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Protect Your Right to Life and the Environment with a “Land Trust”

Any trust, either a complex trust or a simple trust, gets a tax deduction for money it pays out to the beneficiaries. Thus, it is relatively easy to “zero out” a trust’s income and avoid paying taxes on trust money.

A complex trust may have to file a 1041 tax form, but if there isn’t any income retained in the trust, the tax will be zero, even if a 1041 form is filed.

Note that when a simple trust says all of its “income will be paid out at least annually,” that doesn’t mean the money has to be transferred from the trust’s accounts to the beneficiary’s accounts. It simply means that the beneficiary(ies) have to claim all of the income on their tax return(s). Thus, a simple trust does not retain income, at least as far as the IRS is concerned.  Yes, the money will still be in the trust’s account, but it has been recognized as paid out by having the beneficiary claim it as his or her income.

Think twice before letting your trust get into a position where it is subject to a tax liability. Tax rates for a trust are bad news.

Trust Tax RatesTrust tax rates are outrageous. (See table of Trust Tax Rates below.) There are two types of trusts: a simple trust and a complex trust.  The type of  trust you get will determine whether or not you are subject to trust tax rates.

Simple trusts  include the standard estate planning “living revocable trust,” and many other trusts. One example is a Living Revocable Trust or Family Trust. Simple trusts are often used in estate planning to hold property. Most of them are revocable.

Simple trusts usually do not have a tax ID number. If a tax ID is asked for, the grantor/trustee/beneficiary’s Social Security number is used. A simple trust is required to pay all of its income out every year to the beneficiaries. Technically, a simple trust can’t accumulate income.

On the other hand, a complex trust can accumulate income and make its corpus (trust estate) grow. Because complex trusts can accumulate income, they are required to have their own tax ID number. This will need to be an EIN.  Even though complex trusts can accumulate income, it’s usually not wise to have the trust actually do so, because the trust will be taxed on the income it accumulates. With trust tax rates hitting 37% at only $12,500 it’s not good to pay taxes out of a trust. Additionally, the 3.8% Obama-care surtax kicks in at that same “top” level. Obviously, trust tax rates are outrageous.

Tax table rates will blow your mind:

Trust Tax Rates Table

If taxable income is: The tax is:
Not over $2,600 10% of the taxable income
Over $2,600 but not over $9,300 $260 + 24% of the amount over $2,600
Over $9,300 but not over $12,750 $1,868 plus 35% of the excess over $9,300
Over $12,750 $3,075.50 plus 37% of the excess over $12,750

The rates in the table were set in the Tax Cuts and Jobs Act and updated for 2019 cost of living increases. These rates apply to estates and trusts. The Obama-care net investment income tax of 3.8% started in 2013 and applied to trust income above the $12,150 level.  Trust tax rates have been inflation-adjusted each year, so note that the rates in the table above are for 2018 and check for the year you are interested in. The rates are set to go back to 2017 rates in 2025.

For great tax saving ideas, check out my 10 Tax Tips.

Note: This post was updated on September 13, 2018.

Keep your Affairs out of Court: Put your Property in the Name of the Trust

AKA: Avoiding probate, (How to fund the trust): If You Have a Revocable Living Trust, congratulations. Thats just the first step… DONT FORGET TO TRANSFER ALL ASSETS TO THE NAME OF THE TRUST.

There’s a big estate planning problem out there. The titling process is getting neglected causing families to go through probate.

However, when the assets are put in the name of the revocable living trust, the estate settlement is a beautiful thing. But your living trust is only as effective as the assets that you title into it. (https://www.legalzoom.com/articles/revocable-vs-irrevocable-living-trusts-which-one-is-right-for-you)

Many fully funded trusts are settled without court involvement if your put all assets and property in the name of the trust.

There are a few reasons that trusts don’t get funded. People forget they owned that piece of property. People thought they had beneficiaries on all accounts. People didn’t think about buying the new property in the name of their trust. People didn’t think about opening that new account in the name of their trust. People may not have known that they needed to transfer their LLC to their trust. They kept a minimal amount of shares out of the trust. They thought their attorney was going to handle getting everything in the trust, but an attorney can only transfer certain assets into your trust.

