Back to Category » Why Have a Will? What’s a Trust Good for?

    1. So should a person planning to distribute their assets rely strictly on a trust and not have a will?

      Interestingly, the answer is no. Generally, a person will have both a trust and a will. Because the trust is so efficient, the trust becomes the main vehicle for disposition of assets and the will becomes a default document. Most people would dispose of virtually all assets via the trust. However, people sometimes, for various reasons, fail to place all their assets in a trust. For those few assets not included in a trust, those assets will pass by will. Typically, those are smaller asset items, such as a checking account or a car. If the amounts of assets that pass by will are small, the probate process is both simplified and quick.


      1. What about tax planning?

      The thrust of this article is not about tax planning and, in any case, that subject is beyond the scope of this article. However, the subject merits a brief mention. When people plan their estates, a very critical component of the planning can involve the effort to minimize the amount of taxes paid to both the federal and state governments at the time of death. The federal tax laws permit the passing of a certain amount of property at death without taxation. Under the current federal tax regime the amount is $5,250,000 (indexed to inflation), representing a combined life-time limit of both gift and estate tax exemptions. Different and very complex rules apply to those who are not citizens or hold permanent residence status. Amounts in excess of the $5,250,000 per person exemption are taxed at the federal tax rate of 40%. Because the financial circumstances, nature of the beneficiaries and estate plan of each family is different, care must be taken to tailor any estate planning documents to that family.


      Cautionary Reminder. This article contains some general information as to the American legal system. It is not meant as legal advice. It is always important to consult lawyers and other professionals before making important business and legal decisions.
      Copyright. Law Offices of John A. Kithas. Tel: (415)788-8100


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