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Estate Planning Smarts: A Practical, User-Friendly, Action-Oriented Guide

Estate Planning Smarts: A Practical, User-Friendly, Action-Oriented Guide - Deborah L. Jacobs, Joshua Mills While there were some things that could apply to all estates, the audience was definitely those with large estates (odd -- you wouldn't think they would be reading a book on it, but just having their lawyers, accountants handle it). What does it cost to set up and use a trust?Setup costs -- $2500 to $15,000, depending on the type of trust, where you are situated and the size of the law firm you are working with. Trustee's fees. Fees for corporate trustees or advisers vary widely and will depend on the services they perform. If trustees are managing an investment portfolio, their charges will be higher (typically a % of assets under management) than if they are simply making distribution decisions. Income taxes. If a trust is distributing all income, the beneficiaries will be taxed. Tax preparation. The trust needs to file an annual income tax return whether or not it owes income tax, and submit tax information to beneficiaries. Expect an accountant to charge at least $1000 for this service. Questions to ask:What's the profile of the person who typically sets up this type of trust? Does it make sense for me?From a tax perspective, what are the best assets to put in a trust?Is it possible to contribute these assets without paying gift tax?Will the trust save more than it will cost to create and operate?Will the trust tie my hands or restrain the beneficiaries in undesirable ways?Is there a way to undo or alter any aspects of the trust should I change my mind?Do the individuals or institutions I plan to name as trustees or the people I plan to name as beneficiaries live in high-tax states? If so, how will that affect the trust's effectiveness?Make a family member your dependent. To do that, you must pay at least 50% of the person's support. You cannot claim someone as a dependent if his or her annual income is more than $3400. Social security payments do not count, but required withdrawals from retirement plans, like IRAs and 401ks do. Those who claim a relative as a dependent can reap a huge tax benefit by adding the dependent's unreimbursed medical expenses to their own and deducting however much exceeds 7.5% of their adjusted gross income. 4 guiding principles.1. Give your estate plan a checkup at least every 5 years, sooner if there is a change in the law, your finances or personal circumstances.2. Resist the temptation to save money with a do-it-yourself approach. Books and software can be very useful resources, but they are no substitute for expert advice.3. Make lifetime gifts when asset values are low.4. Choose the simplest and most effective method that accomplishes your goals. Choose the right lawyer. use actec.org for trust and estate lawyers. Pay attention to the chemistry during the consultation. Is the lawyer listening? Does he have his own agenda? Are you comfortable revealing highly confidential information? Flat fees? If they offer a package price, make sure it includes any customization that you need. You should have a clear idea of what services to expect. Ask: what would be the next step? How long will the process take? How quickly do you typically respond to telephone and email messages? Review the engagement letter. It should be easy to understand. Don't hesitate to ask questions if anything isn't clear.