Beat the Tax Man with a Living Trust

Living trusts are all about avoiding probate fees, which can be in the tens of thousands of dollars. Basically, you appoint a trustee before your death who transfers ownership of your estate to the beneficiaries you’ve  already selected. In many cases, the whole process takes only a few weeks and there are no attorney or court fees to pay.


Here are answers to common questions about living trusts:

Is it expensive?
The cost of creating a living trust depends on what you want to achieve. The more complicated a living trust is, the more expensive it will be. The value, however, is in the money and time you will save by avoiding probate court.

Is a trust document ever made public, like a will?
A will becomes a matter of public record when it is submitted to a probate court, a living trust does not.

Does a trust protect property from creditors?
No, a creditor who wins a lawsuit against you can go after the trust property just as if you still owned it in your own name.

After your death, however, property in a living trust can be quickly and quietly distributed to your beneficiaries. By the time creditors find out about your death, your property may already be dispersed. Trusts are not public record so, except for real estate, creditors have no way of knowing exactly what you owned and are unlikely to go after the beneficiaries.

Probate, on the other hand, can offer a kind of protection from creditors. During probate, known creditors must be notified of your death and given a chance to file claims. If they miss the deadline, they're out of luck forever.

Do I need a trust if I'm young and healthy?
If you don’t own real estate, probably not; a will and perhaps some life insurance is sufficient.

Can a living trust save taxes?
A simple probate-avoidance living trust has no effect on either income or estate taxes. More complicated living trusts, however, can greatly reduce your federal estate tax bill if you expect your estate to owe estate tax upon your death.

If you're wondering whether you need a living trust, call Allied Brokers. We'll help you figure out the answer.

Visit our website at www.alliedbrokers.com for information about all the types of insurance we offer. Or call 1-888-505-7988 for a free rate quote.

Year End Tax Saving Tips

The end of the year is the time when most of us think about taxes and ways to save on them. Two common and effective ways are:

By deferring income. If you are planning to sell off investments on which you have made a profit, consider the potential tax savings if the sale is deferred till next year. Similarly, if you expect a year-end bonus, you could defer the receipt for a month and take the money in January, thus deferring the tax liability till 2012. The same applies to any stock options you may be entitled to. While exercising the option may not be taxable, selling the stock is. For the self-employed, examine which invoices and bills can be deferred (thus deferring the
income) till January 2012.

You can also accelerate deductions. Make a reasonable estimate of your state tax and pay the installment in December rather than the January due date. You can also pay your complete property tax bill for 2012 in December 2011. Please note that this is not applicable to mortgage escrow accounts. Medical and other “threshold” expenses are deductible only to the extent they exceed a defined percentage of the Adjusted Gross Income. If you can group all these expenses into one year, the chance of exceeding the threshold increases; as does the amount of deduction.

At Allied Brokers we do not just sell insurance policies. We work with our clients to provide them the optimum insurance coverage at the right cost. Whether it is life insurance, health insurance, home insurance, various types of business insurance, auto insurance or any other kind of insurance, we customize solutions that are right for our clients. We have been in business over 50 years and are proud of the reputation we
have built. Visit our website at http://www.alliedbrokers.com/ to learn more about Allied Brokers and the insurance services and products we offer. Or call 1-888-505-7988 (toll free) for a free quote.

Information courtesy Orlando, Mitts, Moore & Company, San Jose, CA. Phone: 408 278-0300.