Picture a couple who have worked very hard and ended up retiring with dignity. They paid off the house and saved for retirement. They are living the American dream. Then at the end of their golden years each passes peacefully. After they are gone their children go to see an attorney to get the house transferred and the retirement benefits paid out. The attorney then has to inform the children that in order to transfer the assets they will have to go through probate which has large fees associated with it.
Moreover, during the probate none of the assets can be distributed until a year or two passes, which is not uncommon in Contra Cost County Courts. Then, after gathering all of the assets, the attorney has to inform the children that even though their parents were blessed with a good sized estate that their parents paid income tax on in order to build, they will have to pay an estate tax of 40% on part of the estate. This whole situation could have been avoided had the parents put a trust in place.
We work with all sizes of estate to ensure that they avoid probate and avoid as much estate tax as possible. Most people don’t realize one large advantage to being married is that couples can double the amount of assets they can pass estate tax free to their children. However, to capture that estate tax exemption they must have the proper trust in place before either dies. There are different ways of drafting trust to capture both estate tax exemptions for a couple.
Many trusts do capture both exemptions but they also require extra steps that can cost thousands of dollars over the lifetime of the trust. Worse yet, some trust don’t capture both estate tax exemptions at all. Therefore it is critical to meet with our firm to make sure you have the proper trust drawn up that balances the advantages of having a double estate tax exemption while minimizing administration costs after the first death.