How business, doctors and journalists prey on your food anxieties I
How business, doctors and journalists prey on your food anxieties I
How business, doctors and journalists prey on your food anxieties I
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I i 111 ;14'EA lTI :~l I I lI ,lk<br />
Trust a trust<br />
Have you set up a trust? If you haven't, get cracking .<br />
No middle-c!ass family should be without <strong>on</strong>e .<br />
By Carolyn T. Geer<br />
Jo ttN HaWtcY, 77, necer c<strong>on</strong>sidered himself the trust fimd<br />
type . A retired college itist<strong>on</strong>teacher <str<strong>on</strong>g>and</str<strong>on</strong>g> s<strong>on</strong> of a high<br />
school pr ;ncipal, lie grew up during the Depressi<strong>on</strong> . Trusts<br />
Ncere for rich people .<br />
They u,ed to be for rich people .'Vo v the° are very' much<br />
for middle-class people like Ha%slec . After his wife died<br />
three years ago, Hawley set up two trusts at Charles<br />
Schwab & Co . to _nrovide tas <str<strong>on</strong>g>and</str<strong>on</strong>g> odier benefits :`or himself<br />
<str<strong>on</strong>g>and</str<strong>on</strong>g> his heirs .<br />
Think ofthat . A discount, mass-market stockbroker has<br />
gotten into the trust <str<strong>on</strong>g>business</str<strong>on</strong>g> <str<strong>on</strong>g>and</str<strong>on</strong>g> has people like retired<br />
teachers :is customers . From a st<str<strong>on</strong>g>and</str<strong>on</strong>g>ing start tive years ago,<br />
Schwab now has S23 billi<strong>on</strong> in pers<strong>on</strong>al trust assets .<br />
Just since 1990 at least 60 indcpendent trust companies<br />
have been founded to capture the new %eavc of trust<br />
actiaitv-<str<strong>on</strong>g>and</str<strong>on</strong>g> t12at doesn't include all the brokeis <str<strong>on</strong>g>and</str<strong>on</strong>g> fund<br />
operators, like I'aineWebber <str<strong>on</strong>g>and</str<strong>on</strong>g> Fidetin1, that are rushing<br />
to set up trust companies . In Florida, revocable living<br />
trusts are so ssidespread, "you can't get into a counm ° club<br />
Niithout slto\~ing a copy of pour trust," jokes Gide<strong>on</strong><br />
Rothschild, a Ven York la~~ver u ith s<strong>on</strong>ie Florida clients .<br />
Trusts have been ~ staple of estate planning for dte likes<br />
ofthe Rockefelles for a century . What's suddenlc pushing<br />
trusts out into the mass market? Four things .<br />
First, minimizing taxes . Inflati<strong>on</strong> has made the tax<br />
problems ofthe %cealthv into the tax problems of the upper<br />
middle dass . As will he explained below, a kev role here is<br />
played by the $600,000 estate tax exempti<strong>on</strong>, which is not<br />
indexed for inflati<strong>on</strong> .<br />
You can also saNe <strong>on</strong> income taaes iaith a trust, as<br />
Hairle\ did, bp transferring appreciated assets to it <str<strong>on</strong>g>and</str<strong>on</strong>g><br />
naming a charinas a remainder benefician, . Yet another<br />
varietv of trust is a must if rou %rant to leave life insurance<br />
to <strong>your</strong> children \cidtout pa% ing wmecessan~ taxes .<br />
Secood reas<strong>on</strong> to set up a trust : avoiding probate .<br />
Probate can be costlv <str<strong>on</strong>g>and</str<strong>on</strong>g> time-c<strong>on</strong>suming . By opening a<br />
living trust i -ou arrange to have some or all of <strong>your</strong> assets<br />
delivered to heirs at <strong>your</strong> death iN ithout rel}'ing <strong>on</strong> a wiil . A<br />
liN ing trust is no big deal . It simpk means a trvst i ou set up<br />
~~hile rou m'e still alire .<br />
By keeping <strong>your</strong> tiiilled assets to a minimum, cou can<br />
save <strong>on</strong> la«~,ers' fees <str<strong>on</strong>g>and</str<strong>on</strong>g> probate court fees, <str<strong>on</strong>g>and</str<strong>on</strong>g> speed up<br />
the h<str<strong>on</strong>g>and</str<strong>on</strong>g>ing-o% er process in the bargain . "In effect, Nchat<br />
