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20801 Biscayne Boulevard
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Miami, FL 33180

305-932-2293 Miami-Dade County
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Verify your trust taxes after a move

Are you considering using a trust in your estate planning documents? If so, there are a few things you should know before you finalize your will and other estate administration directions in Florida. Even though trusts are excellent options for many people, they must be handled with care to ensure their proper execution.

Your state may not require income taxes on trusts. If so, you are free to proceed with your trust planning as you personally see fit. Trust income is taxed in most jurisdictions, though, which can lead to confusion and sometimes financial consequences. States that tax these estate plans tend to have varied regulations and criteria for income tax-related to trusts.

CPAs may serve as your financial adviser and trustee, but they also know how to prepare the income tax forms for the trusts you create. These professionals should be well-versed in your state's tax laws so they can help you get the most for your trust money.

One of the most difficult financial situations involving trusts occurs when the creator of the trust moves to a different state. If you are just arriving in Florida, for example, your trust will be subject to the rules of the new jurisdiction. As a result, you could be required to pay income tax on a trust even before you formally turn it over to your heirs. In many instances, trust owners are unaware that they are required to pay these taxes, and they face financial stress later as a result.

Furthermore, trust tax issues can arise based on the states of residency for the trustee and beneficiaries. The location from which the trust is administered also has an effect on the taxes you pay.

Help your successors navigate the uncertain world of estates and tax laws by making adequate preparations for your estate well in advance of your passing. Consulting a qualified Estate Planning attorney in your state could make the difference between a generous inheritance and a meager one.

Source: On Wall Street, "Trust, but verify your estate tax planning," Roger Russell, March 21, 2013

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