Trying to make some decisions about estate planning. At ages 63, DW and I have 2 married kids with great spouses, a snow bird house in Florida, a net worth in low 7 figures. We are NY residents but may become FL residents as we get closer to RMDs (age 75) and spend more time in Florida in retirement.
I hear frequently in the financial news, ads, press, - we need a trust to ease probate and protect our assets from creditors. I also hear from relatives trusts make financial transactions painful and not tax friendly.
For example
An extended family member just inherited some annuities in a trust from his parents. He said in order to get some money out of one of the annuities the insurance company required him to open up a trust savings / checking account in the trusts name ( annuity would only transfer money to a trust account ). He said the trust has to file an income tax return and it will pay 37% tax on the gains in the withdrawal. Then he said to get the money he will have to pay his normal tax rate again on the gains when he withdraws the money from the trust savings account and puts it in his checking.
I know there are many kinds of trusts and Investments / annuities but do trusts cause double taxation like that?
I’m thinking I’d just buy VTSAX in my taxable brokerage account and leave it to my heirs at a stepped up basis before I jumped thru hoops like that! Of course I am missing some considerations - what am I missing? Thanks for your perspective.
I hear frequently in the financial news, ads, press, - we need a trust to ease probate and protect our assets from creditors. I also hear from relatives trusts make financial transactions painful and not tax friendly.
For example
An extended family member just inherited some annuities in a trust from his parents. He said in order to get some money out of one of the annuities the insurance company required him to open up a trust savings / checking account in the trusts name ( annuity would only transfer money to a trust account ). He said the trust has to file an income tax return and it will pay 37% tax on the gains in the withdrawal. Then he said to get the money he will have to pay his normal tax rate again on the gains when he withdraws the money from the trust savings account and puts it in his checking.
I know there are many kinds of trusts and Investments / annuities but do trusts cause double taxation like that?
I’m thinking I’d just buy VTSAX in my taxable brokerage account and leave it to my heirs at a stepped up basis before I jumped thru hoops like that! Of course I am missing some considerations - what am I missing? Thanks for your perspective.
Statistics: Posted by Parkinglotracer — Mon Dec 16, 2024 8:43 am — Replies 2 — Views 162