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  • Khart23
    replied
    Originally posted by jfoxcpacfp View Post

    There are many downsides to setting up trusts. An RLT will not provide any asset protection. An irrevocable trust requires you to give up control and involves a lot of expense and ongoing administration. I'm not saying that trusts are a bad thing, I'm very much in favor with them in the right situations, but don't let asset protection be the driving factor, just one of the considerations.

    When assigning ownership to one spouse or another, must also consider (hate to say it, but it's true) what the impact will be in the event of divorce, particularly in non-CP states. In the event of 2nd+ marriage with kids from prior(s), estate planning requires a very high level of concentration and thinking ahead to all of the "what if's?"
    +1 to these considerations

    Also, for clarity the expense of a trust doesn't necessarily mean administration expense - trust tax brackets max out extremely quickly creating some serious tax inefficient situations for some of the implied growth you are implying on the account. Consider your options including cost of extra insurance coverage v trust expenses to make the best educated decision with confidence.

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  • jfoxcpacfp
    replied
    Originally posted by DynamicHipScrew View Post
    Can someone explain the difference between "tenants by the entirety" and "joint tenants with rights of survivorship"? Our taxable is currently setup as the latter, but a quick Google search tells me that I currently live in a state where TBE is not an option.
    Google turns up several answers. No reason to regurgitate this article on The Balance.

    For other readers, if you are in a state with TBE, you also need to know that some states offer it only for real estate and others allow TBE titling for personal property, too.

    Leave a comment:


  • DynamicHipScrew
    replied
    Can someone explain the difference between "tenants by the entirety" and "joint tenants with rights of survivorship"? Our taxable is currently setup as the latter, but a quick Google search tells me that I currently live in a state where TBE is not an option.

    Leave a comment:


  • StarTrekDoc
    replied
    Originally posted by billy View Post
    define what you mean by emergency account- if it is truly an emergency account, it should not be in a muni bond fund. It should be in liquid vehicles that will not lose value (other than due to inflation)- HYS, CDs, checking accounts, cash, money market accounts etc. You're not aiming for yield with an EF. You're aiming for stability and ability to access it easily when needed.
    Minus the CD unless it's a fund and able draw out immediately.. yeah that's true EF. Many have a tiered EF as having that much in precovid can be a large opportunity cost.

    Very little of our taxable is outside a reversible living trust.

    ​​

    Leave a comment:


  • billy
    replied
    define what you mean by emergency account- if it is truly an emergency account, it should not be in a muni bond fund. It should be in liquid vehicles that will not lose value (other than due to inflation)- HYS, CDs, checking accounts, cash, money market accounts etc. You're not aiming for yield with an EF. You're aiming for stability and ability to access it easily when needed.

    Leave a comment:


  • Tim
    replied
    Umbrella coverage is a really nice policy to have, especially since they take care of nuisance claims. Can be advantageous, they likely use decent attorneys.

    Leave a comment:


  • ShredtheGnar
    replied
    Forgot to ask if this account is used to hold a lot of our emergency savings, will a trust be a problem? Hold a muni bond fund that is used for part of EF and future estimated tax payments.

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  • StarTrekDoc
    replied
    jfoxcpacfp - yep choose wisely The RLT (Reversible Living Trust) does a middle ground IMO. Doesn't give up control; keeps taxation and admin 'simple' to current tax planning, gives probate direction for estates as they can and do get messy; and lowers a risk of opportunity exposure via 'stealth wealth'. Just don't go naming it Last Name Family Trust. If you do really do something bad, it's not going to protect, but it lowers the nuisance suits if they ever come trolling .

    Leave a comment:


  • jfoxcpacfp
    replied
    Originally posted by ShredtheGnar View Post
    Sounds like looking into setting up a Trust is in order. We don’t have a lot in taxable, but it is growing quickly. Just want to cover our assets in the event of a possible lawsuit. Thanks for your input.
    There are many downsides to setting up trusts. An RLT will not provide any asset protection. An irrevocable trust requires you to give up control and involves a lot of expense and ongoing administration. I'm not saying that trusts are a bad thing, I'm very much in favor with them in the right situations, but don't let asset protection be the driving factor, just one of the considerations.

    When assigning ownership to one spouse or another, must also consider (hate to say it, but it's true) what the impact will be in the event of divorce, particularly in non-CP states. In the event of 2nd+ marriage with kids from prior(s), estate planning requires a very high level of concentration and thinking ahead to all of the "what if's?"

    Leave a comment:


  • ShredtheGnar
    replied
    Sounds like looking into setting up a Trust is in order. We don’t have a lot in taxable, but it is growing quickly. Just want to cover our assets in the event of a possible lawsuit. Thanks for your input.

    Leave a comment:


  • dennis
    replied
    What we did while I was still practicing was put assets in trusts for estate purposes and put the primary and secondary residences and taxable account into wife's trust for asset protection from litigation.

    Leave a comment:


  • jfoxcpacfp
    replied
    Originally posted by jamesja View Post
    Is your wife directly a part owner of the LLC or does she have a PA representing her share of ownership?
    TX is the only state I know of that defines PAs as a specific and separate legal entity. A few states use the term interchangeably with PC, but that is just semantics.

    Leave a comment:


  • ShredtheGnar
    replied
    Originally posted by jamesja View Post
    I was asking if your wife runs her practice as a professional association (PA). That would provide some protection against lawsuits by isolating her individual assets from those of her practice
    I do not think so. She is a member of ACEP, but as far as I know the group is not set up as a PA.

    Leave a comment:


  • jamesja
    replied
    I was asking if your wife runs her practice as a professional association (PA). That would provide some protection against lawsuits by isolating her individual assets from those of her practice

    Leave a comment:


  • ShredtheGnar
    replied
    Originally posted by jamesja View Post
    Is your wife directly a part owner of the LLC or does she have a PA representing her share of ownership?
    Directly. No PAs within the group. W2 employees do work with them, but all are MDs.

    Leave a comment:

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