Trusts

[Alacrity]

When we bought our home the mortgage people were surprised that we did not have a trust.
She said about 70% of the doctors have one.

A place to shield and belongings from creditors or lawsuits. Especialy our home.

Does anyone have any experiance with this?

[samssugarmomma]

We haven't done this yet - but it is the next step in our financial plan. I know others here have done them. I'm just starting to look at what steps are involved.

When we bought our current house we bought from a doc and the sale went into a trust in his wife's name.

[GrayMatterWife]

Trusts can be a way of protecting assets, but you need to use a lawyer to establish one. If you botch it up, it's a real headache. You need to know what type of trust--irrevocable (more protection) or revocable (not much protection from creditors because they can pierce it, force a revocation and access the res). And protections will vary, depending on state law. Also, make sure that you have also utilized less complicated methods of assets protections, which include: (1) shifting assets as allowed under state law to the non-MD spouse; (2) transferring assets to protected vehicles (IRAs, 401Ks, 529s, etc.); (3) buying proper and sufficient insurance, including an umbrella policy...and so forth. Also, know state law--some states allow very generous homestead exemptions, so building equity in your home is a way to protect your assets.

[alotofyarn]

My husband used Quicken Willmaker to set up a trust, which we just had to have notarized, so he could buy a short-barreled rifle. We don't have anything else in the trust though.

[Alacrity]

It's something that we are pushing our luck with waiting so long.
The law protects you if you move into a trust BEFORE any possible claims.

Wifie works in ER so it's not a question of IF she will be named in a lawsuit, it's a question of When.

Illinois has a neat thing that if you name both people in the home ownership in a specific way they have to be suing both spouses to get at the home. One wont do it.

Anyone have experiance with Northern Trust ?

[spotty_dog]

I think of living trusts as being more an estate planning than an asset protection move. I guess an irrevocable trust could keep your house from being taken in a suit, but then...it's irrevocable, you know? I'm totally not an expert though.

[JaneDoe]

We have trusts. Our attorney recommended it for both asset protection and estate planning. It was expensive upfront and requires on-going maintenance (for instance when we refinanced our home we had to update the trust.) Despite its costs I sleep better at night knowing we have taken steps to proect our kids and assets in the event of our deaths.

Our house is in the name of my trust.

[SuzySunshine]

Ours are revocable so they are more for estate planning. We live in a homestead state which means they can't take our house so that is probably why, we have very little in assets otherwise right now. DH's trust is the recipient of his life insurance policy, everything else goes in mine. We met with an attorney, paid $2500 and got everything set up at once: wills, trusts, health care directives, guardians, etc.

[Alacrity]

We have trusts. Our attorney recommended it for both asset protection and estate planning. It was expensive upfront and requires on-going maintenance (for instance when we refinanced our home we had to update the trust.) Despite its costs I sleep better at night knowing we have taken steps to proect our kids and assets in the event of our deaths.

Our house is in the name of my trust.

You seem to be the rule rather than the exception.

We also have no kids or siblings that need any help. So everything would go to charities of our choice if we died.
We are heading to Burma in a month and figure we might want to have things in order before we go off the grid

[houseelf]

We just did this, 2.5 years out of training. In all honesty, creating a trust was driven more by our desire to protect our estate from any additional taxes upon our deaths. I understand the asset protection angle, but there should be things like malpractice, umbrella, tail insurance in place before this would even come into play.

Jane Doe, is correct, it is a bit of a PITA, but I'm coming to find out that managing our financial lives is more complicated than I ever anticipated.

[Vishenka69]

I'm currently researching various trusts and trying to figure out what our and my parents' needs are. All the lawyers that were recommended to us charge $200-250/hr for initial consultation, so I'm trying to read up as much as possible on my own. Any good resources online?

For those who have done the trusts, was avoiding the inheritance tax the main reason?

[spotty_dog]

I think it will be another 8-10 years or so before our net/taxable assets reach the $2 million exemption limit for our state, let alone the $5+ million federal estate tax exemption. And that will only come into play if both of us die -- spouses inheriting don't pay any taxes. So I confess inheritance concerns aren't so much on my radar yet. Let us know what you find out!

[JaneDoe]

We have a trust for two reasons: planning/providing for our minor children in the (unlikely) event that Dh and I die before they are adults and to avoid inheritance taxes. Our estate would be enough to subject it to the estate tax.

I think it will be another 8-10 years or so before our net/taxable assets reach the $2 million exemption limit for our state, let alone the $5+ million federal estate tax exemption. And that will only come into play if both of us die -- spouses inheriting don't pay any taxes. So I confess inheritance concerns aren't so much on my radar yet. Let us know what you find out!

Do you not have life insurance? It's Dh's life insurance benefits that would push us well beyond the 1 million (in Oregon) estate tax exemption. Life insurance is not subject to income taxes, but it is most definitely subject to estate taxes.

[SuzySunshine]

We have a trust for two reasons: planning/providing for our minor children in the (unlikely) event that Dh and I die before they are adults and to avoid inheritance taxes. Our estate would be enough to subject it to the estate tax.

Do you not have life insurance? It's Dh's life insurance benefits that would push us well beyond the 1 million (in Oregon) estate tax exemption. Life insurance is not subject to income taxes, but it is most definitely subject to estate taxes.

This is our reasoning exactly - if something happened to DH his life insurance would be enough to worry about estate taxes. I'm not sure about mine. We have irrevocable trusts for everything over $50K (house, etc are titled to the trust) - we are getting an Irrevocable Life Insurance Trust for DH's policies.

Sorry I'm no help - our attorney set everything up for us for a flat $2500.

[spotty_dog]

Excellent points, thanks! The insurance benefit still doesn't kick us too far over the line for Washington state tax (doesn't at all if only DH croaks) and doesn't come close to the federal exemption, but it's something to think about. Fortunately one of DH's good friends is a general-purpose attorney whose practice focus includes "estate planning, wills & trusts". And he's always up for chatting about basics without billing us. I'll ask DH to bring it up.