My husband is in a nursing home. His son from his previous marriage took him out of the hospital which was near-by. The son got a judge to approve of a transfer to another state, (from Montana to California). Since it is normal for the wife to have control of her husband's care, he must have made some pretty serious accusations against me. The threat now is that he will make a move to force me to sell our home, we are joint tenants with right of survivorship, and he will claim 1/2 the money for "his father's care". A friend suggested that I put the house into Homestead Status to prevent anyone from taking it away from me. I went on line and printed the one page form provided. I can not understand the form and do not know what I would be agreeing to. It would also require my husband's signature which is not possible as my step-son has successfully kept his fathers whereabouts a secret from me, and he is 1,000 miles away. I do have Power of Attorney, but it would seem unethical for me to use it for something that would favor me. The homestead form started out naming my husband and I and ended up in my name alone. It would seem to cut my husband out of his share. This would make sense as if my husband's name is not on the deed than the son would have no claim what so ever. Also, My husband's son has gotten Guardianship and Conservatorship for his father. There were 2 bank accounts in my husbands and his son's name. These 2 accounts were reduced to zero.. Also 1 bank account with myself and my husband was also taken, zero balance! He is ruthless! My husband has two rental properties, in the name of his business L.L.C. Are they safe from Junior? I am in my seventies and was expecting to curl up on the sofa with a cup of tea and a good book, but my life is now a nightmare. Can you offer me any advice? Thank you and best regards, I enjoy your show. P.M.
If your home is in the revocable trust, how does this impact the tax incurred by recipients? How does this compare with you selling the home and paying no capital gains and putting the cash into the trust or selling the asset in the trust before you pass?
The RLT is transparent, so, as he said in the video, for income tax purposes, the settlor is treated as directly owning the assets. This means the scenarios you describe yield the same income tax outcome
Not explained very clearly. When an individual passes away and their RLT goes into effect, does the (now irrevocable) trust become a non-Grantor trust and pay tax on income at the highest levels?
That's if the trust doesn't distribute income. The trust pays tax on anything that isn't passed out and the rates that trusts pay are high relative to income. The top rate kicks in at roughly $13,000!
Very hard to understand. I have a revocable living trust and the only assets in it are my house (which is not yet paid off) and some of my bank accounts which are savings accouns earning about 1.5% interest. Do I have any tax liability. I have never received a 1099 for the trust.
If only more attorneys spoke in this plan and east to understand language so many more people would benefit from it. Can you take this one step forward and explain what happens to the income left in the trust after the grantor dies. Thank you Paul.
@@Corkfish1 I think the question was referring to taxes owed by the trust beneficiaries when the trust owner dies. For example - state inheritance tax, federal and state income taxes, etc. I have asked Paul this question twice before, but no answer.
@@MaMa-qh4dy That depends on the state you live in as well as the size of the estate. Typically what happens is that the grantor trust becomes an irrevocable trust upon death. The assets in the Grantor trust are included in the decedents estate. There really is no tax savings by establishing a grantor trust
@@Corkfish1 So upon the death of the trust owner, the trust beneficiaries would pay the same taxes as they normally would if they were listed as the beneficiaries of a Will? In other words, if the trust owner had a Will instead of a trust. Is this is true, then there are no tax benefits to beneficiaries of a trust vs beneficiaries of a will?
@@MaMa-qh4dy That's true. Revocable (grantor) trusts really don't do anything to save taxes. They're designed to bypass probate ( a Will is subject to probate oversight). I think grantor trusts tend to be oversold, most people really don't need one unless you want to dictate how your money is managed and distributed after you die. Some people use them if they have kids who are irresponsible
Parents have contract for deed feeding their trust. It should last longer than they will. Will the trust be filing or would the people who get a check yearly file the interest gain, based on the amount they get?
Just cleared up a major question. But can a non revocable trust lower its turn over point (14500) by making donations to non profits 501c3s and have other deduction applied?
Twenty-Five years ago, my father-in-law handed me his and her wife's RLT to keep. I and my wife weren't interested in their RLT, so I just shoved it in on one of my briefcases (didn't even put it in a safe box). My father-in-law passed away in 2020 and my mother-in-law in 2021. Their RLT has never been managed. Long story short, after my in-laws both passed away, we claimed the RLT (which became ILT after they passed away). We got no problem claiming what's stated in the ILT.
Very useful information. I was unaware of the adverse tax consequences of an irrevocable trust versus a revocable trust. Thanks. On another subject, have you ever heard of a Massachusetts nominee trust? I argued the leading case on point in front of the Massachusetts Supreme Judicial Court when I was just out of law school . . . my dad against my uncle. It was/is NUTZ. Let me know if you'd like the cite.
My mother mistakenly named a Trust the beneficiary of a small ($25k) life insurance policy, rather than the trustee. What are the tax ramifications? Is the entire $25k considered income or only interest accrued while it’s sitting in the trust account?
Life insurance proceeds are generally not considered income. The trust received the proceeds and the only thing subject to income taxes is the income generated by the $25k. That money is managed according to the trust agreement.
Great video…short and to the point. Answers the question with out all the interruptions and needless blah, blah, blah. Keep up the good work!
Thank you for explaining. Trusts are a very important part of estate planning and seam so complicated.
Thank you for clearly answering the question of RLT tax rate!
