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  • Benefits of Forming a Trust to Hold Title To Your Assets
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Benefits of Forming a Trust to Hold Title To Your Assets

David A. Keller 2021-08-17

Assets Held As Joint Tenants With Your Spouse

Problem: At the first spouse’s death the surviving spouse will receive ONLY a 50% step-up in basis AND joint tenancy fails to take advantage of the decedent’s spouse’s applicable exclusion amount.

Solution: Form a trust and hold the asset as community property titled in both spouses’ names as co-trustee of the trust.

Benefits of the Solution:

  • Full step up in basis at the first death, which means lower income tax liability.
  • No court proceeding required to retitle the assets at death.
  • Can be used to take advantage of the decedent’s applicable exclusion amount.
  • Assets Held As Joint Tenants With Someone Else For Convenience

Problem: At the death of the true asset owner, the assets will receive ONLY a 50% step-up in basis, AND the assets of the account are subject to the debts of the convenience owner.

Solution: Form a trust, remove the convenience owner from title and hold the assets as trustee of a trust. The true asset owner can name the convenience owner as a co-trustee with the true asset owner or as a successor trustee.

Benefits of the Solution:

  • Full step up in basis at death means lower income tax liability.
  • No liabilities for debts of the convenience owner.
  • The convenience owner will be able to help the true asset owner in the event of incapacity.

Assets Held As Joint Tenants With Someone Else For Shared Ownership

Problem: Both shares of the assets are subject to the debts of both owners.

Solution: Each owner form a trust, divide the assets into separate new accounts and each owner hold their own assets as trustee of their trust.

Benefits of the Solution:

  • No liabilities for debts of “other owners”.

Assets Held As Tenants In Common With Someone Else For Convenience

Problem: At the death of the true owner, the assets will receive ONLY a step-up in basis for the portion of the assets held by the decedent, the assets will have to be retitled through a court supervised probate proceeding, AND a portion of the assets of the account is subject to the debts of the convenience owner.

Solution: Form a trust, remove the convenience owner from title and hold the asset as trustee of a trust. The true asset owner can name the convenience owner as a co-trustee with the true asset owner or as a successor trustee.

Benefits of the Solution:

  • Full step up in basis at the first death, which means lower income tax liability.
  • No court proceeding required to retitle the assets at death.
  • The convenience owner will be able to help the true asset owner in the event of incapacity.

Assets Held As Community Property But Not In A Trust

Problem: At death the assets receive a full step-up in basis BUT the assets will have to be retitled through a court supervised probate proceeding even if left all to the surviving spouse, AND community property fails to take advantage of decedent’s applicable exclusion amount.

Solution: Form a trust and hold the assets as community property titled in both spouses’ names as co-trustee of the trust.

Benefits of the Solution:

  • No court proceeding required to retitle the assets at death.
  • Can be used to take advantage of the decedent’s applicable exclusion amount.
Next Post
  • Immigration

New Immigration Rules and Procedures for Mexico

David A. Keller 2021-08-17

Effective April 29, 2010, new rules and guidelines governing immigration controls on foreigners entering Mexico became effective, along with a publication of the National Immigration Institute’s new manual of criteria and immigration procedures. Among other changes, such rules provide for: (i) the creation of an Electronic Immigration Procedures System (Sistema Electrónico de Trámites Migratorios or […]

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