aou're doing is administering <strong>your</strong> estate before vou die,"<br />
explains Richard Goldstein, a cPA in San 97ateo, Calif.<br />
7ust hoW much time or m<strong>on</strong>ey cou can sa%'e by aroiding<br />
probate depends ou ~N here cou live-California, NewYork<br />
<str<strong>on</strong>g>and</str<strong>on</strong>g> Florida being prime tercitories for probate avoidance .<br />
But no matter where vou live, it is intperative to set up a<br />
trust if you own real estate in another state, says New York<br />
la«yer Edtcard Schlesinger. If ' vou make the mistake of<br />
holding an ottt-o :`-stare racati<strong>on</strong> home in <strong>your</strong> oun name<br />
orvot¢spouse's name rather than through a trust, cou ~rill<br />
subject <strong>your</strong> heirs to the torture of having <strong>your</strong> caill<br />
probated in tseo places at <strong>on</strong>ce, using nvo sers of lau ~ ers .<br />
Third motne : privacy . The proceedings of probate<br />
courts are open to the public ; the doings oftrustees (unless<br />
the trust is created'ov a will) are not . Iu similar fashi<strong>on</strong>, real<br />
estate deeds arc open to pubiic perusal in all states, %rhile<br />
the trust documents that soell our the true o«ner of a<br />
parcel held in trust are not. Trusts can keep others from<br />
knowing what vou have nhile vou're alive, <str<strong>on</strong>g>and</str<strong>on</strong>g> u•hom you<br />
leave it to cehen vou die .<br />
Chen~l Holl<str<strong>on</strong>g>and</str<strong>on</strong>g>, a tinancial planner at I .E . Wils<strong>on</strong><br />
Adcisors in Columbia, S .C ., has a client whose s<strong>on</strong> is<br />
diw)rced . The client set up a trust to prevent her s<strong>on</strong>'s cawife<br />
from knowing how much m<strong>on</strong>et the s<strong>on</strong> inherits <str<strong>on</strong>g>and</str<strong>on</strong>g><br />
hitting him up for more chiid support .<br />
Fourth motive : protecti<strong>on</strong> from disgruntled heire . It's a<br />
lot harder for a retatite who has been cut out to atta_kvour<br />
trust than to attackaxcill . 1fian%, states restrictN our opti<strong>on</strong>s<br />
in a vvill-tvpically you can't tornlly disinherit a spouse, for<br />
example . In some of these states (including C<strong>on</strong>necticut,<br />
Florida, Illinois, Michigan <str<strong>on</strong>g>and</str<strong>on</strong>g> Ohio I, you can use a trust<br />
to bypass the restricti<strong>on</strong>s . If you want to minimize ~°our<br />
spouse's share, this is the way to go .<br />
Despite reffirms in s<strong>on</strong>ic states, the probate system has<br />
been bent to scne the interests of l'mcers as much as the<br />
interest of participants . Trusts are <strong>your</strong> escape hatch .<br />
Example of ho" the law makes rou run up legal bills :<br />
You can't probate a will in Florida with an ourofstate<br />
executor m less it's a blood relative . It's a full-emplovment<br />
act for bankers <str<strong>on</strong>g>and</str<strong>on</strong>g> la«vers in Florida-the statutory<br />
executor fee runs $55,000 <strong>on</strong> a 52 milli<strong>on</strong> esrate .<br />
Ifyou plan to retire to Florida <str<strong>on</strong>g>and</str<strong>on</strong>g> d<strong>on</strong>'t «ant to name a<br />
relative as executor, set up a revocable living trust to hoid<br />
<strong>your</strong> assets-securities, real estate, whateeer . Make courself<br />
trttstee <str<strong>on</strong>g>and</str<strong>on</strong>g> hire whomever cou u ant, at whate%cr fee<br />
cou agree <strong>on</strong>, to be <strong>your</strong> successor trustee . When qou die,<br />
the successor trustee h<str<strong>on</strong>g>and</str<strong>on</strong>g>s out the assets in accordance<br />
with cour wishes, as spelled out in the trust document . If<br />
cou later Ita% e misgiN ings, just amend or re\ oke the trust .<br />
That's \% h-at uie °re~ocable" is all about .<br />
In many states tou catt serce as bodt trustee uid<br />
168 Forbrs A Ausust 14, 1995<br />
204ti673424<br />
http://legacy.library.ucsf.edu/tid/agf97d00/pdf