How can a living trust save on estate taxes?
If you die in 2000 and the net value of your estate is more than $675,000, federal estate taxes (starting at 37%) must be paid. If married, in 2000 your living trust can include a provision that will let you and your spouse leave up to $1,350,000 estate tax-free. The exemption will gradually increase to $1 million by 2006. Family businesses and farms that qualify an get a $1.3 million exemption. Provisions can be inserted in a living trust to allow you to take advantage of those estate tax savings. 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 is 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 com
