"Stuart A. Bronstein" <spamt...[at]lexregia.com> wrote:
- quote -

thanks everyone.

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"tfprusd[at]yahoo.com" <tfprusd[at]yahoo.com> wrote:

- quote -

The survivor's trust continues to be counted among the
survivor's property. Any use of the lifetime exemption for
the survivor is unrelated to its use for the spouse who died
first.

In other words, when your mother dies her exemption amount
will be whatever the law says it is at that time (scheduled
to be $1,000,000 after 2010). Whatever is in her trust will
be included in her taxable estate. The fact that some or
all of her assets are in a trust are irrelevant.

Stu

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"tfpr...[at]yahoo.com" <tfpr...[at]yahoo.com> wrote:

- quote -

Kind of an oxymoron here. You have to decide whether you
want current income or long term appreciation of the assets.
Perhaps investing in a more "balanced" set of funds is what
you are after.

- quote -

Trust A, as you have described it, is the property of your
mother and the assets in that trust will be adjusted
(stepped up or down) to FMV upon her death. Combined with
her other estate assets, they will be subject to the
lifetime estate exclusion in force at that time. If death
occurs in 2010, the exemption is unlimited. Distribution of
these assets will be as directed by the trust and/or will
provisions.

Trust B, which is often called the "family trust", is NOT
part of her estate. She may have the right to income
produced by the trust during her lifetime, but the children
(usually) are the ultimate beneficiaries. Assets will be
valued at their purchase price or value when placed in the
trust, and will not receive any step up in cost basis upon
mother's death. There is no estate exemption - that was used
when the trust was created.

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My father died last September and the family trust split
into Trust A (mother's trust) and B (father's trust). The
net value of their estate at the time of his death was about
$330,000. Their house just sold and we are splittling the
proceeds equally into each of the trusts (the title was 50%
A and 50% B), we will be funding the remaining balance from
Trust A into Trust B so Trust B will have $165,000 (50% of
the net estate value at time of death). We plan on
investing the Trust A money into income producing assests
which will grow in value over time.

At the time of his death, the lifetime exemption per person
was 1.5 million, so he was way under that. My question is,
when the estate eventually passes to the children after my
mother dies, what will be the exemption from trust A? Will
it be only the initial $165K or will it be up to the 1.5M
that was the exemption at his time of death? All of this of
course assumes there will still be an estate when the estate
passes to the heirs - there may not be.

thanks very much.

-tim

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