Do these three things:

(1)  If you are an estate planning attorney, share with your clients along with a note to contact you if they need legal help. If you are a financial advisor, share with your clients and prospective clients along with a note to contact you if they need help titling and beneficiary designations.

(2) Fund your trust. While the process isn’t difficult, it’s easy to get sidetracked or procrastinate. Just make funding your trust a priority and keep going until you’re finished. Take a look at everything you have this is titled. Determine whether assets are probate or non probate. Probate assets, in general, go in your trust. There are many excellent attorneys around the country willing to help. If you need a lawyer’s help, get it. While you are at it, update your beneficiary designations.

(3) Write a Comment. if this video can help one person avoid probate and make things easier for their survivors, it’s worth it. Comment with your positive comments and experiences on youtube or linkedin or wherever else you might see or hear this, so that others can and will benefit from your experience.

Now go leave a legacy! Your family will thank you for it.

This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.

Paul Rabalais
Louisiana Estate Planning Attorney
http://www.RabalaisEstatePlanning.com
Phone: (225) 329-2450

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Related:

Revocable vs. Irrevocable Living Trusts – Which One is Right for You?

by Michelle Kaminsky, Esq.
Freelance writer
Revocable vs. Irrevocable Living Trusts – Which One is Right for You?
by Michelle Kaminsky, Esq., March 2015
Living trusts can be a great option for distributing your assets after your death. If you’re thinking of creating a trust as part of your estate plan, you’ll want to learn the differences between a revocable living trust and an irrevocable living trust so you can make the best decision as to which one is right for you.
What Is a Living Trust?
Before moving on to the distinctions between revocable and irrevocable trusts, it is important to note that both trusts are an “inter vivos” trust: a living trust so named because you create it while you’re still alive.
A living trust is a written legal document through which your assets are placed into a trust for your benefit during your lifetime and then transferred to designated beneficiaries at your death by your chosen representative, called a “successor trustee.”
To get the most benefit out of a trust, you should make sure everything you own is held in trust form. No assets become a part of the trust without specific inclusion, so it is important that you revisit your trust provisions from time to time to ensure all of your assets are included.
Now you are ready to move on to whether you want to make your living trust revocable or irrevocable.
Revocable Living Trust vs. Irrevocable Living Trust
With a revocable living trust, the person creating it can later change his or her mind regarding not only the property placed into it, but also the existence of the trust itself.
Some of the benefits of a living revocable trust include the following:
1. Avoids probate, which can mean a faster distribution of assets to your heirs.
2. Potential money savings, though this depends on your financial situation, and remember it does cost something to set up a trust on the front end.
3. More privacy than a will, whose provisions are made public after your death; a living trust’s provisions are kept private.
4. Ability to choose someone to manage your affairs without court intervention should you become incapacitated. Also, since the trust is revocable, if you dispute your incapacity, you can retain control yourself.
An irrevocable trust, on the other hand, is just as it sounds—not revocable. That is, once you put property into it, you cannot retrieve it as it belongs to the trust. Accordingly, this property is not included in your estate’s value for estate tax purposes. This is one big potential benefit of an irrevocable trust, although if your total estate value falls under the federal estate tax exemption, this probably isn’t a concern for you anyway.
Final Living Trust Considerations
Remember that when you establish trusts, be aware of any potential tax consequences (gift, estate and state inheritance) involved with property transfers, and note that you should always have a pour-over will to catch any assets that didn’t make it into the trust or your last will and testament.
Now that you know the differences between the two types of living trusts, you’re ready to move on to the next step in creating your estate plan.
Create a revocable living trust through LegalZoom. Or if you want to create an irrevocable living trust, you can speak to an attorney through the LegalZoom personal legal plan.
Ensure your loved ones and property are protected START MY ESTATE PLAN

https://www.legalzoom.com/articles/revocable-vs-irrevocable-living-trusts-which-one-is-right-for-you

 

Is your Personal Injury Accident Claim worth Pursuing? via Chris Limberopoulos

Is your accident claim worth pursuing?

