March 12, 2021
Trust income is taxed at the highest tax bracket applicable to individuals as soon as there is over $12,950 of income.
In some cases, the high tax bracket can be offset by drafting a trust to provide that the tax consequences pass through to the beneficiary and are taxed at his or her rates. I will often do this when creating a Lifetime Asset Protection Trust for a beneficiary.
This type of trust can provide the benefits of credit protection from lawsuits, divorce, or even bankruptcy, and avoid the negative tax consequence of the highest tax rates on very little income.
Of course, if you have a trust, and you want us to review it for the income tax consequences to your loved ones after your death, please contact me.
Now, let’s talk about estate taxes. Currently, if you die with assets over $11.58M, then your estate will be subject to estate tax on all amounts over that $11.58M at a rate of up to 40%.
Yep, up to 40% could go to the government.
You can mitigate these taxes, or even eliminate them by using various planning methods, most of which are fairly complex, but worth it if you can save your family that 40% estate tax.
If you are trying to figure out whether an irrevocable trust, a revocable trust, or even a Lifetime Asset Protection Trust is best for you and your beneficiaries, I, as your Personal Family Lawyer®, can help you weigh that decision and make the right choice for yourself and the people you love.
This article is a service of Attorney Stefanie Trinkl, Personal Family Lawyer®. I don’t just draft documents; I ensure you make informed and empowered decisions about life and death, for yourself and the people you love.
That's why I offer a Family Wealth Planning Session,™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by scheduling a Family Wealth Planning Session and mentioning this article to find out how to get this $750 session at no charge.
The information on this page is for educational and informational purposes only and does not create an attorney-client relationship. This information should not be construed to be legal advice.
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