How can a living trust save estate taxes?
If you die in 2005 and the net value of your estate (assets less debts) is more than $1.5 million, federal estate taxes (starting at 45%) must be paid. If you are married, your living trust can include a provision that will let you and your spouse leave up to $3 million estate tax-free to your loved ones, saving $705,000. Doesn’t a trust in a will do the same thing? Not quite. A will can contain wording to create a testamentary trust to save estate taxes, care for minors, etc. But, because it’s part of your will, this trust cannot go into effect until after you die and the will is probated. So it does not avoid probate and provides no protection at incapacity. Is a living trust expensive? Not when compared to all the costs of court interference at incapacity and death. How much you pay will depend on how complicated your plan is. Be sure to get an estimate. How long does it take to get a living trust? It should only take a few weeks to prepare the legal documents after you make the bas
