary trustee or secondary trustee of the living trust, the trustor will be treated as the owner of the trust’s assets. For this reason, if you are the trustor of your living trust, you must report any income derived from the living trust on your individual income tax return. This is the same as before you transferred your assets into the living trust. However, if another party other than yourself or your spouse is the trustee, you are not responsible for paying taxes on income generated by the trust’s assets. Instead, the trustee will assume the tax burden or reporting as required by the Internal Revenue Service (IRS).
- Revocable trust: The trustor of a living trust will continue to be viewed by the IRS as the assets’ owner regardless of who is the trustee.
For more information about tax obligations associated with living trusts, contact an estate planning attorney Ridgefield, CT trusts to schedule a consultation.
Thank you to our friends and contributors at Sweeney Legal, LLC for their insight into estate planning and the tax obligations of a living trust.