Irrevocable trust

[Anonymous]

If you have an irrevocable trust, how did you decide how much to transfer into it? What percentage of your NW did that represent? Thank you.

[Anonymous]

I’m not an expert but the only good reason to have one is to get assets out of your estate so you can avoid paying estate taxes. My spouse and I each have trusts that are very well funded for our children and grandchildren but we have enough outside the trusts to live very comfortably. There is no easy formula for how much to put in.

[Anonymous]

Anonymous wrote:I’m not an expert but the only good reason to have one is to get assets out of your estate so you can avoid paying estate taxes. My spouse and I each have trusts that are very well funded for our children and grandchildren but we have enough outside the trusts to live very comfortably. There is no easy formula for how much to put in.

Or you can set it up that the trusts are created upon your deaths.

We will have it both ways, as there is a federal limit for estates and we are approaching it, and most likely will be well over upon death. We also live in a state with estate taxes, so we need to protect it all from the state as well.

[Anonymous]

For those who have trusts, did you transfer your real estate to the trust? We have a trust newly set up but are having cold feet transferring our real estate to it.

[Anonymous]

Why would you irrevocably grant your primary residence to someone else, while you’re living in it?

[Anonymous]

Anonymous wrote:Why would you irrevocably grant your primary residence to someone else, while you’re living in it?

The previous posts explained why- to avoid estate taxes when it goes to the heirs. It's up to them if that's worth the potential risks.

I don't think most people would do it unless they trusted their heirs to look after then before death.

[Anonymous]

Op,

How much money do you have?
$14m? Then you have enough to talk to an estate attorney.

[Anonymous]

Anonymous wrote:Op,

How much money do you have?
$14m? Then you have enough to talk to an estate attorney.

Actually if it's a couple and they have 2 children, they can each gift up to $13 million to each child before triggering gift/estate taxes. So it would take $52 million to be relevant.

A few states do have estate taxes, though.

[Anonymous]

We just put our house into our revocable trust.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Op,

How much money do you have?
$14m? Then you have enough to talk to an estate attorney.

Actually if it's a couple and they have 2 children, they can each gift up to $13 million to each child before triggering gift/estate taxes. So it would take $52 million to be relevant.

A few states do have estate taxes, though.

Not just that, if your kid decides to live in another country with high inheritance taxes, it might make sense to set up their inheritance in an irrevocable trust. In Japan for example, an inheritance of $6M would result in over $2M in taxes.

[Anonymous]

OP here. Current NW is $5MM, but likely to go up to $10MM in a few years. This does not take into account any other appreciation of assets. We’re in our 40s.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Op,

How much money do you have?
$14m? Then you have enough to talk to an estate attorney.

Actually if it's a couple and they have 2 children, they can each gift up to $13 million to each child before triggering gift/estate taxes. So it would take $52 million to be relevant.

A few states do have estate taxes, though.

No, this is wrong. You’re confusing the annual gift tax exemption, which is per giftee, with the lifetime exemption, which does not double if you have additional children.

[Anonymous]

Anonymous wrote:OP here. Current NW is $5MM, but likely to go up to $10MM in a few years. This does not take into account any other appreciation of assets. We’re in our 40s.

No, you should not be putting any assets in an irrevocable trust unless there’s something else major going on and it’s part of a comprehensive estate plan prepared by a reputable professional that you then ran by another reputable professional. I can’t even think of what a that situation would be, I guess maybe non voting shares in a company that’s about to patent alchemy? What you’ve written does not support the idea.

And you certainly wouldn’t put your house in one.

[Anonymous]

Anonymous wrote:We just put our house into our revocable trust.

The terms are similar but they are worlds apart. A revocable trust is like a will that doesn’t have to go through probate. It can streamline things when you die and keep them private.
An irrevocable trust is giving things away now.

[Anonymous]

Anonymous wrote:Op,

How much money do you have?
$14m? Then you have enough to talk to an estate attorney.

Or as low as $2-3M if you live in a state with a "State estate tax"---typcially those are states without income taxes, so they figure they will get it when you die