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Reality Bites for Some Doctors
Staff Writers
Medical professionals are turning to living trusts in increasing numbers for their estate planning needs. But, two major trust myths need to be explored.
Myth 1: Living trusts save taxes.
Reality: They do not. Income earned by a living trust is taxable to the physician or other grantor, and when he or she dies, the assets are includable in the estate for estate tax purposes. All traditional planning methods (i.e., marital deduction, estate tax exemption, charitable giving) are available to all estates—whether or not the assets are in a living trust.
Myth 2: Living trusts save probate expenses.
Reality: Living trusts do avoid probate, which makes them attractive to medical professionals, but the question is whether the costs of establishing and administering the trust outweigh probate costs. Living trusts are quite useful, however, when the grantor owns real estate in more than one state. The living trust avoids ancillary probate in other states, which can result in significant savings—especially if the investments are relatively modest because ancillary probate can cost more than the real estate is worth. Likewise, living trusts are helpful if a discretionary investment manager is used. Living trusts also result in faster estate proceeds transference.
Assessment
A living trust should be only a part of a physician’s estate plan. Currently, living trusts are commonly used in conjunction with wills www.MedicalBusinessAdvisors.com
Conclusion
What has been your experience with living trusts; pro or con? Comments are appreciated.
Related Information Sources:
Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759
Physician Financial Planning: http://www.jbpub.com/catalog/0763745790
Medical Risk Management: http://www.jbpub.com/catalog/9780763733421
Healthcare Organizations: www.HealthcareFinancials.com
Health Administration Terms: www.HealthDictionarySeries.com
Physician Advisors: www.CertifiedMedicalPlanner.com
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Filed under: Estate Planning, Insurance Matters | Tagged: living trusts |
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Estate Tax Reform in 2009?
Not yet!
http://registeredrep.com/newsletters/wealthmanagement/estate_tax_reform_clients_advisors_1111/
Jean
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