husband and wife 2 kids set up a trust and will 25 yrs ago husband dies 5 yrs later has the kids as 50/50 no distribution to the kids wife lives 20 more years sets up her half for the kids 70/30 the estate was worth 1 million at his death and 20 yrs later is worth 8 million at her death
how is the husbands half valued for distribution is it at the time of his death which would make it 1 million or at the time of her death 20 yrs later? which would make it 4 million
also to the taxes come off the top or does to 70% pay more taxes?
This is a bit tough to follow. This is how it should have worked: When the husband died, he can leave the exemption amount, say $1M in the trust, tax free, and an unlimited further sum to his wife. The whole point is to protect the exemption of the million he can leave to other heirs, otherwise, if it all went to the wife, on her death, his half may become fully taxed. Now, the sum ($1M) left to the trust should have been taxed all along, i.e. each year it should have had some distribution to the heirs, but either way, either the trust or the heirs should have paid income (not estate) tax on the earnings.
Are you saying her half is now worth $4M? 2006-8 had a $2M exempt figure. So if I read this right, $2M will be subject to estate tax. I hope this comes close to answering you. (I missed that you crossposted. Some replies may not come through as a result) JOE
I don't think there's any way in the world possible to answer this w/o reading the trusts and the wills. This needs expert advice to whoever is the executor of the estate.
I'll agree it probably is screwed up from what should have been done since the time of the death of the first partner (the husband iirc?).
_IF_ (the proverbial big if) all the assets were actually in the trust as they were likely intended to be, then there should be no estate taxes per se. OTOH, if the trusts were created but not funded or only part of the assets were placed in the trusts then there quite likely will be some estate tax owed as well.
Who the beneficiaries of the trust are and how the assets should be divided to maintain the provisions is going to take looking at the details in detail imo.
Get a competent estate lawyer. It may be reasonably straightforward if things were done properly or it might be a major screwup or anywhere in between. I'd wager towards the messed-up end meself as it sounds as though there wasn't a proper accounting made at the time of the first passing most likely.
This is a bit tough to follow. This is how it should have worked: When the husband died, he can leave the exemption amount, say $1M in the trust, tax free, and an unlimited further sum to his wife. The whole point is to protect the exemption of the million he can leave to other heirs, otherwise, if it all went to the wife, on her death, his half may become fully taxed. Now, the sum ($1M) left to the trust should have been taxed all along, i.e. each year it should have had some distribution to the heirs, but either way, either the trust or the heirs should have paid income (not estate) tax on the earnings.
Are you saying her half is now worth $4M? 2006-8 had a $2M exempt figure. So if I read this right, $2M will be subject to estate tax. I hope this comes close to answering you. JOE
I presume you mean the money went into a marital trust that provided for the wife for the rest of her life, and then to the kids after wife died.
Nothing wrong with that.
It should have been put into a separate trust on his death, using the values at the date of his death. If that wasn't done, it will have to be calculated as if it had been done that way at the time.
Generally taxes come off the top, unless the will or trust says something else.
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