<p>And where I live ALL trusts set up in this way...are required to have language in them that defines how the trust can be disolved if that ever becomes necessary. And if the trust is irrevocable, the grantor cannot ever take ownership of the asset again...at least that is my understanding.</p>
<p>Perhaps more importantly, what kind of directions are given to the trustee can dictate who pays the taxes on any income the trust generates... and at what rate. If you try to retain control over any aspect of asset maintenance or disbursement, that can make the trust a "grantor trust" (yes, it's possible even when the trust is irrevocable), which makes the trust's income taxable to the grantor. You don't get the income, but you have to report it on your return and pay taxes on it at your rate (not the child's). Really not good if the res is a rental property, or if it becomes advisable to sell the property and re-invest. Stuff like this is why it's best to work with a lawyer who specializes in trusts... they can have unintended consequences....</p>
<p>...I'm signing off this one. Let's do it again sometime!</p>
<p>As the parent of 2 kids in private school, I am listed with my sisters as a trustee of my parent’s irrevocabble trust. My mother is still alive, and my tax preparer told me that I am not considered a beneficiary until my mom dies…from the discussions above I’m guessing that this is incorrect advice and I may need to include this (divided amongst my sisters) in my CSS profile…</p>
<p>I can’t seem to find the trust document, but I do sign the tax forms as the trustee, which I know I am. Is the trustee under the same obligations to report the assets as the benificiary…</p>
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it is a good strategy but only helpful fro pretty big estates … the inheritence tax only kicks in for pretty large estates so unless your estate is facing inheritence taxes it is an unneeded move (and expense) … and it is pretty big; the federal tax hits something less than 5%(?) of families … state taxes might be very different … I know in Mass for us the cost of setting up a trust is basically a wash with the tax advantage of putting our house into a trust (the state inheritence tax rate is not that high and if we get over the threshold it won’t be by much so the tax exposrue is quite small for us)</p>
<p>NJLow14–Different advice applies to different types of trust. This is one case in which you really need to go to the source: the document establishing the trust. If you can’t find it, could you ask your mother or the attorney who prepared it for a copy? Because you are a trustee, you really need to have a copy, regardless of the answer to these questions.</p>
<p>Once you have the document in front of you, you can determine whether either you or your child entering college is a beneficiary of the trust, in which case you would have to report the trust on CSS. </p>
<p>It could also be the case that your mother is the sole beneficiary, and the trust provides that the assets must be distributed to you and your sisters after her death. The answer is in the trust documents.</p>
<p>Just finished reading the thread. Concidentally I was at a social event on Friday evening and someone in the group starting asking a lawyer questions about their trust/wills. Geeze…hire a lawyer people.
Most matters will vary from state to state and matters like this shouldn’t be covered online…interesting reading for sure though.</p>