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A trust can ensure your wishes are carried out after you pass on

Pennsylvania residents who pay attention to tax law and current events know that an important law related to estate planning is set to change. At the beginning of 2013, the current rates for the estate and gift taxes are set to change. If Congress does not take action, the top rates for large inheritances are set to go up.

Knowing that tax laws are set to change, wealthier individuals, who plan on giving away inheritances of $1 million or more, may wish to establish and administer a trust before the year's end, so beneficiaries can take advantage of more favorable tax rates.

One of the great benefits of establishing a trust is that the settlor, the person who creates the trust, can set certain conditions for assets being distributed to the beneficiary. As one estate planning professionals put it: By establishing a trust, a person can, more or less, dictate their heirs' behavior "from the grave."

Of course, as with many areas of the law, regulations surrounding trusts are immensely complex and can vary from state to state. Yet the basic premise of trust still stands. For example, the settlor can stipulate that their grandchild will receive tuition money for college only if they attend a certain school.

Just as many trusts are executed posthumously, they can also be put into effect while the owner of the assets is still living, which may become a trend among those who anticipate the change in tax rules governing estate execution. If a person would like to take advantage of current tax laws, they would have to surrender control of their assets to the trustee with an irrevocable trust.

As mentioned previously, regulations surrounding trusts can be complicated and ambiguous. A person cannot generally request an action that violates the law or cannot be satisfied. At times, determining what conditions can't be satisfied is put up for debate. In order to determine how Pennsylvania law governs trust administration, it may be best to speak to a legal professional with specific knowledge of local statutes.

Above all, it's important to remember that trusts can be a very valuable estate planning tool. In this way, the owner of the assets can be confident that their wishes are respected and their legacy is upheld.

Source:

  • Our firm has experience handling the estate planning needs of Pennsylvania residents. To learn more about trust administration, please see our Philadelphia wills and trusts page.

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