So my SO tells me she has this weekend workshop for us to go to that explains how to have a living trust made to protect all of our assets. I started looking into and it looks pretty comprehensive. To all the lawyers and financial planners that may be out there in hobby world, or anyone that has been through this process. . .
1) When you hire a lawyer/estate planner do they do a thorough search of credit history and current financial accounts?
2) How difficult will it be to continue to have a secret credit card and cash account for hobbying?
3) What are others things are there to watch out for or be concerned about with regards to hobbying once one of these go into place?
4) Can I hide a Paypal account with eBay sales and other drip incomes from that and just assume they will be covered in the pour over will?
5) Are there any providers out there that will take collectible coins instead of cash. . .just joking!
- ANONONE
- 01-21-2010, 08:29 PM
- GneissGuy
- 01-21-2010, 09:34 PM
Be REALLY careful.
There are a lot of hucksters and con artists "selling" living trusts.
There are also a lot of misinformed true believers who will make you think it's a lot easier than it really is.
Be very VERY careful about doing anything based on what the workshop tells you.
I DO believe that a living trust can be a good idea, especially if you have a lot of assets to protect and special wishes. Unfortunately, it's not the simple "spend a few days and solve all your inheritance problems" process some people claim it is.
There are a lot of hucksters and con artists "selling" living trusts.
There are also a lot of misinformed true believers who will make you think it's a lot easier than it really is.
Be very VERY careful about doing anything based on what the workshop tells you.
I DO believe that a living trust can be a good idea, especially if you have a lot of assets to protect and special wishes. Unfortunately, it's not the simple "spend a few days and solve all your inheritance problems" process some people claim it is.
- TexTushHog
- 01-21-2010, 09:35 PM
What are you protecting your assets from? Protecting your assets is a great sales phrase, but it means different things in different contexts.
I'm no trust lawyer, but setting up trusts is no small matter. There are tax implications, liquidity implications, and all sorts of other issues to be considered. Depending on your wealth at the time of your death, and the tax law at the time of your death, there may be inheritance tax implications. Rather than go to some seminar for someone with a vested interest, I'd consult with a good trusts lawyer and a tax lawyer (in that order).
If you are seeking to "protect your assets" from potential tort creditors, the best and cheapest protection is to have adequate insurance. I also believe that a tort creditor (or a non-tort creditor) can bust a trust where you are the beneficiary and the settlor. This is especially true with a revocable trust. If you are seeking to "protect your assets" against non-tort financial creditors, you need to consult a bankruptcy lawyer, not some seminar company. If you are seeking to "protect your assets" from inheritance taxation, you should see a lawyer who specialized in Wills and Estates and Estate Planning.
Here is a very brief summary of the issue concerning living trusts from the Texas Bar Association:
http://www.texasbar.com/Template.cfm...entDisplay.cfm
Here's another info sheet: http://www.tlsc.org/lhot%20pubs/Living%20Trusts.pdf
I'm no trust lawyer, but setting up trusts is no small matter. There are tax implications, liquidity implications, and all sorts of other issues to be considered. Depending on your wealth at the time of your death, and the tax law at the time of your death, there may be inheritance tax implications. Rather than go to some seminar for someone with a vested interest, I'd consult with a good trusts lawyer and a tax lawyer (in that order).
If you are seeking to "protect your assets" from potential tort creditors, the best and cheapest protection is to have adequate insurance. I also believe that a tort creditor (or a non-tort creditor) can bust a trust where you are the beneficiary and the settlor. This is especially true with a revocable trust. If you are seeking to "protect your assets" against non-tort financial creditors, you need to consult a bankruptcy lawyer, not some seminar company. If you are seeking to "protect your assets" from inheritance taxation, you should see a lawyer who specialized in Wills and Estates and Estate Planning.
Here is a very brief summary of the issue concerning living trusts from the Texas Bar Association:
http://www.texasbar.com/Template.cfm...entDisplay.cfm
Here's another info sheet: http://www.tlsc.org/lhot%20pubs/Living%20Trusts.pdf
- GneissGuy
- 01-21-2010, 09:49 PM
IANAL
You can put some of your assets in a living trust, but leave your "working" money in "normal" bank accounts. You could put "long term" assets into the trust. You could even put nothing in the trust. For instance, if you want certain assets to go to certain people, you can put them in the trust.
This way, the trust doesn't interfere with your day-to-day finances.
One big mistake people make is not to to transfer ownership of their big assets to the trust.
Of course, the assets not in the trust don't get the "protection" of the trust.
You probably don't get any tax benefits from the trust, including inheritance taxes. Your tax prep gets more complicated. Other financial transactions may be somewhat more complicated as well.
Be SURE! it's a revocable trust. i.e. You can undo it at any time. Be sure you can pull some of the funds out of the trust at any time and make them personal assets.
You can put some of your assets in a living trust, but leave your "working" money in "normal" bank accounts. You could put "long term" assets into the trust. You could even put nothing in the trust. For instance, if you want certain assets to go to certain people, you can put them in the trust.
This way, the trust doesn't interfere with your day-to-day finances.
One big mistake people make is not to to transfer ownership of their big assets to the trust.
Of course, the assets not in the trust don't get the "protection" of the trust.
You probably don't get any tax benefits from the trust, including inheritance taxes. Your tax prep gets more complicated. Other financial transactions may be somewhat more complicated as well.
Be SURE! it's a revocable trust. i.e. You can undo it at any time. Be sure you can pull some of the funds out of the trust at any time and make them personal assets.
- ANONONE
- 01-22-2010, 09:19 AM
Going to the seminar is to keep the SO happy. I am not so much interested in the merits of a living trust, but they may be worth discussion for some folks.
I was curious about the hoby implications.
My concern is at any level of exploration will some of my secret maneuvers for hobbying be exposed?
