A lot of people in North Dakota come to an estate planning attorney after hearing about the benefits of creating a revocable living trust. Living trusts are excellent estate planning devices that almost anyone can use and benefit from. However, the benefits conveyed by such trusts are not comprehensive. In order to create a comprehensive estate plan, you will need to develop other elements that provide benefits living trusts do not, and cannot, give you.
People with a high net worth cannot use a living trust to reduce their potential estate tax exposure. Though the estate tax exemption limit is a robust $5.25 million, people with assets in excess of that amount cannot use living trusts as a way to avoid paying estate taxes. To minimize how much your estate might have to pay, you will have to look at other estate planning devices.
If you want to develop an estate plan that reduces your income tax exposure, living trusts are also not the right way to go about doing it. The property you own in a living trust is still considered yours for income tax purposes. Other trusts, such as some types of irrevocable trust, might be able to help you minimize your income tax burden.
Having your assets titled under the name of your living trust will also not protect you if you are sued. Someone who wins a judgment against you can still go after the assets you have in your living trust. If you want asset protection you will need to take additional steps.
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