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Posted by Ryan on February 5, 2007, 1:31 am
Please log in for more thread options nomail1...@hotmail.com wrote:
>> If it's under the GST exemption amount [...],
>> there's little or no reason to do that unless the
>> kids have a lot more money than the parents.
>>
>> If the estate is larger, there is more reason for using a
>> GST.
> But who knows what the exemption amount, if any, will be at
> the time of death? And who knows what the financial status
> of the beneficiaries of the current living trust (i.e. the
> "skipped generation") will be at the time of __their__
> deaths?
>
> That is one of my problems with a GST: we are making a
> decision now (to write the creation of GSTs into the current
> living trust) based on ass-u-me-tions about conditions, ergo
> tax benefits, long after the time of death.
>
> Another concern is the restrictions on the use of the funds
> in the GST by the beneficiaries of the current living trust
> (i.e. the presumptive trustees of the GSTs). My mother has
> no intention of limiting how her immediate beneficiaries
> (me, for example) use the funds they inherit. The __only__
> intended purpose of GSTs would be the potential tax
> benefits.
>
> Some of the restrictions are de jure (the IRS limitation,
> viz. for health, education, support and maintenance in
> accustomed manner of living). When I asked my mother's
> attorney, he scoffed at the concern ("who is going to
> enforce it?"). But when I asked about specific hypothetical
> uses -- e.g. to buy a Maserati or a palatial second home in
> Maui? -- he said: well, maybe not that. What about using
> the funds to start a business? He said "sure!". Hmm, that
> does not sound like "support or maintenance" to me.
>
> (Who would enforce it? Well, the beneficiaries of the GSTs,
> if no one else. We hear about such lawsuits all the time
> among "the rich and famous".)
>
> Some of the restrictions are de facto. If I choose to
> distribute "my" estate (including the GST funds for this
> accounting) disproportionately, I cannot easily apply that
> proportion to the funds covered by the GST. (Although I
> might get lucky and the GST funds are less than the
> proportion of "my" estate that I would to give to the GST's
> beneficiary anyway.)
>
> Another thought: I believe that the funds in a GST for
> which I am the trustee (i.e. I am the "skipped generation")
> are not considered mine. That is a good thing for the
> purpose of sheltering those funds from liability claims. But
> it might be detrimental if I were to apply for a loan, for
> example. Again, it is not my mother's intention to set
> aside some of her inheritance for the "second" generation
> (i.e. the beneficiaries of any GSTs).
>
> My mother's estate planning lawyer says a GST is a
> "no-brainer". But aren't those valid considerations? Did I
> overlook any other potential concerns about GSTs?
>
> PS: I am not saying that any of those concerns trump the
> benefits of a GST. I am simply saying that they seem to be
> issues to weigh against the benefit. That is, a GST is
> __not__ a "no-brainer" in my mind.
Well it agaoin comes down to the size of the estate and the
size of the funds going to you. If the funds are large
enough where you will be getting plenty of $ then legacy
planning is always a good idea when there is extra cash.
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