Do revocable (living) trusts avoid estate taxes after death?
A. No. It is a common misconception that these trusts save estate taxes. Instead, these trusts are a method to avoid some judicial involvement in controlling a person’s property during incapacity and after death. In some circumstances, provisions may be added to preserve what is known as the estate tax exemption amount in the same manner as may be done under a will. Q. How do I know if I should have a will or revocable (living) trust? A. Consultation with an experienced estate planning attorney is the best approach, since certain assets may be inappropriate for tax and non-tax reasons. For example, a revocable trust should never own an IRA, while very specific language is required for post death subtrusts to qualify as IRA-designated beneficiaries.