My husband is in a nursing home. His son from his previous marriage took him out of the hospital which was near-by. The son got a judge to approve of a transfer to another state, (from Montana to California). Since it is normal for the wife to have control of her husband's care, he must have made some pretty serious accusations against me. The threat now is that he will make a move to force me to sell our home, we are joint tenants with right of survivorship, and he will claim 1/2 the money for "his father's care". A friend suggested that I put the house into
Homestead Status to prevent anyone from taking it away from me. I went on line and printed the one page form provided. I can not understand the form and do not know what I would be agreeing to. It would also require my husband's signature which is not possible as my step-son has successfully kept his fathers whereabouts a secret from me, and he is 1,000 miles away. I do have Power of Attorney, but it would seem unethical for me to use it for something that would favor me. The homestead form started out naming my husband and I and ended up in
my name alone. It would seem to cut my husband out of his share. This would make sense as if my husband's name is not on the deed than the son would have no claim what so ever. Also, My husband's son has gotten Guardianship and Conservatorship for his father. There were 2 bank accounts in my husbands and his son's name.
These 2 accounts were reduced to zero.. Also 1 bank account with myself and my husband was also taken, zero balance! He is ruthless! My husband has two rental properties, in the name of his business L.L.C. Are they safe from Junior? I am in my seventies and was expecting to curl up on the sofa with a cup of tea and a good book, but my life is now a nightmare. Can you offer me any advice? Thank you and best regards, I enjoy your show. P.M.
You need to hire a lawyer. This isn't a q for youtube.
If your home is in the revocable trust, how does this impact the tax incurred by recipients? How does this compare with you selling the home and paying no capital gains and putting the cash into the trust or selling the asset in the trust before you pass?
The RLT is transparent, so, as he said in the video, for income tax purposes, the settlor is treated as directly owning the assets. This means the scenarios you describe yield the same income tax outcome
Not explained very clearly. When an individual passes away and their RLT goes into effect, does the (now irrevocable) trust become a non-Grantor trust and pay tax on income at the highest levels?
That's if the trust doesn't distribute income. The trust pays tax on anything that isn't passed out and the rates that trusts pay are high relative to income. The top rate kicks in at roughly $13,000!
Very rarely necessary or appropriate to set up a revocable living trust for New Jersey resident
Very hard to understand. I have a revocable living trust and the only assets in it are my house (which is not yet paid off) and some of my bank accounts which are savings accouns earning about 1.5% interest. Do I have any tax liability. I have never received a 1099 for the trust.
No you don't.
He is amazing.. he explains things so good that us regular people can understand. Thank you Paul!
If only more attorneys spoke in this plan and east to understand language so many more people would benefit from it. Can you take this one step forward and explain what happens to the income left in the trust after the grantor dies. Thank you Paul.
You have to read the trust agreement. The agreement dictates the terms of the assets held in the trust.
@@Corkfish1 I think the question was referring to taxes owed by the trust beneficiaries when the trust owner dies. For example - state inheritance tax, federal and state income taxes, etc. I have asked Paul this question twice before, but no answer.
@@MaMa-qh4dy That depends on the state you live in as well as the size of the estate. Typically what happens is that the grantor trust becomes an irrevocable trust upon death. The assets in the Grantor trust are included in the decedents estate. There really is no tax savings by establishing a grantor trust
@@Corkfish1 So upon the death of the trust owner, the trust beneficiaries would pay the same taxes as they normally would if they were listed as the beneficiaries of a Will? In other words, if the trust owner had a Will instead of a trust. Is this is true, then there are no tax benefits to beneficiaries of a trust vs beneficiaries of a will?
@@MaMa-qh4dy That's true. Revocable (grantor) trusts really don't do anything to save taxes. They're designed to bypass probate ( a Will is subject to probate oversight). I think grantor trusts tend to be oversold, most people really don't need one unless you want to dictate how your money is managed and distributed after you die. Some people use them if they have kids who are irresponsible
Hello,
secondary Beneficiary and Successor Beneficiaries has same meaning in the trust?
Parents have contract for deed feeding their trust. It should last longer than they will. Will the trust be filing or would the people who get a check yearly file the interest gain, based on the amount they get?
Excellent presentation / explanation although a bit verbose and convoluted.
What about the age of thr guarantor of the RLT? Does it matter the income. Let's say a 95 yr old is the guarantor and gets SS and interest on CD.
Just cleared up a major question.
But can a non revocable trust lower its turn over point (14500) by making donations to non profits 501c3s and have other deduction applied?
Does the trust agreement allow for charitable contributions? Most do not.
This video was way above my head. I did not understand. I need an intro to trusts video. Gonna check your other videos and see if you have one.
Twenty-Five years ago, my father-in-law handed me his and her wife's RLT to keep. I and my wife weren't interested in their RLT, so I just shoved it in on one of my briefcases (didn't even put it in a safe box). My father-in-law passed away in 2020 and my mother-in-law in 2021. Their RLT has never been managed. Long story short, after my in-laws both passed away, we claimed the RLT (which became ILT after they passed away). We got no problem claiming what's stated in the ILT.
Very useful information. I was unaware of the adverse tax consequences of an irrevocable trust versus a revocable trust. Thanks. On another subject, have you ever heard of a Massachusetts nominee trust? I argued the leading case on point in front of the Massachusetts Supreme Judicial Court when I was just out of law school . . . my dad against my uncle. It was/is NUTZ. Let me know if you'd like the cite.
What happens when the grantor/settler becomes deceased? What will be the tax obligations for the beneficiaries ?
What happens when the grantor dies and the trust continues with the spouse as trustee?
This was a great video, thank you!
I concur.
My mother mistakenly named a Trust the beneficiary of a small ($25k) life insurance policy, rather than the trustee. What are the tax ramifications? Is the entire $25k considered income or only interest accrued while it’s sitting in the trust account?
Life insurance proceeds are generally not considered income. The trust received the proceeds and the only thing subject to income taxes is the income generated by the $25k. That money is managed according to the trust agreement.
@@Corkfish1 From what I could find, that was also my understanding, but wanted to make sure I wasn't missing anything. Thanks!