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Home » Estate Planning » Two Trusts That Provide Advanced Solutions

Two Trusts That Provide Advanced Solutions

August 6, 2019Estate Planning

trusts People often reduce estate planning to the creation of a last will, but in reality, there are many different legal tools in the toolkit that estate planning lawyers can utilize. The proper course of action will depend upon the circumstances.

This is why we place an emphasis on personalized attention when we work with clients. We gain an understanding of your unique situation and your estate planning goals, and we provide the appropriate solutions. Let’s look at a couple of the scenarios that can call for the implementation of somewhat advanced estate planning techniques.

Estate Tax Strategy for Non-Citizen Spouses

People that have enjoyed significant financial success may be faced with estate tax exposure. At the time of this writing in 2019, the estate tax exclusion is $11.4 million. This is the amount that can be transferred before the estate tax would kick in. It carries a 40 percent maximum rate, so it can take a very significant bite out of your legacy if the value of your estate is in taxable territory.

The estate tax is potentially applicable on asset transfers to any and all family members with one exception. If you are married, and your spouse is a citizen of the United States, you can take advantage of the unlimited marital estate tax deduction.

This allows you to leave unlimited assets to your spouse free of the estate tax. Now that the federal government recognizes same-sex marriages, as long as you are legally married, you can take advantage of this marital deduction, regardless of orientation.

Getting back to citizenship, the estate tax, and asset transfers to your spouse, there is a solution in the form of a qualified domestic trust (QDOT). To implement this strategy, you convey assets into the trust. Your spouse would be the first beneficiary, and you would also name secondary beneficiaries (such as your children).

The trustee that you name in the trust agreement would be empowered to distribute the earnings from the trust to your spouse throughout the rest of his or her life. These distributions would be subject to regular income taxes, but the estate tax would not be applicable.

If the trustee was to distribute any part of the principal to the beneficiary for some reason, the estate tax would be a factor. However, it is possible to request a hardship exemption from the Internal Revenue Service.

After the death of the first beneficiary, the secondary beneficiaries would assume ownership of the remainder in the trust. The estate tax could be applied then if the value of the estate was in excess of the estate tax exclusion that was in place at that time.

Qualified Terminable Interest Property Trusts

Another type of trust that can be the ideal solution when certain circumstances exist is the qualified terminable interest property trust (QTIP). Though this type of trust does not necessarily have anything to do with estate tax efficiency or non-citizen status, there are some similarities between a QTIP and a QDOT.

Qualified terminable interest property trusts are often utilized by individuals that are getting remarried that want to protect inheritances that they will be leaving to children from previous marriages. In the same manner as the qualified domestic trust, assets are conveyed into the device, and the spouse of the trust creator or grantor is named the first beneficiary. The children of the grantor would be the successor beneficiaries.

The trustee can distribute the trust’s earnings to the surviving spouse after the death of the grantor of the trust. In addition to this, the survivor can also utilize property that has been placed into the trust, like homes and motor vehicles. However, the beneficiary designations can never be changed. After the death of the first beneficiary, the successor beneficiaries would assume ownership of the trust.

Attend One of Our Free Seminars!

We place an emphasis on education. You can learn a lot if you visit this blog often, and there are other resources on our website. In addition to the written materials, we go the extra mile in another very significant way.

Our estate planning lawyers regularly schedule informative seminars that are open to the public, and there is no admission charge. There are multiple sessions scheduled over the coming weeks, so you will definitely be able to find a seminar that fits into your schedule. If you are ready to reserve your seat, click the following link and follow the simple instructions: Los Angeles, CA Estate Planning Seminars.

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Scott Schomer, Estate Planning Attorney
Scott Schomer, Estate Planning Attorney
A graduate of Boston University School of Law, Scott P. Schomer is a frequent lecturer on estate planning and elder law issues, having discussed these important issues on local and national television. A seasoned courtroom advocate, Scott has obtained combined judgments and verdicts in excess of twenty-five million dollars for his clients. Scott has served as a member of the Los Angeles Superior Court Probate Volunteer Panel (PVP Attorney), Probate Settlement Panel and a Judge Pro Tempore. Scott's expertise has been recognized by his peers with such accolades as a life-time membership in the Multi-Million Dollar Advocates Forum, the Five Star Wealth Manager designation, and repeated nominations as California Super Lawyer.
Scott Schomer, Estate Planning Attorney
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We need to update our Living Trust and attended Schomer Law Group’s seminar. Afterwards we made an appointment and were impressed by the attention Scott Schomer and Liran Aliav gave to our case answering all questions and making suggestions how to minimize the estate tax. All the office staff is very friendly and we highly recommend Schomer Law Group.

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When you’re presented with an invitation to attend in a mailer, you may have reservations, this was a truly gift!! My wife and I were educated and guided through the process of creating a family trust.
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We knew we had to update our 10 year old ( 20 page ) trust. After several detailed meetings, Liran and Cesar produced a large ( 300 pages + ) highly detailed trust document that we have used to make sure our family estate is well managed and clearly understood.
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We had contemplated updating our will and starting a trust for a number of years. After attending a talk by Scott Schomer we realized we were long overdue and the potential downside of not having our affairs in order was significant. Scott and his excellent team made the process simple and seamless. They were great listeners, addressed all our concerns and even pulled and processed all the paperwork from our financial institutions. If you are looking for assistance with estate planning, wills and trusts, we highly recommend Schomer Law Group.

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