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How to do Living Trust Planning
When you are considering living trust as the main estate planning document, you should consider living trust planning if the total values of the estate you and your spouse own is greater than 3.5 million dollars. The 3.5 million dollar figure is usually the value the federal government will allow you to be able to pass to your heirs without having to assess the amount of your estate tax. To have the capacity to know whether this will affect you, you should include the estimation of your real and individual property in addition to your financial assets, retirement resources and the benefits from life insurance.
If the value you have exceeds the 3.5 million dollars then it is important to consider if you will have a credit shelter trust also known as bypass trust to be included in your document with the objective of reducing your estate taxes. Many married couples will usually use wills as ways in which they will leave properties to each other, in this plan the first to die will not use the their estate tax exemption and they will therefore lose it, this process is very expensive and it takes a long time.
Having living trust you will have the ability to use the estate tax exemption and you will have the ability to avoid probate, if for example if you and your spouse have 7 million dollars one half in each of your trust, and you die, you can leave your better half 3.5 million dollars in a credit trust which will be without estate taxes. Your wife will now have 3.5 million dollars in her trust and the other 3.5 million dollars in your credit shelter trust.
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The spouse that is surviving is usually the primary beneficiary to the credit shelter trust and it will also be named as trustee. The remaining life of the surviving partner, the income and moreover the principal of the trust can be used by them for the care of their health, education and likewise maintenance. At the point when the surviving spouse dies then the property would now be able to go to the children and it won’t be incorporated into the home of the surviving life partner, the whole 7 million dollars will go to the family without the estate taxes and this is great living trust planning.
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In case this method is not used 1.5 million dollars will be the estate tax will be charged upon the death of the second spouse. The bypass trust can also offer protection from claims made by creditors and it will ensure that the property will remain in the family and if the surviving spouse remarries then they will not be able to give the trust property to the new spouse.