January 2024.
Q: I need a trust so my kids don’t have to pay a boatload of taxes.
A: Actually, a trust doesn’t avoid taxes. In fact, a trust might actually increase the taxes due if your estate plan is not correctly set up. For example, if your IRA or 401(k) pays to your trust and your trust isn’t drafted correctly, the entire payment might be taxed as income to the trust, and trusts can pay much more in taxes on a dollar of income. But aside from IRA’s, 401(k)’s and other retirement plans or annuities, inheritances are not income, so there’s no tax on the inheritance itself. Let’s look at your situation to see if a trust is best for you, or whether there is a simpler way to plan your estate and benefit your kids without the expense of a trust.
Q: Why do I need a lawyer? Can’t I just download a will from the Internet?
A: The technology has changed, but the question has been around seemingly forever. Twenty years ago, the will was a “freebie” on tax software, or was included in a software package bought at an office supply store. Before that, it was a form purchased at the stationery store, with blanks to be filled in by hand or on a typewriter.
The comment misses the point. Lawyers don’t provide wills, anymore than doctors sell pills or accountants, 1040s. What professionals sell is wisdom – knowing how to spot the issues and problems, and approach them in the most efficient way to get the job done best.
Applied wisdom is what clients pay for from their attorney, their accountant, their medical professional – knowing what to do, when and where – to produce the right result.
Yet the plethora of DIY websites and self-help books and volumes for Dummies attests to our culture’s distrust of professionals and assurance that we really can figure it out, given enough time and information. And that might be true, or it might not.
It might be relatively simple to find online instructions for an operation on a pet – but what layperson would really poise a kitchen knife over Fido with confidence? A miswritten will might be just as disastrous as a misdirected knife, and the DIY will drafter, by definition, will not even be around to find out that a mistake was made that hurt his or her family and friends.
Wills can be created at no charge, but at a high cost to those left behind.
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Attorney Tim Barkley
The Tim Barkley Law Offices
One Park Avenue
P.O. Box 1136
Mount Airy
Maryland 21771
(301) 829-3778
Wills & Trusts | Estate Planning | Probates & Estates
Elder Law | Real Estate | Business Planning