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Posted by dpb on December 14, 2007, 2:41 am
Please log in for more thread options joetaxpayer wrote:
>
>
> dpb60 wrote:
>
>> husband and wife 2 kids
>> set up a trust and will 25 yrs ago
>> husband dies 5 yrs later
>> has the kids as 50/50
>> no distribution to the kids
>> wife lives 20 more years
>> sets up her half for the kids 70/30
>> the estate was worth 1 million at his death
>> and 20 yrs later is worth 8 million at her death
>>
>> how is the husbands half valued for distribution
>> is it at the time of his death which would make it 1 million
>> or at the time of her death 20 yrs later?
>> which would make it 4 million
>>
>> also to the taxes come off the top
>> or does to 70% pay more taxes?
>
> This is a bit tough to follow. This is how it should have worked: When
> the husband died, he can leave the exemption amount, say $1M in the
> trust, tax free, and an unlimited further sum to his wife. The whole
> point is to protect the exemption of the million he can leave to other
> heirs, otherwise, if it all went to the wife, on her death, his half may
> become fully taxed.
> Now, the sum ($1M) left to the trust should have been taxed all along,
> i.e. each year it should have had some distribution to the heirs, but
> either way, either the trust or the heirs should have paid income (not
> estate) tax on the earnings.
>
> Are you saying her half is now worth $4M? 2006-8 had a $2M exempt
> figure. So if I read this right, $2M will be subject to estate tax.
> I hope this comes close to answering you.
> (I missed that you crossposted. Some replies may not come through as a
> result)
I don't think there's any way in the world possible to answer this w/o
reading the trusts and the wills. This needs expert advice to whoever
is the executor of the estate.
I'll agree it probably is screwed up from what should have been done
since the time of the death of the first partner (the husband iirc?).
_IF_ (the proverbial big if) all the assets were actually in the trust
as they were likely intended to be, then there should be no estate taxes
per se. OTOH, if the trusts were created but not funded or only part of
the assets were placed in the trusts then there quite likely will be
some estate tax owed as well.
Who the beneficiaries of the trust are and how the assets should be
divided to maintain the provisions is going to take looking at the
details in detail imo.
Get a competent estate lawyer. It may be reasonably straightforward if
things were done properly or it might be a major screwup or anywhere in
between. I'd wager towards the messed-up end meself as it sounds as
though there wasn't a proper accounting made at the time of the first
passing most likely.
--
--
========================================= MODERATOR'S COMMENT:
- please trim next time. "Trim" means
that except for a FEW lines to provide context, the previous posts are
deleted.
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