"berry" <berry[at]ix.netcom.com> wrote in message
news:lk5o22peh2doeaq82h8tk3ur1t1omuuq1r[at]4ax.com...
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It's not totally clear what your situation is. I THINK you are asking if you
STILL need a bypass trust since the estate tax exemption amount grew from
$600,000 in 1997 to $2M today. So you could leave your assets to your wife
then she can leave stuff to your kids.

Unfortunately, my father in law thought the same thing in 1991 just before
he died. The good news is that his small nest egg grew exponentially during
the 1990s bull market. By the time my mother-in-law died 8 years later, a
big estate tax was owed. If dad had split his assets....even though it saved
no taxes at his death, the FUTURE GROWTH would have been outside my
motherinlaws estate and he would not be rolling over in his grave over how
much tax had to be paid upon her death.

In other words, consider the long term picture; not just how much tax might
be paid, or not, at the death of the first spouse. Keep your bypass trust.

berry[at]ix.netcom.com (berry) wrote:

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If it's incorporated into your Will, it means that your estate will
have to go to probate. That kind of a trust does not avoid it.

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Not quite. If the IRA passes outside the will but the money is not
retained in the IRA, it will be required to go through probate on
the death of the second spouse. Sane thing with insurance policies
and any other money left in your bank accounts.

As far as the real estate, that's the biggest reason to have a
trust. Since Texas is a community property state, if it is
community property as opposed to joint tenancy, it gets a full
stepped up basis when one of you dies. As joint tenancy property
it may only get a half stepped up basis.

That means that if one of you dies and the other wants to sell to
move into a smaller place, for example, your income taxes may be
higher as joint tenancy property than if it is in a trust and held
as community property.

In addition, when the second one dies, the property will then have
to go through probate. Or it could then be place into joint
tenancy with the kids. But again, if it passes as joint tenancy
property the income taxes will be higher when it is eventually
sold.

Plus there is the problem that, if you make your kids joint
tenants, they become legal owners of the property. That means you
won't be able to sell without their consent. You will not even be
able to refinance without their consent. And if one of them gets
into financial trouble, their creditors could conceivably force the
sale of the house to pay their bills.

In other words, it's best not to pass property by joint tenancy.

As far as the trust, your kids will be much better off if you use
one. But don't have one as part of your Will. Have one that is
separate from your Will, that becomes the legal owner of all your
property right now, while you are still alive. That will avoid
probate. Your current trust won't.

Stu

"berry" <berry[at]ix.netcom.com> wrote in message news:[at]4ax.com...
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The only problem may be when the surviving spouse dies. It is
possible with proper titling to avoid probate and pass real estate and
other assets to the children. If your children are the executor and and
at least one lives in Texas then the trust/no trust may not make a
difference. But if your real estate has appreciated more than $500,000
you should definitely see a lawyer about retitling or using the trust.

We have a Bypass Trust incorporated in our Will. We are over 70 and I
feel we don't need that Trust and wouldn't fund it. IRA would pass
outside the will - spouses IRA - which would be rolled over to me then
go to grown children on both our demise.
2 small ins. policies have beneficiaries. Me first, then grown
children on both our demise. A monthly pension is at 50/50
and would stay the same, if spouse died. Under these circumstances,
and well below the estate tax limit ------------should we keep the
Will as is (not funding it upon spouse's demise) or do another one
without the Bypass Trust? Seems like everything we have is
covered without a Trust. Only other thing - is a paid off house
which I would continue to live in - if spouse died. (Titled jointly -
both our names.) This is TX.

Thanks for any ideas. (Will was written in l997)