I was curious about the hoby implications.
My concern is at any level of exploration will some of my secret maneuvers for hobbying be exposed?
- Chevalier
- 01-22-2010, 10:52 AM
It's not my area of speciality, but based on my experience as the client rather than lawyer/financial planner:
1) The primary purpose of a living trust, as opposed to something set up in your will to take effect at your death, is not to protect assets from creditors or to avoid taxes per se. The purpose, as I understand it, is to have the assets in the trust bypass probate. Thus, at your death, the people whom you want to get the assets can get them immediately without waiting for the probate court. And I believe those assets would not need to be identified in any of the documents for the probate case, in case you don't want people to be able to see the details of what you owned -- might be of interest for the super-rich.
2) In return, you have to incur some minor administrative hassles up front, setting up the trust and transferring assets to it. And when I endorse some checks for deposit, I have to add ", trustee" at the end of my name. Not a huge deal.
3) No complications regarding income taxes; you get 1099's in the name of the trust, but you just report those on your 1040 as though the 1099 was in your name instead. The trust will probably have a separate TIN, but don't rely on that to exclude income from your tax return; they will track you down and find you eventually.
4) There are legitimate estate planning practices to reduce or minimize estate taxes, but they don't depend on a living trust and would be ancillary to it. The trust will still be included in your estate for purposes of estate tax, and your creditors almost certainly will be able to reach it. If you're being told differently . . .
We set ours up a long time ago. If I were looking at it currently, I'm not sure I would go to the trouble just to avoid probate. But perhaps.
As far as your specific questions, again based on my experience:
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Good luck.
1) The primary purpose of a living trust, as opposed to something set up in your will to take effect at your death, is not to protect assets from creditors or to avoid taxes per se. The purpose, as I understand it, is to have the assets in the trust bypass probate. Thus, at your death, the people whom you want to get the assets can get them immediately without waiting for the probate court. And I believe those assets would not need to be identified in any of the documents for the probate case, in case you don't want people to be able to see the details of what you owned -- might be of interest for the super-rich.
2) In return, you have to incur some minor administrative hassles up front, setting up the trust and transferring assets to it. And when I endorse some checks for deposit, I have to add ", trustee" at the end of my name. Not a huge deal.
3) No complications regarding income taxes; you get 1099's in the name of the trust, but you just report those on your 1040 as though the 1099 was in your name instead. The trust will probably have a separate TIN, but don't rely on that to exclude income from your tax return; they will track you down and find you eventually.
4) There are legitimate estate planning practices to reduce or minimize estate taxes, but they don't depend on a living trust and would be ancillary to it. The trust will still be included in your estate for purposes of estate tax, and your creditors almost certainly will be able to reach it. If you're being told differently . . .
We set ours up a long time ago. If I were looking at it currently, I'm not sure I would go to the trouble just to avoid probate. But perhaps.
As far as your specific questions, again based on my experience:
1) When you hire a lawyer/estate planner do they do a thorough search of credit history and current financial accounts? Originally Posted by ANONONENo. They should ask you what all your assets are, in order to properly plan, but they'll take your word for it rather than doing an independent investigation.
2) How difficult will it be to continue to have a secret credit card and cash account for hobbying? Originally Posted by ANONONENot at all. I have both. Well, the cash is in a drawer rather than a separate bank account, but even the latter would probably not be a problem just because of getting a living trust.
3) What are others things are there to watch out for or be concerned about with regards to hobbying once one of these go into place? Originally Posted by ANONONENothing that occurs to me.
4) Can I hide a Paypal account with eBay sales and other drip incomes from that and just assume they will be covered in the pour over will? Originally Posted by ANONONEProbably. You're not required to transfer all your assets into the trust. Anything else should be covered by the pour over will.
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Good luck.
- ANONONE
- 01-22-2010, 11:36 AM
It's not my area of speciality, but based on my experience as the client rather than lawyer/financial planner:Thank you. . .that is exactly what i was looking for. I will go to the seminar to keep the SO happy, but will not freak out that suddenly there will be financial scrutiny of my hobby activity.
1) The primary purpose of a living trust, as opposed to something set up in your will to take effect at your death, is not to protect assets from creditors or to avoid taxes per se. The purpose, as I understand it, is to have the assets in the trust bypass probate. Thus, at your death, the people whom you want to get the assets can get them immediately without waiting for the probate court. And I believe those assets would not need to be identified in any of the documents for the probate case, in case you don't want people to be able to see the details of what you owned -- might be of interest for the super-rich.
2) In return, you have to incur some minor administrative hassles up front, setting up the trust and transferring assets to it. And when I endorse some checks for deposit, I have to add ", trustee" at the end of my name. Not a huge deal.
3) No complications regarding income taxes; you get 1099's in the name of the trust, but you just report those on your 1040 as though the 1099 was in your name instead. The trust will probably have a separate TIN, but don't rely on that to exclude income from your tax return; they will track you down and find you eventually.
4) There are legitimate estate planning practices to reduce or minimize estate taxes, but they don't depend on a living trust and would be ancillary to it. The trust will still be included in your estate for purposes of estate tax, and your creditors almost certainly will be able to reach it. If you're being told differently . . .
We set ours up a long time ago. If I were looking at it currently, I'm not sure I would go to the trouble just to avoid probate. But perhaps.
As far as your specific questions, again based on my experience:
No. They should ask you what all your assets are, in order to properly plan, but they'll take your word for it rather than doing an independent investigation.
Not at all. I have both. Well, the cash is in a drawer rather than a separate bank account, but even the latter would probably not be a problem just because of getting a living trust.
Nothing that occurs to me.
Probably. You're not required to transfer all your assets into the trust. Anything else should be covered by the pour over will.
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Good luck. Originally Posted by Chevalier