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One New Hampshire couple in their late 60s moved half their $10 million net worth into an irrevocable trust for their children. Now the husband is losing sleep worrying about outliving his money. Joseph McDonald, an estate lawyer in Concord, N.H., is undoing the trust by having the trustee disclaim the assets, essentially negating the gift.
The widow has access to the earnings and if need be the principal, but at her death the trust assets bypass her estate and go straight to the kids. The point is to preserve the husband’s exemption from estate tax. It made sense for a lot of families when the amount exempt from federal estate tax was $675,000 per person in 2001 or $2 million in 2008. The trustee is legally liable for the debts of the trust and may use its assets to meet those debts. However, if there is a shortfall the trustee is responsible for the difference. Your letter can briefly go over the same ground—that is, you can explain that you’ve paid all the expenses and taxes and distributed all the property, and that as a result, the trust no longer exists.
People plagued by distrust can start to see threats that aren’t there; they become risk averse. Americans take fewer risks and are much less entrepreneurial than they used to be. In 2014, the rate of business start-ups hit a nearly 40-year low. Since the early 1970s, the rate at which people move across state lines each year has dropped by 56 percent.
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