Based in Tampa, Florida, attorney Christopher “Chris” Limberopoulos emphasizes a knowledgeable approach to auto accident law. Guiding the Florida Law Group, Chris Matthew Limberopoulos has an extensive background in auto product liability and cases involving accidents related to defective parts installed in vehicles. Among those parties that can be held liable for vehicle defects under […]

via Vehicle Defects under Florida Personal Injury Law — Chris Limberopoulos

Where do Your Tax dollars go? via U.S. Supreme Court Council

Your tax dollars are being spent on government programs that sponsor the victimization of women, children and the elderly.

See charts detailing the tax consequences on a dollar doubled at http://www.legalees.com/dollar-double… It’s only part of the information in my Advanced Tax Tactics. Use promocode “YouTube” to get 30% off at https://legalees.com/advancedtaxtactics/

Postpone, shift or change the nature of the tax:

Find out more in my newly updated Advanced Tax Tactics 3.0. http://www.legalees.com/advancedtaxta… Use promocode “YouTube” for 30% off.

 

10 Steps to Starting a Business via All Up in Yo Biz

If you are starting a business but don’t know where to start, start with the business plan. Now, I know that for a lot of business owners and aspiring business owners, making a business plan can be one of the toughest parts of starting a business. But this is exactly what the business plan is for; it is meant for those juices to start flowing in your head and to get you thinking about every detail of your business, so when you do start it you know exactly where you are going. Your business plan does not have to be a static thing; it changes. Your business plan should forecast about 3 to 5 years out, but along the way you may need to make changes and modify that business plan. And that’s okay. Here are a few of the most important items that you want to put in your business plan:

1. The Executive Summary. An executive summary is especially important if you are going to be seeking investors or a business loan to help finance your business. An executive summary should highlight the best ideas and the most important aspects of your business. For example, what makes your business unique, why is your business is going to succeed, and obviously a summary of what your business idea is. And it should really be just the most important parts of your business plan, that way if someone has just 30 seconds to read over your business plan, they can scan the executive summary and get the gist of what your business is about.

2. The Industry Analysis. This Industry Analysis will show what the market looks like in your business’s industry, who your competitors are and their strengths and weaknesses, who your target audience is and their demographic, as well as who exactly you are going to be aiming for with your business.

3. The Marketing Analysis. Your business plan should also include a Marketing Analysis. The Marketing Analysis should describe how you plan on marketing your business and the types of marketing channels you are going to use, as well as any unique or special ideas you have for marketing your business.

4. The Operations Plan. Your business plan should also include an Operations Plan, which includes information as to what type of personnel you are planning on hiring and some of the processes you will need to follow in the execution of your business. The Operations Plan is also a good place to include some of the milestones or goals you are hoping to accomplish.

5. The Financial Plan. Finally, you will want to include a Financial Plan that highlights what your budget is going to look like: how much money you are starting with and how much money you think you’ll need just to get the business going. Try to budget out what your business is going to need, make some financial projections for your business, including what you think you can make within a given amount of time and what you expect to bring in and spend. Also include information on pricing, i.e., how you are going to price your products or services and how that pricing compares to some of your competitors’ pricing.

6. Form 2553 (S Corp). This is the IRS form that needs to be filed if you want your small business to elect to be taxed as an S Corporation. Whether or not you need to file form 2553 is going to depend on whether it would make sense for you tax-wise to elect to be taxed as an S Corp.

7. Insurance (General Liability, Workers Comp, etc.). Every small business is going to need some type(s) of insurance. The type of insurance your small business will need also depends on what type of business you are operating.

8. Initial Resolution/Consent. Although this isn’t necessary (at least in Colorado) for all small businesses, it is usually a good idea to have an Initial Resolution or Initial Consent to Action when starting a small business in order to demonstrate that your business has adopted certain documents, like it’s Operating Agreement or Articles of Organization, and that you as the business owner have resolved to operate your business in accordance with those documents.

