Reply to Inheritance Question

Forum Index » Money and Finances

Reply to "Inheritance Question "

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]OP, why do you think the widow is not inheriting all of the money? Did you Inlaws tell you otherwise?[/quote]

Because of estate taxes.   If she inherited everything her estate would have huge estate taxes to pay.   In order to avoid this a marital deduction trust is created calculating how much needs to be put in that trust to avoid the estate taxes.  The remainder is put in a family trust which goes directly to his beneficiaries. That trust is available  according to the trust terms.

There’s also a generation skipping trust so the estate isn’t taxed twice. When my husband’s mother dies some assets skip her two children and goes directly to the grandchildren to avoid estate tax.

My dh asked me to explain it, not sure why people who don’t know the answer just respond with rudeness.

[/quote]

Ok, I think part of the problem here is that you don't understand how the estate tax works and then you're assuming the trust is doing things to avoid estate taxes that don't exist or work differently than you think they do.  The first thing to understand is that there is an unlimited deduction from the estate tax for any transfers to a surviving spouse, so there is no need to create a trust to avoid estate tax on transfers to a spouse.  A marital deduction trust or bypass trust used to be a technique to capture the first deceased spouse's estate tax exemption when the spouses wanted that money to go to the surviving spouse instead of other descendants, although it isn't needed anymore because of changes in the estate tax law that allow for portability of the exemption.  Those trusts almost always are for the benefit of the surviving spouse while they were alive (the whole point was to allow the surviving spouse to use the assets while also preserving the estate tax exemption from the first spouse) so your husband or kids wouldn't see any of that until she dies.

Generation skipping trusts could be funded during life, or at time the first spouse dies, or when the second spouse dies.  Depends on the plan.  If there aren't enough assets for the surviving spouse, they may have decided to wait on funding those or only partially funded them.  But even if they are funded now, that doesn't mean the beneficiaries can draw from them now.  Trusts very often have limits on when the beneficiaries can draw from them and for what purposes, particularly when the beneficiaries are minors.  They may say your kids get no access until they are 18, or 30, or 50.  Maybe they say they can only take money out for college or a first home purchase.        [/quote]

The surviving spouse has enough of her own money to survive a lifetime. The dad wanted to leave the children and grandchildren his estate.  But he lived in Massachusetts and the estate tax starts at a ridiculously low
 $2 million dollars.

So he could only leave $2,000,000 to his children and grandchildren without paying taxes.   That amount is held in separate  Trusts for immediate use for basic needs, education health.

The remaining assets went through a trust for his spouse only.   There is no estate tax between spouses but the marital trust has benefits when the surviving spouse dies.

Do you see any specific inaccuracies? [/quote]

How could I say if your description is accurate without seeing the documents?[/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics