By Lindsay Chin
A trust should be set up if you have a certain amount of assets. A trust is a contract or a legal arrangement between two or more persons defining the ownership and distribution of his or her possessions. The rule of thumb is if you have a net worth of at least $100,000 and have a substantial amount of assets in your real estate. A trust should also be set up with you have very specific instructions on how and when you want your estate to be distributed among your heirs after you are deceased. The benefits of a trust is that they are great for minimizing estate taxes, which after your federal death your estate can be taxed up to 55%. They also are used for protecting your estate from lawsuits and creditors. However, a trust does not replace a will. Most trusts deal with only specific assets while a will governs the distribution of nearly everything else in your estateA basic trust plan can run anywhere from $1,600 to $3,000. Obama administration states that to tax the wealth is not only defined by income levels. He expects that the estate tax exemption will amount to $3.5 million, up from its $2 million dollar level And favors maintaining the estate tax which is up for appeal in 2010.
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