Another financial surival topic: Trusts - Lysander, can we pick your brain again?

[O.S.O.K.]

Trusts. The tool of the wealthy to shelter their income. I understand that a fund held by a trust is sheltered from income tax in that only the capital gains are taxed on withdrawls. So a Kennedy family member for example never pays the high tax rates that they are so fond of exhorting.

I understand this to some degree. But how about a good laymen's terms explanation of how the trust works adn how the "average joe" can use a trust to good effect. Beyond title two weapons and gizmos that is.

I really think this could be something that we all here could benefit from.

[O.S.O.K.]

Ah - mriddick has some input: ( I don't agree with everything you say, but I appreciate that you are trying to provide this kind of information to the board =- thanks)

http://www.gunsnet.net/images/misc/quote_icon.png Originally Posted by mriddick http://www.gunsnet.net/images/buttons/viewpost-right.png (http://www.gunsnet.net/showthread.php?p=73023#post73023)
The trust can pay for almost all living expenses, the house, the car, utilities, upkeep, taxes, etc... can all be paid by the fund. Even the money the trust makes can be rolled back into the trust reducing that tax bite (they often times do not pay the full amount of capital gains). I don't think you can equate someone taking out spending money and having to pay taxes on it VS someone who has to live and pay all expenses through a retirement account. As I stated back on the old site there was a thread dealing with ol'Ted, he paid taxes like a guy making $125,000 but in order to live his lifestyle (live in the houses, the vacations, the jets, etc...) you or me would have to be worth something on the order of 8 billion. To me it's no wonder Ted thought we all should be liberal thinkers and pay more in taxes, afterall he had no real connection to what he paid and what he got in return from the gov't. One of the biggest liberals I know gets $300,000 grand a year from the gov't, pays almost no tax (not even sales tax) and will go on for hours about how you and I should "give" more.

I've never met a guy who earned his wealth ever really claim to be a hard core socialist type liberal, trust fund babies I've met on the other hand are almost always are and that is no accident. To me the engine of society is the private sector, it trumps the public workers, those at the bottom who don't work or those at the top who write the laws to benefit themselves. If it comes down to a progressive style tax rate (and it does) then I think it needs to reach lower and higher of the chain and stop trying to get all it's wealth from the workers in the middle. As I stated I think many times we confuse the working rich who pay alot in taxes and the sheltered rich who pay very little. When the left wants to point to the excesses of the rich (say when Warren buffet talks of paying less in taxes then his secretary) they use the sheltered rich (himself) as the example. when the right wants to point out how much the rich pay, they use examples of the working rich who pay ungodly amounts in taxes. To me it's simply time we separate the sheltered rich from the workers."

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So, again, what are the specifics, and can this be of benefit to people with average income or someone who is currently retired and holding different investments?

[HDR]

"I've never met a guy who earned his wealth ever really claim to be a hard core socialist type liberal,"

George Soros.

[El Laton Caliente]

"I've never met a guy who earned his wealth ever really claim to be a hard core socialist type liberal,"

George Soros.

Earn or steal?

[HDR]

Earn or steal?

Deciding which would apply is one hell of a question.

[Lysander]

Ok, sorry I know this was up for a while, but I don't often drop by here. Next time, PM me a link with a "MCFLY!" and I'll be on it.

A trust is a good idea for anyone managing an estate or real property, or even financial property for that matter. That's the management side. Essentially, it makes it easy for multiple people to have access to the property owned by the trust without being taxed on it. For instance, say I want to leave my daughter 500,000 before I die, but I A) Want to limit her access until she's mature and B) not get triple taxed by the Gov't. Well, I then leave it as a trust. The maximum tax rate (federal) for a trust is 38.9%, and the trust does not pay capital gains on investment income. Nor does it pay a death tax or anything else. Then the trust also gets exemptions and deductions that go far beyond what an individual or married couple get to do.

The tax rules are different, and complex. Let's just say that for anyone of good financial standing who has the prospect to grow their estate, a trust is a great idea.

Here's a good lesson on it from the AICPA (http://www.aicpa.org/InterestAreas/Tax/Resources/TrustEstateandGift/Trusts/DownloadableDocuments/IncomeTaxTrustEstates.pdf). This is a very complex field, even for Accountants. It's highly specialized so if you do pursue this, I highly recommend A) Having a lawyer set it up and B) Having a CPA who specializes in Trust and Estate taxation handle it. Depending on the size of your city, you can probably find a lawyer who is also a CPA and specializes in this.