Personal Finance After 50 For Dummies, 3rd Edition

Chapter 16

Focusing on Estate Taxes and the Many Types of Trusts

IN THIS CHAPTER

Recognizing the individuals involved in trusts

Understanding the different types of trusts

Planning your estate with trusts that fit your needs

Trusts have been a key element of estate plans for centuries and began as a way to avoid taxes. Now, trusts remain central to estate planning for estates of all levels and serve many purposes, but tax reduction remains a key use of trusts for those individuals rich enough to worry about estate taxes.

Many types of trusts are available, and they can get complicated. But the simple fact of estate tax reduction is that putting an asset in a properly-designed trust can avoid estate taxes on that asset. When tax reduction is one of your estate planning goals, your estate planner will ask you to at least consider using different types of trusts. Although tax reduction isn’t the main goal of estate planning and affects fewer estates each year, when you are fortunate enough to have an estate that may be taxable, tax reduction is one of your top goals and different types of trusts may be potential solutions.

Trusts used to be the province only of the very wealthy. In ...