9. Operating Agreement or By-Laws. Every LLC needs an Operating Agreement. Let me say that again in case you missed it: every LLC needs an Operating Agreement. Even if it is not required by statute (Colorado does not require it), it is still a vital internal document for your small business to have. An Operating Agreement is the internal document where the owner or owners (aka the members) agree on how the business is going to be operated, i.e., type and nature of business; what the business is going to do; how members are going to get paid; how distributions are going to be made; what will happen in the event of disagreement between the members; etc. All of this information is set forth in the Operating Agreement. The By-Laws of a corporation serve basically the same purpose as the Operating Agreement of an LLC.

9a. Form SS-4 (Federal Tax ID). IRS Form SS-4 Application for Employer Identification Number is the form that you file with the IRS to get a Federal Tax ID number (aka EIN or Employer Identification Number) for your small business.

9b. Articles of Organization (or Articles of Incorporation). Every single LLC in existence must have Articles of Organization. I can say this with complete certainty because you will need to file Articles of Organization with the Secretary of State in order to create your LLC. Bottom line: if you did not file Articles of Organization, then you don’t have an LLC. Similarly, every corporation in existence must have Articles of Incorporation. The Articles of Organization or Incorporation are what brings the LLC or corporation into a legal existence. Without them, your small business, whether it is a corporation or an LLC, does not legally exist.

9c. Licenses. Specifically, Tax Licenses, Business Licenses, and Other Licenses. Honestly, they are all equally important and depend largely on the nature of your small business.

10. Agreements. Whether they are service agreements, independent contractor agreements, subcontractor agreements, etc., most small businesses are going to need some sort of an agreement in place to operate safely (in the legal sense) and effectively. The type of small business you have will determine the types of agreements you will need to have in place. For example, as an attorney, I have a service agreement (called an Engagement Letter) with each and every client that makes it clear what I am going to be doing for the client, my fees, how the client can expect to be billed, what I expect or need from the client, my policies that affect the client, what happens if there is a disagreement between us, and so on and so forth. Most, if not all, small businesses that provide a service to their customers should, at a minimum, at least have a similar type of service agreement with their clients. It protects both the small business and the client.

Contact Aiden and learn more at http://www.180lawco.com. Hello@180lawco.com | 720-379-3425 Thumbs up & subscribe if you want more AUIYB! Follow Me! IG: @allupinyobusiness Twitter: @_AllUpInYoBiz http://www.facebook.com/180lawco http://www.google.com/+aidenkramerlawAUIYB http://www.pinterest.com/AUIYB The information provided in this video should not be construed or relied on as legal advice for any specific fact or circumstance. Its content was prepared by 180 Law Co. LLC, with its principal office located at 50 S. Steele Street, Suite 250, Denver, CO 80209. This video is designed for entertainment and information purposes only. Viewing this video does not create an attorney-client relationship 180 Law Co. LLC or any of its lawyers. You should not act or rely on any of the information contained herein without seeking professional legal advice. All Up In Yo’ Business® is a registered trademark of 180 Law Co. LLC. ©180 Law Co. LLC. All rights reserved.

Blog Party: Share Your Blog Here, May 2019 via Learn Fun Facts

Growing a blog isn’t simple. It takes time, patience, and dedication before others would begin to notice your blog. While I can’t offer you a magic formula that would increase your blog’s popularity overnight, I can at least help you to promote your blog and find new readers. Here’s what you’ll need to […]

via Learn Fun Facts’ Blog Party: Share Your Blog Here, May 2019 — Learn Fun Facts

Can a Video be used as a Will? via Texas Estate and Probate Law

This column first appeared in the San Antonio Express News and other Hearst Newspapers on February 18, 2019. Dear Mr. Premack: My grandmother while in ICU stated that she wanted all she owned including her house to go to me and my bother in law. This was caught on cell phone video. She was later […]

via Can a Video be used as a Will? — Texas Estate and Probate Law